Legislation to help struggling multiemployer pension funds is to be introduced Thursday in the House and could be headed for passage if bundled with a COVID-19 relief measure now before Congress.
The proposal also calls for some funding relief for single employer plans through extended amortization periods and pension interest rate smoothing changes.
The proposed Emergency Pension Plan Relief Act of 2021 is based on similar multiemployer pension reform legislation proposed in the last session of Congress as part of the House-passed Heroes Act. It does not include a controversial provision that would have allowed for new composite plans that called for investment risk sharing with plan participants.
House Ways and Means Committee Chairman Richard E. Neal, D-Mass., said in a statement that it was the first bill he introduced in the new 117th Congress in part “because the COVID-19 economic downturn has only worsened the multiemployer pension crisis and increased the urgency with which we must act to help folks whose financial security is at risk.”
It would expand the Pension Benefit Guaranty Corp.’s authority and resources to help troubled plans through partitions. It would also double the PBGC guarantee level for plan participants from the current maximum of $12,870 for 30 years of service.
Plans applying for benefit reductions under the Multiemployer Pension Reform Act, or considering that action, would no longer have that option.
According to members of the House Education and Labor Committee who introduced a similar version Thursday, the pandemic could cause an additional 180 multiemployer plans to become insolvent, bringing the total of plans facing failure to 300 plans covering 2.5 million participants.
Committee Chairman Robert C. “Bobby” Scott, D-Va., said that while a Congressional Budget Office scored similar legislation in the Heroes Act as costing $52 billion over 10 years, lost tax revenue and increased social spending if plans become insolvent would cost taxpayers much more. “Doing nothing is the worst and most expensive option on the table,” Mr. Scott said in a separate statement.
Source: Pensions & Investments