Congress recently approved legislation to revamp the multiemployer-pension programs in an attempt to bolster plans that are in dire financial shape.
The pension policy changes, which are part of a $1.1-trillion 2015 spending package the Senate passed on Dec. 13, allow sponsors of multiemployer plans in “critical and declining” condition to temporarily or permanently cut members’ vested benefits.
It also would mandate a doubling in the annual per-member premiums the plans pay to the federal Pension Benefit Guaranty Corp., to $26 from $13 now.
The Senate vote followed the House’s approval of the bill two days earlier, sending the measure to President Obama, who is expected to sign it.
Multiemployer pensions are prevalent in unionized construction. Engineering News-Record reported that they cover more than 3 million workers and retirees in the industry and their beneficiaries.
Contractor groups, including the Associated General Contractors of America and the National Electrical Contractors Association, have endorsed the new legislation. However, Terry O’Sullivan, general president of the Laborers’ International Union of North America (LIUNA), strongly opposed the proposal.
“Using parliamentary gimmicks and without debate or hearings, Congress is on a path to rob millions of dollars from workers’ pensions to keep a failing government agency [PBGC] on life support,” Sullivan said in a December 11 statement.
Under the plan, drafted by House Education and the Workforce Committee Chairman John Kline (R-Minn.) and Rep. George Miller (D-Calif.), trustees of “severely underfunded” plans could cut vested benefits for the workers and retirees the plan covers, if necessary.
While Miller told the Rules Committee that the proposal doesn’t mandate benefits cuts; such steps would be up to the pension plans.
Construction-industry plans accounted for 55% of all multiemployer plans and 37.5% of the people such plans covered in 2010, PBGC said in a 2013 report.