The Chairman of the Senate Finance Committee, Senator Chuck Grassley (R‐Iowa), and the Chairman of the Senate Health, Education, Labor and Pensions Committee, Senator Lamar Alexander (R‐Tennessee), have unveiled a proposal to shore up multiemployer pension plans. About 125 multiemployer pension plans may be close to insolvency within the next 20 years, leaving approximately 1.3 million participants without their pension benefits.
The proposal involves creating new authority and improvements to the ability for the Pension Benefit Guaranty Corporation (PBGC) to take on the liabilities of struggling multiemployer pension plans. The legislative goal is to help the plans satisfy their financial obligations to participants, as well as making fundamental changes to plan regulation.
Some multiemployer unions, including the AFLCIO, have expressed opposition to the proposal. The belief is that the proposal lacks federal financial assistance required to salvage these multiemployer pension plans. Also, opposition argues that the proposal attempts to rely on the major stakeholders of the plan to correct a situation they feel has been created by increased deregulation, more creative use of corporate bankruptcy, and the financial industry’s riskseeking behaviors. It is asserted that the proposal will work to the detriment of the retirees and active participants and have the effect of expediting the collapse of these same multiemployer pension plans.
Chart Source: “Why Congress Must Fix Multiemployer Pension,” Manhattan Institute for Policy Research, Inc., December 5, 2019.