Reports on Multi-Employer Pension Plans Released

On Jan. 29, 2013, the federal the Employee Retirement Income Security Act (ERISA) agencies sent Congress several reports on multi-employer pension plans insured by the Pension Benefit Guaranty Corporation (PBGC). These reports provide information on the financial health of multi-employer plans and the PBGC’s multi-employer insurance program, but make no recommendations. First, ERISA requires an evaluation every five years to determine whether current PBGC insurance premium levels support the multi-employer benefits guarantee. Second, the Pension Protection Act (PPA) of 2006 mandated a study on the effects of the law on multi-employer plans, including the impact on small employers. These two reports were due to Congress in 2011. Additionally, PBGC issues an annual “exposure report” that examines the future solvency of its insurance programs. The reports show the PBGC has a significant funding shortfall; the ratio of retirees to workers is increasingly putting additional downward pressure on the system; a growing number of individual plans have significant funding shortfalls; and the PBGC is headed toward insolvency without corrective action. The findings paint a sobering picture of the issues facing the PBGC and employers involved in these pension plans. AGC is actively working – along with other stakeholders – to present recommendations to congress and the federal agencies on reforms to the system to ensure that the system going forward is sustainable for participating employers and retirement income security for participants is protected. AGC held a webinar on Jan. 29 that outlined the recommendations AGC is proposing, along with the other stakeholder organizations in the construction industry, as well as other industries involved in multi-employer plans. For more information, please contact Jim Young at (202) 547-0133 or youngj@agc.org.