On April 29, AGC CEO Stephen Sandherr testified during a hearing held by the House Education and the Workforce Subcommittee on Health, Employment, Labor, and Pensions on ways to further strengthen the multiemployer pension system. The bipartisan, noncontroversial hearing focused on the recommendations outlined in the joint labor-management proposal, Solutions Not Bailouts, to create a new “composite” type of multiemployer benefit plan that is distinct from either defined-benefit or defined-contribution plans. The new plan design was not included in last year’s bill that overhauled much of the multiemployer system, the Multiemployer Pension Reform Act of 2014, which tracked other policy recommendations from Solutions Not Bailouts.
Sandherr’s testimony urged Congress to allow collective bargaining parties or plan trustees the option to decide whether to adopt the composite plan model, which more equally distributes some of the risks associated with retirement plans so employers don’t have to shoulder the entire burden. He also stated the new plan design is essential to the shared goal of protecting both those who earn benefits and those employers that contribute retirement benefits to them. The “composite” plan design concept would be conservatively funded; have rules for adjusting benefits (either up or down), based on funding levels; include no withdrawal liability, ensuring that accrued benefits will always remain fully funded; continue legacy liabilities in original plan, but include options to realistically pay off the liabilities; and, the plan design would apply only to future benefit accruals.
AGC views last year’s bill as a step in the right direction and provides many needed reforms to the multiemployer system. But, Congress needs to enact additional reforms to the pension system that allow multiemployer plans to modernize by choosing from additional retirement plan models, including the composite plan concept. The proposed amendments to the law are not a union bailout. They would remain completely voluntary and ensure that both employers and the pension system are fiscally viable in the future. Finally, the design change further alleviates future financial strains on the PBGC.
AGC will continue to advocate for adoption of the new plan design concept and remains hopeful for legislative action in the current Congress.
For more information, please contact Jim Young at youngj@agc.org or (202) 547-0133.