The Senate Committee on Health Education Labor and Pensions (HELP) was scheduled to hear testimony during the afternoon session in Washington, D.C. from six witnesses about the “Create Jobs & Save Benefits Act of 2010,” (SB 3157) sponsored by Senator Bob Casey (D-Pennsylvania).
The controversial portion of the Casey bill, unveiled earlier this year, would allow multiemployer plans to segregate the benefit liabilities attributable to participants of bankrupt former employers who pull out of the program without funding their withdrawal liability. Assets equal to a maximum of five years of projected benefit payments would also be moved to the separate account where the Pension Benefit Guaranty Corporation (PBGC), the nation’s private-sector pension insurer, would back the benefit payments.
Casey said when he announced the bill that the move was necessary because so many small employers who belong to multiemployer plans have gone out of business during the economic downturn. The lawmaker said costs to remaining employers increase to fund the benefits of participants left orphaned by their bankrupt employer withdrawing from the plan and that puts an additional – often unsustainable – burden on other plan members.
“Pension plans across the country have taken major losses because of the near economic collapse and the decline in the stock market,” said Casey, on announcing the proposal. “Multi-employer plans face unique challenges that are overburdening pension plans and the bottom lines of companies. My legislation would help correct these problems to protect the pensions of workers and unburden companies stuck paying a crippling expense that threatens its existence and the jobs of its employees.”
The Casey bill would also enable multiemployer plans to pool resources to help reduce administrative costs.
The bill could cost $8 billion over 10 years, Casey aide Larry Smar told the Pittsburgh Tribune-Review.
Letter: Bill 'Criminally Stupid'
Since the bill’s introduction, it has drawn heavy fire from a number of groups including business trade groups, who argue that it represents an improper taxpayer bailout that would help unions who often sponsor the benefit plans. Thursday, one coalition opposing the bill announced it had sent a letter to President Obama asking for his support to kill the Casey measure.
“Rewarding unions for mismanaging workers’ pensions by having taxpayers bail them out is a criminally stupid idea. In creating a fifth fund within the PBGC, then allowing for the PBGC to tap money from that fund when they have a deficit of $22 billion is like putting a dieter in a cookie store – the outcome is never good,” wrote Grover Norquist, President of Americans for Tax reform. “Instead, legislation should seek to unburden the plan participants by giving them a portable, defined contribution pension plan – like a 401(k) – workers can invest themselves and take with them if they leave their union job.”
The Associated Builders & Contractors Inc., a Washington-based group of contractors employing non-union workers, is also opposing the Casey legislation.
The PBGC said plans for which it is providing benefits had $898 million in unfunded liabilities in 2009.
Multiemployer Plans Under Pressure.
A survey released by a Washington, D.C. trade group representing multiemployer plans said the value of assets in those plans plummeted an average of 22.1% from the beginning of 2008 to 2009 (see Multiemployer Plans Suffered from Downturn Too)
A Segal Company report released earlier this year shows a deterioration in the funding status of more than 360 multiemployer client plans between 2008 and 2009 due to the meltdown in the investment markets (see Market Troubles Hit Multiemployer Plans Hard).