Workers Urge Committee to Fix Multiemployer Pension Crisis Now

The committee was told that benefit cuts are not the answer and was urged to reform withdrawal liability rules.

The Joint Select Committee on the Solvency of Multiemployer Pension Plans held a hearing in Ohio last week to gather testimony from employees affected by the multiemployer pension plan crisis.

In his opening remarks, Senator Sherrod Brown, D-Ohio, co-chair of the committee, noted that the crisis threatens the pensions of more than 1.3 million Americans. He pointed out that he has put out a proposal—the Butch Lewis Act—which  “establishes a legacy fund within the Pension Benefit Guaranty Corporation to ensure that multiemployer pension plans can continue to provide pension benefits to every eligible American for decades to come.” This legislation is paid for by closing “two tax loopholes that allow the wealthiest Americans to avoid paying their fair share of taxes.”

However, Brown said he is open to any solution that protects workers, retirees and businesses.

The committee heard testimony from workers such as Larry Ward, a retiree and member of the United Mine Workers of America multiemployer plan, who stated that it has been said that the average mine worker pension is $582.00 per month, but explained that many fall short of that and one pensioner receives only $252.97 per month. “I sit here before you today and tell you that for most of the retirees I know, any reduction to their pensions will make paying their bills very difficult, if not impossible,” Ward said.

Since the enactment of the Kline-Miller Multiemployer Pension Reform Act (MPRA) in December 2014, some 15 plans have filed MPRA benefit suspension applications, and the Treasury Department has approved several. The committee heard testimony from two members of the Central States, Southeast and Southwest Areas Pension Plan, for which the Treasury Department rejected a suspension of benefits proposal under the MPRA.

In his testimony, David A. Gardner, chief executive officer of Alfred Nickles Bakery made recommendations:

  • All multi-employer pension plans with a certain level of under-funding must be immediately frozen.
  • Companies must have the right to help fund 401(k) plans for their employees and be able to withdraw from multi-employer pension funds without liability.
  • The contributions made by a participant to multiemployer pension plans must go back to the participant. Based on the contributions, the participants and the unions will determine pension amounts for retirees, for current employees and for employees who left but who were vested.
  • The government must decide how to fund the pensions of “orphans,” the employees in companies that went out of business.

On the issue of withdrawal liability, Mike Walden, president, National United Committee to Protect Pensions, said the matter needs to be addressed and revamped. He suggested putting a cap on withdrawal liability not to exceed the worth of the company, and possibly doing away with withdrawal liability in the future in exchange for contracts to stay in the fund or enter a fund for a certain length of time. “Withdrawal liability is one of the biggest concerns of employers that I have met with,” Walden said.

In its last hearing, the committee heard a suggestion that a long-term, low-interest-rate loan program would help solve the multiemployer pension crisis.

Text of testimony during the hearing last week can be found here.