Tucked into the “Bipartisan Budget Act of 2018” — signed into law by President Donald Trump on February 9, 2018 — is language that establishes the Joint Select Committee on the Solvency of Multi-employer Pension Plans, a bipartisan House and Senate panel tasked with finding a solution to the looming multi-employer defined benefit pension crisis.
Roughly 10 million union workers and retirees are enrolled in 1,400 multi-employer pension plans in the United States. About 110 of those plans are considered in critical and declining status and are projected to run out of money within the next 20 years. Once a plan becomes insolvent, it turns to the Pension Benefit Guaranty Corporation (PBGC) to pay out benefits, albeit at a much reduced level. However, with so many plans facing insolvency, PBGC says it is likely to run out of money by 2025.
To help prevent a catastrophe, lawmakers passed the Multi-employer Pension Reform Act of 2014 (also known as the Miller-Kline law). It allows troubled plans to cut the accrued benefits of most participants—even those already retired. Fifteen plans have applied for permission to cut benefits—some by as much as 50 percent. The Treasury Department has approved four applications and denied five others. Four applications have been withdrawn and two are under review.
Among those under review is the Western States Office and Professional Employees International Union (OPEIU) Pension Fund, whose participants include members and retirees of OPEIU locals in several western states, including Local 11 based in Vancouver, Wash. Pension trustees are proposing cuts of 30 percent.
Participants are up in arms about the reductions, especially retirees, who put money into pension plans year after year, sometimes forgoing larger wage increases or other benefits because they wanted to make sure they had enough to maintain their middle-class lifestyle in retirement.
The goal of the new committee is to find a way to prevent cutting the pensions of workers in troubled plans, while also avoiding tapping into the PBGC.
Members of the panel have until Nov. 30 to craft a plan. Co-chairs are authorized to hold at least five meetings, including one public hearing outside of Washington, D.C. It will take agreement by a minimum of five of the eight members of both parties to send any proposal to the full House and Senate for up-or-down votes. Neither chamber will be permitted to amend the agreement.
The first meeting was held March 9. Committee members are:
- U.S. Senate: Democrats Sherrod Brown of Ohio (co-chair), Joe Manchin III of West Virginia, Heidi Heitkamp of North Dakota, Tina Smith of Minnesota. Republicans Orrin Hatch of Utah (co-chair), Lamar Alexander of Tennessee, Michael Crapo of Idaho, Rob Portman of Ohio.
- U.S. House: Republicans Virginia Foxx of North Carolina, Phil Roe of Tennessee, Vern Buchanan of Florida, David Schweikert of Arizona. Democrats Richard Neal of Massachusetts, Bobby Scott of Virginia, Donald Norcross of New Jersey, Debbie Dingell of Michigan.