Union construction contractors from around the country converged on Washington, DC last week with a single, overriding message for their legislators: the multiemployer pension system is in deep trouble, and Congress needs to pass a significant set of reforms – fast.
“We must face the hard truth,” Bob Hoover, VP of Kvaerner North American Construction and a past president of TAUC, told attendees at a special forum on pension reform co-hosted by the Quality Construction Alliance (QCA) and Bloomberg Government. “Economic realities have changed, and the defined benefit structure must change with them if we expect our companies – and the plans our workers depend on – to survive.”
The forum – streamed live on the websites of C-SPAN and Bloomberg Government – was part of the QCA’s annual legislative conference, which also included a series of visits to legislators’ offices on Capitol Hill. QCA is comprised of five specialty construction trade associations, including TAUC.
One common theme running through all of the QCA presentations was that pension reform shouldn’t be viewed as a “bailout.” In fact, the proposal put forward by the National Coordinating Committee for Multiemployer Plans (NCCMP) is entitled “Solutions Not Bailouts.” It advocates giving multiemployer plan trustees more flexibility and additional financial tools to better manage their funds. Furthermore, the NCCMP proposal protects taxpayers by not calling for any additional federal spending. Rather than “government help,” the proposal encourages “industry self-help.”
“Our pension proposal is, first and foremost, a way to preserve good benefits for your workforce and their families,” John McNerney, general counsel for the Mechanical Contractors Association of America, told contractors. “It’s about the employers, their workers and families.”
Josh Gotbaum, Director of the Pension Benefit Guaranty Corporation, said that if Congress does not reform the pension regulations in a thoughtful and even-handed manner, “we will drive away employers.” The task, he added, is to figure out how to give plans additional flexibility while, at the same time, making sure those changes allow existing contributing employers to stay in business.
Gotbaum also emphasized that the majority of multiemployer plans are currently in the “green zone” and doing reasonably well. Other plans face a variety of financial challenges, but are expected to recover over time. “A couple of bad apples convince people the whole barrel is bad,” he said. Later, Gotbaum warned that we should not let “the fact that a minority of plans are generally in trouble taint the other plans,” and said Congress shouldn’t “throw the baby out with the bathwater” when trying to fix bad plans.
Gotbaum and other speakers pegged the number of deeply troubled plans at about 10% of roughly 1,350 multiemployer plans overall.