WE NEED YOUR HELP: Multiemployer Pension and Health Needs in COVID 4 Response Package
May 1 2020
UPDATE 6/10/20: NEW LETTER TO CONGRESS ON COMPOSITE PLANS — CLICK TO READ!
UPDATE 5/29/20: NEW WHITE PAPER FROM GROOM LAW GROUP ON COMPOSITE PLANS — CLICK HERE TO READ & DOWNLOAD
UPDATE 5/12/20: READ TAUC'S LATEST LETTER TO CONGRESS ON COMPOSITE PLANS
TAUC is urging all members to reach out to your Congressional representatives in the House and Senate and urge them to take action on critical multiemployer pension and health measures in the next COVID-19 relief bill, commonly referred to as "COVID 4."
More than 20 million active and retired American workers and their families rely on multiemployer pension and health and welfare plans to provide for their retirement security and their health plan coverage.
The crisis in a limited number of systemically important multiemployer pension plans has been deeply exacerbated by the COVID-19 pandemic, the related market collapse, and the government mandated shutdown of the U.S. economy. The shutdown of the economy has resulted in more than 30 million workers being unemployed, and significantly reduced employer contributions to multiemployer pension and health plans. While the full impact of the health and economic crisis will not be known for some time, there is no doubt that the impact on participants, employers, plans and the PBGC will be severe.
Congress must act now to secure these retirement and health benefits, and to stop the additional downward pressure on the economy as retirees face the loss of income and unemployed workers lose their employer provided healthcare coverage.
To address the crisis facing the multiemployer pension and health and welfare plans, Congress must enact legislation to:
- Establish a special partition program at the PBGC to for deeply troubled plans. The special partition program would move liabilities from failing plans to the PBGC, ensuring that participants receive full benefits while providing plans with the path to long-term solvency. As part of that program, the PBGC must be provided with enough annual funding by the U.S. Government to carry out its mission.
- Provide relief for all multiemployer plans. Congress should include provisions to allow plans to freeze their zone status for the current year, and to allow plans to smooth investment and contribution base unit losses in the funding standard account, and investment losses in the development of the actuarial value of assets.
- Authorize Use of Composite Plans. Congress should authorize alternative plan design option/Composite Plans to provide signatory employers and employees participating in multiemployer pension plans with more choices in retirement plan models. Composite Plans are a critical reform for the long-term viability of construction industry businesses and is key to avoid jeopardizing the retirement benefits for millions of active and retired construction craft workers. Providing a new self-help hybrid option for plans will prevent more plan failures and stabilize funding volatility in the future and should be done this year.
- Provide Federal support for COBRA premiums. There is an absolute necessity and urgency during this uncontrolled pandemic to ensure that workers do not lose access to their healthcare because they are laid off or due to reduced hours. Congress must pass full premium support for those workers relying on COBRA due to layoffs or reduction in hours.
WHAT YOU CAN DO TO HELP
TAUC is urging all of our members to reach out personally to your Senators and Representatives to impress upon them the urgency of multiemployer pension legislation and COBRA premium support in the next COVID bill.
To assist you, here is a direct link to download an Excel sheet containing the contact information for particularly important Congressional leaders and their staff (the first tab is a priority ranking, the second tab is sorted by state).
What should you say? Here are some suggested talking points that summarize the points made above:
- We fully support establishing a special establish a special partition program at the PBGC to address the needs of deeply troubled plans.
- Any legislative package to address the crisis facing the multiemployer pension system must also authorize the use of hybrid composite plans to provide signatory employers and employees participating in multiemployer pension plans with more choices in retirement plan models.
- Composite Plans are a critical reform for the long-term viability of construction industry businesses and is key to avoid jeopardizing the retirement benefits for millions of active and retired construction craft workers. Providing a new self-help hybrid option for plans will prevent more plan failures and stabilize funding volatility in the future at no cost to the Federal government.
- Composite plans would enable multiemployer pension plan trustees to voluntarily adopt more flexible plan structures that would reduce risks for contributing employers while still provide reliable, lifetime retirement security for plan participants.
- TAUC's members remain committed to maintaining the pension benefits and retirement security for the craft people they employ. Unfortunately, uncertainty and risk in the current multiemployer pension system — which has been exacerbated by the COVID-19 pandemic, the related market collapse, and the government mandated shutdown of the U.S. economy — threaten its overall long-term sustainability.
- Market volatility and default by other employers create unpredictable, unacceptable risk. Resulting unfunded liabilities create withdrawal liability, which leads to lending and bonding issues for construction industry employers. This unquantifiable risk serves as a barrier to new employers entering the system and creates an incentive for current employers to leave the system, further destabilizing the plans.
- Authorizing the use of composite plans would provide a private sector solution — not requiring government dollars — and would prevent the current funding crisis in the multiemployer pension system from happening in the future.
Thank you in advance for your support! If you have any questions, please contact Todd Mustard, Vice President of Industry Innovation and Government Affairs, at email@example.com.