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Lawmakers Seek to Provide Pension Relief

May 3, 2010

The 2008 housing crash, the worst recession in decades and historically low interest rates have had a devastating impact on defined contribution pension plans, imperiling the retirement security of millions of working families.

But some relief from Congress may soon be on its way.

A bipartisan bill, introduced in the Senate by Pennsylvania Sen. Bob Casey (D), would allow troubled multi-employer pension plans to be partitioned, with the Pension Benefit Guaranty Corporation covering the pension contribution credits for companies that go bankrupt – saving the remaining companies from shouldering burdensome contribution increases. 

The Preserve Benefits and Jobs Act of 2009 will offer further federal support for both single-employer and multi-employer – known as Taft-Hartley – plans that are in financial danger.

Said Political/Legislative Department International Representative Bruce Burton:

Time is of the essence. Without immediate action, many Taft-Hartley plans could be forced to institute crippling employer increases or cut future retiree benefits.

Addressing concerns about the price tag of the bill, Casey told the Kansas City Business Journal that it’s a “bargain compared to what could happen if we let some of these multi-employer plans get in greater jeopardy than they are right now.”

Reps. Earl Pomeroy (D-N.D.) and Pat Tiberi (R-Ohio) have introduced the House version of the bill.

The legislation also gives underfunded plans that took a big hit in the stock market crash more time to recover pension investment losses by extending employers’ mandatory contribution schedules. This extra breathing space will help companies avoid having to resort to unsustainable contribution increases to make up for losses incurred in 2007 and 2008.

Under the regulations set by the Pension Protection Act of 2006, some companies would be required to increase their mandatory contributions by nearly 200 percent to make up for the hit most pension funds took in the downturn.

The bill has been referred to the House Education and Labor Committee, as well as the Ways and Means Committee for further discussion.

Says International President Edwin D. Hill:

While we were prudent about investing our pension monies, which have kept our fund relatively stable, greedy and irresponsible behavior by Wall Street has put the retirement security of millions or Americans – union and nonunion alike – in danger.

It’s vital that Congress and the administration take action now to make sure workers know that their pensions will be there for them in their retirement.