House panel approves measure to shore up failing multiemployer pension plans
A bill to prop up financially ailing multiemployer pension plans advanced in Congress on Wednesday as an influential House panel approved a proposal that would protect benefits promised to more than a million workers nationally, including tens of thousands in Massachusetts.
The measure, introduced in January by Representative Richard Neal, Democrat of Massachusetts, was passed by the Ways and Means Committee on a 25-to-17 vote along party lines. The full House of Representatives is expected to approve it later this month.
But with some committee Republicans calling it a “federal bailout,” it remains unclear if the bill will be taken up in the GOP-controlled Senate. The bill would create a new agency within the Treasury Department called the Pension Rehabilitation Administration to issue government bonds that would finance loans to underfunded multiemployer pension plans.
More than 120 multiemployer plans covering 1.3 million workers and retirees are underfunded by a total of $48.9 billion, and have told regulators they could slip into insolvency within 20 years, according to a report last year by the pension consulting firm Cheiron Inc. Such plans typically draw contributions from groups of mostly small businesses.
“These are American workers who planned for their retirement and now, after working for 30-plus years, they are facing financial uncertainty at a time when they are often unable to return to the workforce,” Neal, the committee chairman, told his Ways and Means colleagues before Wednesday’s vote.
The underfunded plans include one covering truck drivers and warehouse workers, represented by the New England Teamsters Union, and another covering Massachusetts workers through the Teamsters’ Central States Funds. Two smaller Massachusetts multiemployer plans, the Chicopee-based Roofers and Slaters Local 248 Pension Plan and the New Bedford Fishermen’s Pension Fund, were also listed among those whose condition was deemed “critical and declining.”
John Murphy, an International Brotherhood of Teamsters vice president who’s led the union’s efforts to shore up the plans, called the Ways and Means vote “a major legislative achievement, showing that government will respond to the needs of middle-class retirees and workers.” Calling on the Senate to pass it, he said “the ramifications of inaction are immeasurable.”
But one of those opposing the Neal bill, Representative Tom Rice, a Republican from South Carolina, blamed the precarious finances of the multiemployer plans on what he called “an arcane provision” that allows the labor unions that administer the plans to “chronically underfund” them.
Rice said the new agency would exist to issue “federal bailout loans.”