A bipartisan proposal for changes to multiemployer pensions is taking shape on Capitol Hill. Rep. Donald Norcross, D-N.J., and Rep. Phil Roe, R-Tenn., said this week that they plan to roll-out a bill that would allow some multiemployer plans to move to a hybrid structure. Their proposal, the Give Retirement Options to Workers Act (GROW Act), could be part of an omnibus fiscal year 2018 federal spending bill.
According to the lawmakers, many multiemployers plans are struggling with funding. Two years ago, the House Education and Workforce Committee cautioned that the Pension Benefit Guaranty Corporation (PBGC) will run out of funds to pay multiemployer benefits around 2024. At that time, a similar composite approach was debated in the committee.
The hybrid or “composite” approach includes elements of defined contribution (DC) plans and defined (DB) benefit plans. “The GROW plan offers another tool in the toolbox for workers to grow their retirement savings and employers to grow their businesses,” Norcross said. “This bipartisan proposal will provide a new voluntary vehicle for retirement savings that combines the best components of defined benefit and defined contribution plans,” Roe said.
The hybrid/composite approach has generated opposition. “The proposal would allow relatively healthy multiemployer plans with secure and adequate benefits to transition to inferior plans,” the Pension Rights Center cautioned. “This proposal would shrink the number of defined benefit plans, and since fewer plans would be paying premiums to the PBGC, it would also hurt solvent plans,” the International Association of Machinists and Aerospace Workers, said.
By George L. Yaksick, Jr., Wolters Kluwer News Staff