Government affairs

Legislative Updates

Senate Republicans introduce multiemployer pension proposal

Today, Senate Finance Committee Chairman Chuck Grassley (R-IA) and Senate Committee on Health, Education, Labor and Pensions (HELP) Chairman Lamar Alexander (R-TN) introduced a proposal “to avert the collapse of critically underfunded” union pension plans. This plan comes as a white paper in order to solicit comment ahead of an actual bill being introduced, the timing of which is unclear at this time. Text of the white paper may be found here and text of an accompanying Technical Explanation can be found here.

It is important to note up front that letter carriers and other postal employees’ pensions are not part of these multiemployer plans and are not at risk. This crisis impacts workers such as miners, truck drivers, carpenters, bakers and others. Most are private sector workers who, through no fault of their own, are at risk of losing their retirement after being promised their futures were secure.

The Pension Benefit Guaranty Corporation (PBGC) is a federally chartered corporation and the government insurer of multiemployer pensions. Without government intervention, the PBGC will become insolvent or go broke by 2025. This would not impact all multiemployer pension plans as many are well funded, but an estimated 1 million to 1.5 million Americans are in plans that are at risk of becoming insolvent within the next 20 years. Without the federal backstop of the PBGC, the retirement security of these Americans is therefore at risk.

The causes of this crisis are many and cannot be attributed to any single event or action, though perhaps the largest contributing factor was the financial crisis of 2007–2008 brought upon by the excessive risk-taking and crimes committed by individuals and organizations on Wall Street, especially the now defunct Lehmann Brothers. This financial crisis had wide-ranging repercussions that include a depreciation of such multiemployer pension plans. Other factors include fewer active workers that are paying into the plans and the fact that some employers have exited such plans without paying for their share of funding thereby leaving the remaining employers on the hook with for the liabilities of those who left.

On July 24, in a 264 to 169 vote, the House passed the Rehabilitation for Multiemployer Pensions Act of 2019 (H.R. 397), a $68 billion multiemployer pension bill with the support of 29 Republicans. Among many farther-reaching provisions missing from the Grassley-Alexander proposal, includes a 30-year loan program and stronger reinforcement of the PBGC. Many Republican lawmakers have referred to the House-passed bill as a “bailout,” though they agree that Congress must act to prevent these pension funds from failing.

Upon release of the GOP Senate white paper, Sen. Sherrod Brown (D-OH), the lead sponsor of the Butch Lewis Act of 2019 (S. 2254), which is the Senate version of H.R. 397, voiced his opinion.

“I’m glad to see Republicans in Congress have come forward with a pensions proposal of their own,” said Sen. Brown. “Just this week, the PBGC made clear that the longer we wait to solve this crisis, the more expensive it gets. I have concerns with some of the provisions put forth by Republicans, but I look forward to working together with Chairman Grassley and Senator Portman to find a bipartisan solution.”

“Wall Street destroyed our economy, and they got a bail out,” Sen. Brown continued. “These workers, retirees and small businesses did everything right. Congress has a responsibility to protect the pensions they worked hard for and earned. We need to act now, before it is too late. Failure is not an option for millions of Americans.”

While this proposal and pieces of legislation do not directly impact letter carriers and other postal employees, NALC hopes Congress can do what is necessary to protect the pensions, the retirements, and the future of American workers who are not to blame for the crisis they find themselves in. NALC will be sure to keep letter carriers informed on the latest updates to this issue.

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