Grassley on Multiemployer Pension Reform
Prepared Floor Remarks by U.S. Senator Chuck Grassley of Iowa
Chairman, Senate Finance Committee
Tuesday, June 30, 2020
I reclaimed the gavel of the Finance Committee at the start of this Congress,
one of my top priorities has been to fix the failing multiemployer pension
system and help secure retirement benefits of more than 10 million workers and
retirees in multiemployer plans.
is especially important since 150 multiemployer plans have failed or terminated
already and another 40 are expected to run out of money in the coming 10 years.
more plans are expected to fail in the decade after that. In all, more than 1.5
million Americans will be affected by the failure of these plans.
virus has had its effects, although we don’t yet have a firm read on how much
the economic downturn has affected plan funding or the Pension Benefit Guaranty
Corporation’s multiemployer insurance fund. We expect more details on those
issues later this summer.
one thing we do know for sure is that this problem is only going to get worse
and more costly to resolve as time goes on. And, we have a real opportunity to
get it fixed this year.
November, HELP Committee Chairman Lamar Alexander and I released a draft plan
to reform the multiemployer pension system, protect retirees, and secure the
PBGC’s insurance fund.
received many thoughtful and constructive comments, and we’ve worked over the
past several months to address those comments and make our reform plan as
effective and balanced as possible.
what’s standing in the way?
short answer is that the Democratic Leadership doesn’t seem too interested in
working to find a bipartisan solution.
seem to think the no-strings bailout they tried to force into the CARES Act
in March and that now appears in the House’s Heroes Act is a “take it or
leave it” proposition.
I hope they’re not playing election-year politics with the retirement security
of millions of Americans.
a solution until next year is only going to make it more costly, and it will
still require bipartisan support.
can and must do better if we want a healthy multiemployer pension system for
the long run.
put this into perspective, let’s consider what it means to do nothing and leave
current law unchanged, versus what Chairman Alexander and I propose in several
for retiree benefits, doing nothing means that PBGC insurance fund runs out of
money in 2027. If the fund goes broke, that means PBGC will only be able to pay
benefits equal to the premium revenues it receives, which are minimal compared
to potential claims.
means retirees could see benefit cuts in the range of 90 percent.
me repeat that: 90 percent.
contrast, our plan would preserve benefits and ensure solvency of the PBGC’s
multiemployer system over the long run. It would save many failing plans by
having the government pay a portion of benefits earlier than under current law.
would help the plan to stretch its assets much longer and preserve benefits as
promised under the plan.
for plans that aren’t able to be saved, our proposal would increase the
insurance guarantee amount from the current $12,870 maximum for a retiree with
30 years of service to over $20,000.
will be preserved with the help of additional support from employer and union
stakeholders, and a modest retiree insurance premium for retirees in plans that
face financial challenges.
premium would be no more than 10 percent and eliminated entirely for older and
disabled retirees, as well as for plans that are well funded. That’s far better
than a 90 percent cut if we do nothing.
nothing also means more and more plans will become underfunded, or worse,
insolvent, resulting in major benefit cuts and only a small amount of benefits
covered by the PBGC for as long as its insurance fund holds up.
Grassley-Alexander plan would provide relief to the failing plans, and without
an up-front benefit cut.
would restore the benefit cuts that some plans chose to make under the
Multiemployer Pension Reform Act since 2014, and it would increase the PBGC
insurance guarantee amount by more than 50 percent.
for other plans not on the brink, doing nothing would mean that the current
minority of multiemployer plans that are better funded would continue to
shrink, with many more likely to move into the danger zone in the coming years.
plan would provide significant funding reforms to help prevent that from
variables like the discount rate that plans use to estimate future asset and
liability values would be subject to new standards to help ensure that plans
are funded to provide the benefits promised.
we have taken to heart comments that those changes need to be phased in over a
sufficient period to allow plans to transition smoothly.
plan would institute other changes to improve the early warning system so
multiemployer plans can avoid flirting with the underfunding danger zone.
also provides needed oversight for plans in trouble. And it would provide
unions and employers the opportunity to set up “composite plans,” a new type of
hybrid retirement plan that enjoys bipartisan support.
fundamental tenet of the Grassley-Alexander reform plan is that all
stakeholders have a role in fixing the multiemployer pension system that has
been on its current path to failure for nearly 40 years.
and unions have a role in ensuring that adequate contributions are made to the
plans to ensure sufficient funds to pay the promised benefits.
have a role in ensuring that that the PBGC insurance fund backing up those
benefits is adequately funded through reasonable premiums, with higher risk
plans contributing more for that insurance backstop.
and retirees have a role in contributing to the insurance coverage that protect
their benefits just like they do now for auto, home, and life insurance.
last but not least is the Federal government – yes, the government had a role
in setting out the rules that have governed these plans and regulating the
operation of these plans.
government has a role in fixing the resulting situation we are in today. And
that means taxpayer funds may be needed to help the PBGC provide the partition
relief for plans on the brink of failing.
those funds must come with important reforms to ensure that taxpayers are not
back on the hook again in five or 10 years.
no matter how sensible of a reform plan we come up with, it has no chance of
success unless our Democratic colleagues are willing to sit down and discuss a
“my way or the highway” approach is not the pathway to a successful solution.
That was clear when they tried it during the negotiation of the CARES Act
invited our colleagues on the other side of the aisle, and Speaker Pelosi as
well, to join me and Senator Alexander in finding a bipartisan solution. That
invitation stands, and we remain ready to talk.
use the time we have to negotiate a balanced, sensible solution to this
increasingly critical problem so we are ready for whenever an opportunity
presents to enact that solution this year.
retirees in each of our states, the businesses and unions that support these
pension plans, and our long-term federal budget deserve no less.
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