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House Passes Bill to Aid Endangered Pension Funds

July 25, 2019

By Steve Wishnia

New legislation still has major hurdles to overcome.

WASHINGTON—The House has approved a bill to rescue multiemployer pension funds whose collapse could cut off benefits for 1.3 million people, but it now faces an uphill battle in the Senate.

The Rehabilitation for Multiemployer Pensions Act, sponsored by Rep. Richard Neal (D-Mass.), passed by a 264-169 margin July 24, with 29 Republicans voting yes and no Democrats voting no. Also called the Butch Lewis Act after a retired Teamsters Union leader in Ohio who died in 2015, the bill would create a Treasury Department agency called the Pension Rehabilitation Administration that would sell bonds and use the proceeds to give 30-year loans to troubled pension plans, to enable them to pay benefits owed to current retirees and give them time to become solvent again. A Senate version was also introduced on July 24.

“After years of tireless work by Teamster retirees, members and local union officers, the House today rewarded their efforts by passing this critically important legislation,” Teamsters General President Jim Hoffa said in a statement. “Lawmakers cannot delay any longer—this legislation must now be approved by the Senate so that American workers retain their hard-earned retirement security.”

The Teamsters’ Central States Pension Fund, with some 400,000 participants, is the largest of the estimated 130 to 300 multiemployer pension plans in danger of failing. These plans, primarily in trucking, mining, construction, and entertainment, have suffered massive losses as the number of active workers contributing to them has been eroded by employers going out of business and the growth of nonunion employment, as well as investment losses in the Great Recession of 2008-09. 

More than 20 of these plans have applied to the Treasury Department for permission to reduce benefits. “I have heard the message time and again from retirees in my district and across this nation: They worked for decades to earn these pensions and they cannot sustain these massive cuts,” Rep. Marcy Kaptur (D-Ohio) said during the House debate.

Some of the endangered plans, she added, “are large enough to take down the entire Pension Benefit Guarantee Corporation” if they failed. The PBGC is the federal backup agency that guarantees a minimum level of benefits to the 10 million Americans in multiemployer pension funds if their plan goes bankrupt.

“Pensions are not ‘benefits’ given as a gift from employer to employee, they are payment for work that was already done,” Rep. Tim Ryan (D-Ohio) said in a statement after the vote. “And when these pensions are cut or dissolved, it is a clear breach of contract.” 

Rep. Morgan Griffith (R-Va.), one of the Republicans who voted for the bill, said in a statement that the bill had its flaws, but the cost of doing nothing would be much more. “This is the only plan out there that potentially prevents the Federal Government from picking up the full tab,” he said. “Its chief beneficiaries are people who have counted on these pensions, whether a retired worker drawing on it to assist in caring for his disabled child or the widows of coal miners.”

Other Republicans were virulently opposed. Rep. Virginia Foxx (R-N.C.), the GOP leader on the House Education and Labor Committee, blamed the pension crisis on “reckless mismanagement by union leaders.”

After a bill supporter compared the crisis to a house on fire, Foxx told the House that the bill “gives more gasoline to the arsonist who started the fire.” She also attacked it for letting pension plans “to continue to promise new benefits, allowing their liabilities to grow.”

That dynamic may play out in the Senate, where a group of 27 Democrats, led by Sherrod Brown of Ohio, Tina Smith of Minnesota, Joe Manchin of West Virginia, and Minority Leader Charles E. Schumer, is sponsoring it. The cosponsors include presidential candidates Cory Booker, Kamala Harris, Bernie Sanders, and Elizabeth Warren.

Brown said in a statement that he was committed to continuing to work with Senator Rob Portman (R-Ohio) “to find a bipartisan solution that can pass the Senate.” However, a bipartisan joint committee headed by Brown and Sen. Orrin Hatch (R-Utah) failed to reach agreement on pension legislation last year. 

Senate Majority Leader Mitch McConnell (R-Ky.) was unavailable for comment. Lamar Alexander (R-Tenn.), chair of the Senate Health, Education, Labor and Pensions Committee, did not respond to a request from LaborPress. Alexander has a generally anti-union record, although he abstained from campaigning against the United Auto Workers’ efforts to organize Volkswagen’s Chattanooga plant. In 2017, he cosponsored a bill that would have prohibited unions from being recognized unless they won a majority of all eligible employees, not just those who voted. 

Meanwhile, the House is considering a separate measure that would transfer surplus funds from the Abandoned Mine Reclamation Fund to the United Mine Workers of America’s pension plan in order to help it pay benefits and regain an adequate level of funding. The bill, the Miners Pension Protection Act, is sponsored by Rep. David B. McKinney (R-W.Va.) and has drawn some bipartisan support, with 54 Democrats and 16 Republicans—largely from coal-mining states—signed on.

“I think really what it boils down to is the size of the pocketbooks and people involved,” UMWA Secretary-Treasurer Levi Allen told West Virginia Public Radio after a July 23 subcommittee hearing. “If you’re helping people with small pocketbooks, we have a whole bunch of people out there that want to call that socialism. But if you’re helping people with big pocketbooks, they call that capitalism for some reason.”

July 25, 2019

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