WASHINGTON—The $1.9 trillion COVID-19 relief bill now pending in the Senate includes a long-sought measure to rescue the nation’s endangered multiemployer pension plans.
The American Rescue Act, passed by the House Feb. 27, incorporates language from the Butch Lewis Act, sponsored by Sen. Sherrod Brown (D-Ohio). Named after the late leader of Teamsters Union Local 100 in Ohio, it would create a Treasury Department agency called the Pension Rehabilitation Administration that would sell bonds and use the proceeds to give grants to troubled pension plans. That money, according to the AFL-CIO’s pension team, would enable underfunded multiemployer pension plans to pay all benefits owed to retirees through 2051 without any cuts, giving them time to become solvent again.
“The Butch Lewis Act and the pension provisions in the American Rescue Act achieve the same substantive goal,” Sen. Brown’s office told LaborPress. “Fundamentally, they both provide funding to help these plans remain solvent, protecting thousands of Americans’ retirement and ensuring that small businesses and taxpayers are not left in the lurch.”
The two modifications to Brown’s original bill, the AFL-CIO said, are that the federal aid will be grants, not loans, and that in ten years, multiemployer plan premiums will be increased to $52 per participant, from the current $31 plus adjustments for inflation.
Congressional Democrats are trying to pass the American Rescue Act through the budget-reconciliation process, which means it can’t be filibustered.
“We are optimistic that the provisions will make it through the Senate,” an AFL-CIO spokesperson told LaborPress. “Senators should have no problem understanding that the financial stress the pandemic has placed on our country makes it imperative that the hard-earned retirement income of working men and women — for which they sacrificed wage increases and they are counting on — is protected.”
A growing crisis
Multiemployer pension plans cover more than 10 million people who regularly work for different employers, such as truckers, miners, construction workers, stagehands, and musicians. More than 1.3 million workers and retirees are in the more than 120 plans in danger of becoming insolvent, as the number of active workers contributing to them isn’t enough to cover payments promised to retirees. Many plans also lost both investments and contributing workers during the Great Recession.
“Reckless Wall Street behavior, industry deregulation, and employers’ deviant use of corporate bankruptcy have threatened the financial security of millions who’ve worked hard only to have that promise robbed from them,” AFL-CIO President Richard Trumka, AFL-CIO Secretary-Treasurer Liz Shuler, United Food and Commercial Workers International President Marc Perrone, and Joseph Sellers, general president of SMART, the International Association of Sheet Metal, Air, Rail and Transportation Workers, said in a joint statement Feb. 27. “The current pandemic has only exacerbated the dire situation and the need for immediate action.”
More than one-third of the workers affected are Teamsters, as the deregulation of trucking slashed the number of union drivers. The Teamsters say more than 50 of their pension plans would be immediately eligible for aid if the relief bill passes. Those include the Central States Pension Fund, which has about 400,000 participants, and is projected to go broke in 2025, threatening cuts as high as 70% of benefits. Other Teamsters plans would become eligible in 2022.
“For my entire administration, the Teamsters have been fighting for members and retirees who only want to receive the nest eggs that they’ve worked so hard to earn for their golden years,” General President Jim Hoffa said in a statement Feb. 27. “Now we are one step closer towards fulfilling that promise.”
Other large plans on the endangered list include the Bakery and Confectionery Union and Industry International Pension Fund, which has more than 110,000 people enrolled, and the United Mine Workers of America 1974 Pension Plan, with more than 100,000. The American Federation of Musicians and Employers’ Pension Fund applied to the Treasury Department for permission to reduce benefits in 2019, on the grounds that it had entered “critical and declining” status — projected to run out of money to pay benefits within 20 years.
Sen. Brown first introduced the Butch Lewis Act in 2017. It passed the House in 2019, but went nowhere in the Senate. A joint House-Senate committee formed in 2018 to create a compromise was unable to agree on a measure that could be endorsed by 10 of its 16 members. House Education and Labor Committee Republican leader Virginia Foxx (R-N.C.), who served on that committee, said Feb. 27 that including the Butch Lewis Act in the COVID relief package was “taxpayer bailouts for mismanaged union-run pensions.”
The Butch Lewis Act would also restore full benefits for retirees in plans that have already cut them, such as Ironworkers Local 17 in Cleveland and the 35,000-member New York State Teamsters Conference Pension and Retirement Fund. It would also increase the maximum amount of insurance the federal Pension Benefit Guarantee Corporation can carry, and require each plan that receives assistance to file regular status reports with the PBGC and Congressional committees.
Protecting multiemployer pensions, Brown said in a statement Feb. 17, would also prevent the PBGC, which pays partial benefits to plans that go bankrupt, from collapsing under the weight of failed plans. As of last December, he said, its Multiemployer Program was “highly likely” to become insolvent by 2026, as it had less than $4 billion in assets and more than $66 billion in liabilities.
1 thought on “COVID Relief Bill Includes Long-Sought Pension Rescue”
Give these men and women back their money! And the back pension they took they worked and put their money trusted hands of the union give all the money back