Retirees and their families would be guaranteed their promised benefits, and the loan proceeds would be prohibited from being invested in risky investments.

According to the Senate and House Democrats who proposed the legislation, the money for the loans, and the cost of running the PRA, would come from the sale of Treasury-issued bonds in the open market to large investors such as financial firms and other institutional investors.

The PRA would then lend the bond sale proceeds to the troubled pension plans.

To make sure that the pension plans can afford to repay the loans, the terms would be 30 years at approximately 3 percent interest—thus buying time for the pension plans to focus on investing for the long-term health of the plan while at the same time the loans pay benefits owed to current retirees.

Additional requirements include reports demonstrating the relative health of the plans throughout the term of the loan, as well as intervention by the Pension Benefit Guaranty Corporation in the case of plans that can’t borrow enough to cover the cost of their obligations.

Lawmakers said in the report that more than 200 multiemployer pension plans covering 1.5 million plan participants are projected to fail, many within the next 10 years.

In addition, the PBGC has an exposure of $59 billion and is projected to become insolvent by 2025. The Congressional Budget Office estimates that the cost of backstopping the PBGC if it fails would be $101 billion over 20 years.

By making the pension plans borrow to pay benefits and invest to pay back the loans, both situations would see improvement.

As it is currently, if the PBGC steps in, it doesn’t pay out the full amount of the pension. Under this plan, retirees would receive the full amount promised.

Sen. Sherrod Brown, D-OH, wrote the bill, according to a KCRG report, named the “Butch Lewis Act” in honor of a now-deceased Teamster from Ohio.

In the report, Brown says that workers deserve the retirement they paid for and companies promised, adding that he believes pensions will be able to pay out with government backing and oversight. He’s quoted saying, “So many people who earned their pension will actually get their pension.”