A Congressional Joint Select Committee on Multiemployer Pension reform will not report legislation that would rescue up to 130 collectively bargained pension plans, according to an email obtained by BenefitsPRO. (Photo: Shutterstock)
[Update: A previous version of this story mistakenly reported the U.S. Chamber of Commerce backs the Butch Lewis Act.] A Congressional Joint Select Committee on multiemployer pension reform will not report legislation that would rescue up to 130 collectively bargained pension plans, according to an email obtained by BenefitsPRO.
The Joint Select Committee on Solvency of Multiemployer Pension Plans, created earlier this year, was comprised of 16 lawmakers from the House and Senate—eight Republicans and eight Democrats.
A November 30 deadline was set to report bipartisan legislation. But Republican and Democrat members could not agree on an “equitable” solution, despite getting “close” to a compromise, according to an email from an aide close to the committee.
Sen. Sherrod Brown, D-OH and retiring Sen. Orrin Hatch, R-UT co-chaired the Committee. Last year, Brown introduced the Butch Lewis Act, which would channel low-interest rate loans to pensions facing imminent insolvency over a 30-year period. Under the bill, retirees would not suffer cuts to pensions.
But the bill met resistance from Republicans on the Committee, who charged the legislation did not create the reforms to pension funding needed to avert a future crisis.
The Congressional Budget Office, which produces cost estimates of legislation after proposals emerge from committees, did produce two preliminary scores of Butch Lewis. The first put the cost of the bill at $100 billion. But a second score reduced the cost to $36 billion.
The Committee's inability to report legislation comes in spite of an array of economists that have warned of massive macroeconomic implications of letting the pensions, and the Pension Benefit Guaranty Corp.—the federal agency charged with insuring defined benefit plans—fail.
A discussion draft of legislation, released last week, included two alternative proposals to the Butch Lewis Act that would reduce pensions in plans that need assistance by 20 percent. PBGC's maximum guarantee for a worker in a collectively bargained plan with 30 years of service is about $13,000 annually. When PBGC exhausts its cash reserve in its multiemployer insurance program by the end of 2025, workers in failed pension plans will see retirement benefits cut up to 98 percent of scheduled payments.
Upwards of 15 percent of roughly 1,400 multiemployer plans are projected to be insolvent within 20 years.
Rep. Nancy Pelosi, D-CA, who will likely be made the majority leader when Democrats take control of the House of Representatives in the 116th Congress, is expected to reintroduce the Butch Lewis Act early next year. The bill's passage in the House would be all but guaranteed. But it would need 60 votes in the Senate, and a signature from President Trump, to become law.
Another possible option is for lawmakers to incorporate funding and reforms for pensions in the spending bill currently being debated.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
