AGMA will join the FCA International in a legislative “fly in” this week to meet with members of the Senate Finance Committee and the Senate Health, Education, Labor, and Pension (HELP) Committee to discuss the status of multiemployer pensions and our Solutions Not Bailouts proposal.
For 18 months, labor management groups worked on this proposal. For example, AGMA, together with FCA, has participated in five MEP legislative fly-ins. After all, the viability of our business is at stake. Many AGMA contractors cannot sell their business because of withdrawal liability and we do not want to saddle the next generation with that liability. Getting bonded and receiving bank credit is becoming harder because of liability and the new banking rules. We cannot be competitive and we could be driven out of business. Ultimately, the jobs with good pay and benefits will be gone. We, the employers carry all the risk when plans get in trouble.
One of the foundations of our Solutions Not Bailouts proposal is that trustees of deeply troubled multiemployer plans need additional tools to effectively address their funding challenges. While this flexibility may result in short-term benefit sacrifices for the worst-off plans, the long-term impact will be that retirees in these plans will receive dramatically higher benefits than is possible under current law. The longer Congress waits to take action, the more employers, participants and trustees will feel the uncertainty that comes with the approaching 2014 sunset of the multiemployer funding provisions of the Pension Protection Act (PPA). This growing uncertainty will only further destabilize the multiemployer pension system, force additional employers to opt out, and shake the confidence of workers and retirees in the stability of their retirement pensions.
WHY WE CANNOT WAIT FOR MULTIEMPLOYER PENSION REFORM Employers need a system that does not place their businesses at risk, and employees and retirees need to know that their retirements are secure. An extension of the PPA will only serve to delay some of these problems, and will fail to address any of the systemic issues while those problems become harder to solve. The challenges facing the multiemployer pension system require urgent action and they include:
• Benefit Losses Become More Severe: The longer Congress waits to take action, the more severe benefit losses will become for those plans in the worst financial shape. Absent an unlikely taxpayer bailout, retirees in deeply troubled plans will face automatic and dramatic benefit reductions when the plans reach insolvency. The sooner the worst off plans are given the ability to take action to preserve benefits, the better of their participants will be. Waiting only means more severe impacts for retirees, workers and employers.
• PBGC Insolvency: The longer Congress waits to take action, the closer the Pension Benefit Guaranty Corporation (PBGC) gets to insolvency and the worse that will be for participants. A June 2014 PBGC report along with baseline projections issued in early 2014 by the Congressional Budget Office (CBO) show the agency could find its multiemployer fund exhausted by 2021 – just seven years from now. These projections make real for more than a million participants in at-risk multiemployer plans the possibility of seeing their pensions disappear entirely. Multiemployer participants cannot afford the automatic and drastic cuts that will come if Congress does not enact reforms.
• Keeping Employers in the System: The longer Congress waits to take action, the more participating employers will leave the multiemployer system. Facing growing risks, employers are forced to consider paying their withdrawal liability, cutting special deals or in some cases, bankruptcy, to exit the system and leave retirees behind while also weakening the system for other participating employers. The bargaining parties urgently need new, innovative plan designs that limit the financial risk for the employers while providing effective benefit protections for plan participants.
For more information on Solutions Not Bailouts, contact the AGMA Office at 215-854-0129.