As the Multiemployer Pension Reform Act of2014 comes closer to reality for tens of thousands ofretirees, new legislation is emerging from both sides of thepolitical aisle that would give union members the final say inauthorizing clawbacks in their pensions.

|

Passed as a rider to the omnibus spending bill in the eleventhhour of the last Congressional session, the controversial law givestrustees to multiemployer plans in “critical and declining status,”which means they are expected to be insolvent in the next 15 years,power to cut promised pension payments of active and retiredparticipants.

|

Those reductions have to be approved by the Treasury Department,and can be made only after sponsors and trustees have taken allreasonable measures apart from reducing benefits, like increasingsponsor and participant contributions, to avoid insolvency.

|

The law says the benefit reductions must be approved by vote byaffected union members.

|

If they vote the benefit reductions down, Treasury can overridethe vote, if the plan is deemed systemically important to thePension Benefit Guaranty Corp.’s multiemployer pension program.

|

The latest legislation introduced in the House ofRepresentatives, which is a companion law to a version introducedin the Senate by Rob Portman, R-Ohio, would not allow Treasury tooverride union members.

|

Rep. David Joyce R-Ohio and Tim Ryan D-Ohio co-sponsored theHouse version.

|

Last April, trustees of the financially strappedTeamsters Central States multiemployerplan told members they would be availing themselves of the newmeasures passed in MPRA.

|

The Central States plan covers the retirement benefits of about410,000 active and retired workers. It reportedly has about $18billion in assets, pays $2.8 billion in annual benefits, and onlytakes in about $700 million a year in contributions.

|

More aggressive legislation has been introduced byPresidential candidate Bernie Sanders,I-Vermont, which would repeal all of MPRA.

|

Rep. Marcy Kaptur, D-Ohio, also sponsored the Keep Our PensionPromises Act of 2015.

|

That both Republican and Democrat lawmakers are taking the leadin reforming or repealing MPRA may be expected, given Ohio’sprominence as a battleground state in national elections.

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

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.