Multiemployer Pension Reform: Contractor Resource Page
The Association of Union Constructors' (TAUC) membership of 2,000+ contractors all contribute to one or more multiemployer pension plans throughout the United States. These plans have historically provided a stable retirement fund for those union construction employees who work for our members and other union contractors. Unfortunately, the recent economic downturn has exacerbated the cumulative effects of three decades of statutory and regulatory changes to multiemployer pension plans.
This is further compounded by the addition of broader financial reporting requirements, tightening credit markets, and unprecedented competitive pressures on contributing employers, leading to an environment of decreased long-term viability of many plans as new employers are discouraged from participating and existing employers are encouraged to withdraw.
With the Pension Protection Act (PPA) expiring at the end of 2014, now is the time to make substantive changes to the statutory and regulatory framework. TAUC and many other groups have come together to advocate for a proposal that would allow the multiemployer pension plan community to address our own issues without the need for government or tax payer assistance.
On this page you will find all of the resources you will need to understand and educate others in the industry about the need for multiemployer pension reform.
In February of 2013, the Partnership for Multiemployer Retirement Security released a report outlining a series of reforms to ensure that multiemployer plans are able to continue to provide cost-effective and reliable retirement benefits to millions of working class Americans while protecting taxpayers.
To confront the challenges facing multiemployer plans, the report recommends a three-pronged approach:
1. Preservation: Proposals to Strengthen the Current System. These recommendations are designed to provide additional security for (a) the majority of plans that have successfully weathered the recent economic crises; (b) those that are on the path to recovery as measured against the objectives set forth in their Funding Improvement and/or Rehabilitation plans; and (c) those that, with expanded access to tools provided in the PPA and subsequent relief legislation, will be able to achieve their statutorily mandated funding goals.
2. Remediation: Measures to Assist Deeply Troubled Plans. Under current law, a small minority of deeply troubled plans are projected to become insolvent. For these plans, the report recommends that limited authority be granted to plan trustees to take early corrective actions, including the partial suspension of accrued benefits for active and inactive vested participants, and the partial suspension of benefits in pay status for retirees. To protect participants against potential abuse of these additional tools, the Commission further recommends the adoption of special protections for vulnerable populations including PBGC oversight and approval of any proposed actions, taking into consideration certain specified criteria.
3. Innovation: New Structures to Foster Innovative Plan Designs. To encourage innovative approaches that meet the evolving needs of certain plans and industries, the Commission recommends the enactment of statutory language and/or promulgation of regulations that will facilitate the creation of new plan designs that will provide secure lifetime retirement income for participants, while significantly reducing or eliminating the financial exposure to contributing employers. While the development of new flexible plan designs including, but not limited to, variable annuity and "Target Benefit" plans would permit adjustment of accrued benefits, in order to protect plan participants from this risk, these models would impose greater funding discipline than is required under current defined benefit rules. The adoption of such new models would be entirely voluntary and subject to the collective bargaining process.
On April 16, 2014 in San Antonio, TX TAUC and the Ironworkers International Union co-signed a joint letter to Congress in support of the NCCMP Multiemployer Pension Reform Proposal entitled "Solutions Not Bailouts." The letter provides an overview of why this issue is so important to the union construction industry as a whole, and provides an executive summary of what is includes in the reform proposal.
The letter was sent to all Chairmen, Ranking Members and members of the following committees:
- U.S. Senate Health, Education, Labor and Pensions Committee
- U.S. Senate Finance Committee
- U.S. House of Representatives Education and Workforce Committee
- U.S. House of Representatives Ways and Means Committee
To view the letter click here.
TAUC and four other national union trade associations (FCA, ICE-BAC, MCAA and SMACNA) teamed up as the Quality Construction Alliance to push for pro union construction legislative and regulatory items during the April 30 - May 2, 2014 National Legislative Issues Conference. Multiemployer Pension Reform took center stage at a Panel Presentation hosted by Bloomberg Government.
U.S. GAO released a report in late March 2013 on the current status of multiemployer pension plans in the United States, and found that "the most severely distressed multiemployer plans have taken significant steps to address their funding problems and, while most plans expected improved financial health, some did not. A survey conducted by a large actuarial and consulting firm serving multiemployer plans suggests that the large majority of the most severely underfunded plans--those designated as being in critical status--either have increased or will increase employer contributions or reduce participant benefits. In some cases, these measures will have significant effects on employers and participants. For example, several plan representatives stated that contribution increases had damaged some firms' competitive position in the industry, and, in some cases, threatened the viability of such firms. Similarly, reductions in certain benefits--such as early retirement subsidies--may create hardships for some older workers, such as those with physically demanding jobs. Most of the 107 surveyed plans expected to emerge from critical status, but about 25 percent did not and instead seek to delay eventual insolvency."
GAO recommends "Congress should consider comprehensive and balanced structural reforms to reinforce and stabilize the multiemployer system."
The MCAA has once again teamed up with Horizon Actuarial services to update their report entitled Inventory of Construction Industry Pension Plans, and TAUC is pleased to offer its members a free copy at the download link below.
The report is a valuable resource for all contractors involved with multiemployer pension plans. It provides an overview of key trends in plan demographics, cash flows, investments, funding, costs and expenses from 2002-2011.
The purpose of this report is to summarize and analyze key trends at work impacting multiemployer plans over the past decade by taking a close look at this amazing compendium of information, we can better understand how these construction industry plans have evolved and where they may be headed.
TAUC continues to push for statutory and regulatory fixes to the Pension Protection Act (PPA), and will ensure we keep our membership up to date on any additional information as it becomes available. For more information, please contact Senior Director of Membership Services and Government Affairs Todd Mustard via email at firstname.lastname@example.org or via telephone at (703) 524-3336 x 112.
TAUC - Ironworkers Joint Support Letter Congress