Since 2014, NECA has been working to reform and modernize the multiemployer pension (MEP) system through the adoption of composite plans. The main legislative vehicle NECA has advocated for is the passage of the Giving Retirement Options to Workers Act
Earlier this year, Congress created a new bipartisan and bicameral special committee to help devise a comprehensive solution to address the shortcomings of the current system, solve the financial problems of other non-NECA pension plans, and address the future needs of the MEP system. The Joint Select Committee on Solvency of Multiemployer Pension Plans
(the JSC) has until November 30, 2018 to craft a legislative solution for Congress to consider.
That said, we have had a chance to review a proposed first-iteration preliminary draft plan presented by the JSC and we believe it is, as written, structurally detrimental to NECA plans nationwide.
The draft plan has several flaws of major concern for NECA contractors:
- It increases premiums in funding for the Pension Benefit Guaranty Corporation (PBGC) to a catastrophic point.
- It drastically lowers discount rates and will have a serious negative zone impact on plans.
- It implements an excessively punitive exit premium charge so that contractors will be forced to remain in the system and others willing to join the system will not do so.
- The proposal does not explicitly mention the inclusion of the GROW Act.
NECA has long worked towards the responsible restructuring of the multiemployer pension system. The lack of composite plans alone is a challenge for our industry’s acceptance and when combined with the aforementioned concerns, we believe the JSC must substantially rewrite their proposal before the Committee meets on November 29, 2018. Having participated in multiemployer pension reform over the last few Congressional lame duck sessions, our team understands the ever-changing and fluid nature of these discussion drafts. We are committed to keep our seat at the table and will do all we can to positively help improve the multiemployer pension system.
NECA Government Affairs will continue to work alongside multiple industry partners in both management and labor to express our concerns with the draft proposal, advocate for commonsense solutions, and continue to keep you informed on how these discussions proceed. Please be prepared to weigh in with your Senators and Representative in the coming days.
Thank you for your time and attention to this critically important issue.