Welcome to the first in a series of articles from the Communications Subcommittee of the Local 802 Executive Board. Our mission is to expand direct communication between musicians and their representatives at Local 802. To this end, we are currently visiting pits and venues, listening to questions and concerns about all aspects of our business, including conditions encountered in the workplace. With this series of articles, we hope to answer, for a wider audience, many of the questions raised at these meetings.
The secondary aim of this series is to provide our membership with data regarding their concerns. The data we will provide comes from our own research, and wherever possible, we will cite our sources. In addition, our sources will be provided, which we recommend you examine in order to learn more and judge for yourselves whether we have represented them fairly.
Finally, we would like to say that we may not, in every article, state a Local 802 position. On some issues, we will offer data to help our members formulate questions and ultimately make their own decisions. On these sorts of complex issues, the Communications Subcommittee welcomes input from members. Such input, in some cases, would help Local 802 to formulate a position to better represent us all.
If you have further questions about any union business, feel free to contact any or all of us at the e-mail addresses listed at the end of this article.
In this first article we will describe some of the proposals the Joint Select Committee on the Solvency of Multiemployer Pension Plans has before it. The committee was formed as part of the Continuing Resolution bill of Feb. 9, 2018 and comprises four Republican senators, four Democratic senators, four Republican House members and four Democratic House members. The co-chairs are Senator Orrin Hatch, R-Utah and Senator Sherrod Brown, D-Ohio. The committee is tasked with finding a solution to the problem of declining multiemployer pension funds by Nov. 30.
If its final proposal gets the support of at least five Republicans and five Democrats from the committee, it is guaranteed an expedited vote on the floor of the House and Senate. However, the Continuing Resolution does not guarantee that it will be signed into law or implemented immediately by the Executive Branch. The committee will decide if it wants to endorse one of these listed proposals, combine two or more of them, or go an entirely different route and formulate a new proposal. We will know by Nov. 30 at the latest.
This is a list of some of the proposals before the committee thus far.
The Butch Lewis Act (S 2147, introduced Nov. 16, 2017)
- Establishes the Pension Rehabilitation Administration within the U.S. Treasury with a trust fund for making low-interest 30-year loans to pension plans.
- Loans are available to plans either in critical and declining status or insolvent.
- Plans receiving loans will not cut benefits and if benefits have been cut they will be restored.
- Plans that have cut benefits are required to apply for loans
- Loan proceeds will be used to purchase annuity contracts to pay benefits to participants in pay status.
SOURCE: The full text is posted at www.bitly.com/PensionSource1
The Emergency Multiemployer Plan Financing Act (proposed March 19, 2018)
- Authorizes the Pension Benefit Guaranty Corporation (PBGC) to make low-interest loans of up to $100 billion in aggregate that comply with the Federal Credit Reform Act (FCRA)
- Plans are eligible if they are in critical and declining status and if they have applied to Treasury to make benefit cuts under the Multiemployer Plan Reform Act (MPRA) and have either been denied or found ineligible for other reasons
- The cost of subsidizing the loan will: 1) be borne by the government and no benefits are cut, or 2) require a 20 percent benefit cut with proceeds used to subsidize the loans, and if a larger amount is needed it is borne by the government, or 3) demand as large a cut as necessary to subsidize the loan, and the government does not bear any cost of the subsidization.
SOURCE: The full text is posted at www.bitly.com/PensionSource2
The Giving Retirement Options to Workers (GROW) Act (HR 4997, introduced Feb. 13, 2018)
- Allows plans in the “green” zone to form a composite plan; accruals to the defined benefit would be frozen and all new accruals would be in the composite plan
- The old plan (legacy plan) would continue to draw contributions and pay out benefits until all benefits earned before the “freeze” are paid
- Composite plan is designed to pay benefits as annuities for life
- If funding level drops below 120 percent, remedial action must be taken, including slowing of accruals and/or benefit cuts
- Gets rid of withdrawal liability; employers are liable only for what is in the collective bargaining agreements (CBAs)
SOURCE: The full text is posted at www.bitly.com/PensionSource3
The UPS Proposal (proposed April 14, 2017)
- Critical and declining funds are eligible for 30-year loans to cover their cash flow shortages for five years. During those five years, the fund pays interest on the loan. If the cash flow problem is fixed within five years, the fund begins to pay back the principal.
- The aggregate amount in loans is estimated to be $22 billion to $30 billion
- Benefits would be cut 20 percent representing “shared sacrifice.” The cuts would remain in place until the plan is in the “green” zone. Benefit cuts remain in the asset pool as the fund tries to grow its assets.
- A risk reserve pool would be created if investment earnings on the loan proceeds exceeded the cash flow shortfall. This could be drawn upon if a fund’s critical and declining status would be made worse by loan repayments.
- If the fund is still in critical and declining status after five years, a new loan amount is recalculated for the next five years.
SOURCE: The full text is posted at www.bitly.com/PensionSource4
The Department of Labor (DOL) Budget Proposal (released May 23, 2017)
- l Permits the PBGC to collect increased premiums phased in over ten years from plans in an amount of $16 billion aggregate over the next ten years
- l Introduces a variable-rate premium that is based on the level of a plan’s underfunding.
- l Authorizes the PBGC to waive the variable rate if it threatens to exacerbate a troubled plan’s underfundedness.
- l Authorizes an “exit premium” for employers leaving the system. The “exit” rate would be calculated on the additional risk the exit places on the remaining employers.
SOURCE: The full text is posted at www.bitly.com/PensionSource5
All of these proposals except the DOL’s proposal and the GROW Act contemplate low-interest, government-backed loans to the most deeply troubled plans. The GROW Act is designed for plans that may be looking to avoid the same problems the underfunded plans are having, but only “green” zone plans would be allowed to participate.
The DOL proposal only addresses the PBGC multiemployer program shortfall, not the many plans that are deeply underfunded. More about both topics in a future article.
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