Letters Urging Support of Multi-Employer Pension Reform

7/23/2019 Letters Urging Support of Multi-Employer Pension Reform

http://slidepdf.com/reader/full/letters-urging-support-of-multi-employer-pension-reform 1/19

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December 9, 2014

U.S. House of RepresentativesWashington, D.C. 20515

Re: Support for Multiemployer Pension Reforms

Dear Representative:

The National Coordinating Committee for Multiemployer Plans (NCCMP) strongly supports the

bipartisan agreement between Chairman John Kline and Ranking Member George Miller of the

House Education and Workforce Committee to reform the multiemployer pension system and

implement key provisions of the Solutions Not Bailouts proposal.

The Solutions Not Bailouts proposal was the result of 18 months of deliberation by the

NCCMP’sRetirement Security Review Commission which, was made up of approximately 40

labor and management organizations. The proposal helps troubled plans avoid insolvency, puts

the plans recovering from the economic downturn on firmer ground, and helps those plans – and

retirees – in trouble avoid losing everything. Importantly, this proposal also protects taxpayers by

avoiding a massive taxpayer-funded bailout that would cost billions. We stand with both labor

and business leaders today in support of those recommendations and urge you to pass the

bipartisan proposal being finalized in the Education and Workforce Committee.

Critics of the proposal and the bipartisan agreement claim that they take benefits away from

retirees. The hard truth is that the retirees in troubled plans are going to lose benefits under

current law, and these vital reforms will preserve benefits above what current law provides. For

example, an actual construction industry plan in the Midwest will exhaust its assets in

approximately 15 years, at which point current law will impose a mandatory benefit reduction of

50% on all participants, including retirees. These reforms will provide the trustees with the

option of voluntarily adopting a 10% benefit reduction today, which would prevent the looming

catastrophe. This is what we mean when we say that the proposal preserves benefits.

The most recent claim from those who stand in the way of the bipartisan agreement is that it has

been rushed through and debated in secret. For nearly two years, and following five

Congressional hearings and several public forums, we have worked with both labor and business

stakeholders, and importantly, Members of Congress, to debate and act on the provisions of the

Solutions Not Bailouts. Our most prominent critic, AARP, has testified before Congress and



"

participated in public forums in opposition to the proposal. While they have produced no

alternative proposal, they have had extensive opportunity to participate in the process and voice

their opinion. The time for debate is over. Now is time for action.

Our critics have been very vocal, yet they remain highly outnumbered by our

supporters. Attached to this letter are numerous letters of support that the proposal has received

from various labor and management organizations. Each and every one of these organizations

remains 100% committed to the enactment of these reforms.

Thank you for your attention to these important matters. We encourage you to pass these much-

needed, bipartisan reforms.

Sincerely,

Randy G. DeFrehn



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1501 Lee Hwy, Ste 202 ● Arlington, VA 22209 ● 703!"#$!3336 ● Fax: 703!"#$!3364 ● www.tauc.org

1750 New York Ave. NW, Ste 400 ● Washington, DC 20006 ● 202 !383!4800 ● Fax: 202!347!1496 ● www.ironworkers.org

April 16, 2014

Sent to the Chairmen and Ranking Members with copies to all members of:

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

Washington, DC

Re: Please support the Solutions Not Bailouts multiemployer pension plan reform proposal

Dear Representative:

The Association of Union Constructors (TAUC) and the International Association of Bridge, Structural,

Ornamental and Reinforcing Iron Workers have joined together as representatives of labor and

management to urge Congress to support the multiemployer pension plan proposal that has been

developed by the Retirement Security Review Commission of the National Coordinating Committee for

Multiemployer Plans (NCCMP). This proposal is known as Solutions Not Bailouts, and it will

significantly benefit both the 100,000 skilled men and women in the Iron Workers and the 2,100

employers that belong to TAUC by making the retirement plans in our industry more secure. This will be

done without a government handout. It will be accomplished by labor and management working out

solutions together through collective bargaining and cooperation at the pension fund management level.

If left unresolved, or if the relief comes too late, the crisis facing multiemployer pension plans will be

devastating not only to our members, employees and retirees, but potentially harmful to many others,

including the nation’s entire pension retirement system.

Absent the reforms outlined in the Solutions Not Bailouts proposal, it is an absolute certainty under

current law that many deeply troubled plans will become insolvent and benefits received by both current

and future retirees will be reduced – at best, to the level guaranteed by the Pension Benefit Guaranty

Corporation (PBGC).

Even under the most optimistic scenario, benefits for retirees would be drastically reduced. For instance a

retiree with 30 years of service would see their pension reduced to a mere $12,870 annually.

Unfortunately, , the PBGC already faces a very significant funding shortfall – in excess of eight billion

dollars as of September 30, 2013 which calls into question its ability to provide the statutorily guaranteed

benefits. In order for the PBGC to fulfill its legal obligations should these plans become insolvent, it





would require billions of dollars in additional funding from Congress, or through crushingly high

increases in the PBGC premium structure. Should Congress choose not to increase funding for the PBGC,

Government Accountability Office Director Charles Jeszeck testified that the PBGC would be forced to

pay benefits from the cash flow produced by premium payments – thereby reducing the maximum

monthly benefit to below $125. That is not an acceptable solution for anyone involved.

Since the passage of the bipartisan Pension Protection Act (PPA) in 2006, TAUC and the Iron Workers

have worked together to improve the status of many multiemployer pension plans. This has meant

significant increases in pension contributions, reductions to the retirement accruals of future retirees

(today’s active employees), and the consolidation of some plans. These aggressive actions taken jointly

by labor and management have helped place many plans on the path to long-term sustainability.

Undoubtedly, these actions have strengthened the retirement benefits of these plans’ participants.

Yet, due to the unexpected financial collapse of 2008, a number of multiemployer pension plans still

stand on the brink of financial collapse. These deeply troubled plans have exhausted the remedies

available under current law, and without additional options, they will face insolvency in the relatively

near future.

In an attempt to avert this crisis, labor and management from numerous industries worked together for

approximately eighteen months to analyze all possible solutions and develop a consensus position. This

joint labor-management effort led to a report issued in 2013 by the NCCMP, which TAUC and the Iron

Workers fully support. The NCCMP Recommendations included in the proposal Solutions Not Bailouts

offer a measured, fair, and viable solution to the difficult but necessary task of rescuing troubled plans

from the path to insolvency.

The proposal’s recommendations fall into three basic categories: (1) recommendations that will preserve

and strengthen the current system; (2) measures designed specifically to help deeply troubled plans; and

(3)innovative proposals for alternative plan design structures to address the structural deficiencies of thecurrent system and enhance retirement security by expanding the current base of contributing employers.

Proposals to preserve and strengthen the current system include technical corrections to the PPA

designed to strengthen the financial well-being of plans that have been able to regain “green zone” status

and facilitate the more financially challenged plans to access the tools of the PPA. Measures designed to

help deeply troubled plans have been carefully constructed to enable plans that face impending insolvency

to gain early access to statutory requirements that are imposed upon them by current law when they

become insolvent – the reduction of accrued benefits - but only to the extent necessary to preserve

solvency, with the net result of preserving such plans and preserving participants’ benefits (usually

substantially) above those which they will receive when the plans ultimately become insolvent. In doing

so, the Commission recommended strong participant protections including the ability to protectvulnerable retirees and survivors (e.g. those of advanced age or are disabled) and requiring government

approval of fund trustees’ decisions to utilize such measures. Reducing benefits is not a tool the trustees

could wield recklessly. In fact, labor and management trustees would need to agree that it is necessary in

order to save the plan and the PBGC would need to approve any such plan to ensure that the interests of

all plan participants were given equitable consideration.





Finally, the Commission proposes changes to the tax code to encourage the creation of innovative plan

designs beyond the current defined benefit or defined contribution models, that will provide participants

with the regular monthly income they have earned and come to expect from the defined benefit model,

but will limit the contributing employers’ residual liabilities currently provided by defined contribution

plans by greatly reducing or completely eliminating withdrawal liability. This strategy offers the real

prospect of plan expansion and positive demographic trends. One new plan design would retain thelifetime annuity income feature of defined benefit plans for participants and their beneficiaries so no

participant has to fear outliving their retirement savings, along with pooled longevity risks; and the

generally higher returns and lower fees obtained from trustee negotiated professional asset management.

While the elimination of withdrawal liability will shift the risk of asset performance to plan participants,

the Commission’s recommendations include significantly more conservative funding targets and other

protections designed to make it less likely that benefits would require future adjustments. Also, the fact

that these designs minimize or eliminate withdrawal liability for the benefits accrued prospectively will

encourage continued participation by current employers as well as permitting the entry of new employers.

We understand from various publicly available reports that currently insolvent multiemployer plans, aswell as multiemployer plans projected to become insolvent within the foreseeable future, will eventually

exhaust the PBGC multiemployer fund and there will be no money to pay out benefits. The only ways to

prevent this from happening are to either arrange for a taxpayer bailout (which we understand is highly

unlikely) or reform the system by adopting the reasonable remedies outlined in the Solutions Not

Bailouts proposal. This is the reality that opponents of reform fail to address, which is why they have not

offered any constructive alternatives. Permitting the most troubled plans to reduce benefits is a better

solution than the complete loss of benefits, which is where we are headed if action is not taken right

away.

Please join us in supporting Solutions Not Bailouts. We ask you to focus on the balanced merits of the

proposal.

The NCCMP recommendations offer the most logical and least painful way forward. Providing labor and

management trustees of deeply troubled plans with the needed flexibility to rescue the retirements of

thousands of Americans is best for all parties concerned – retirees, workers, employers and taxpayers.

We appreciate your support and urge you to support legislation that will make the Solutions Not Bailouts

proposal a reality. The website www.solutionsnotbailouts.com contains additional information that may

be useful. Please contact us with any questions or concerns.

Sincerely,

Walter W. Wise, General President Tom S. Felton, President

International Association of Bridge, Structural, The Association of Union Constructors

Ornamental and Reinforcing Iron Workers (TAUC)



Joseph T. Hansen, International PresidAnthony M. Perrone, International Secretary-Treas

United Food & Commercial Workers International Union, AFL-CIO, C

1775 K Street, NW • Washington DC 20006-1Office (202) 223-3111 • Fax (202) 466-1562 • www.ufcw

David B. Dillon, Chairman and CEOThe Kroger Co.

1014 Vine Street • Cincinnati OH 45202-1100

Office (513) 762-4000•

www.thekrogerco.com

Via Facsimile

December 5, 2013

The Honorable Harry Reid

The Honorable Mitch McConnellMembers of the U.S. Senate HELP Committee

Members of the U.S. Senate Finance Committee

Dear Senators:

The Kroger Co. (Kroger) and the United Food and Commercial Workers International Union

(UFCW) urge that Congress take quick action to address the looming multiemployer pension crisis. If leftunresolved, this crisis will be devastating not only to our members, employees, and retirees, but potentiallyharmful to many others, including the nation’s pension retirement system.

Since the passage of the bipartisan Pension Protection Act (PPA) in 2006, Kroger and the UFCWhave worked together to improve the status of many multiemployer pension plans that we co-sponsor. This hasmeant significant increases in pension contributions, changes to the retirement benefits of our employees, and

consolidation of some plans. These aggressive actions, jointly taken, have placed many plans on the path tolong-term sustainability. Undoubtedly, these actions have strengthened the retirement benefits of ouremployees and members.

Yet, due to unexpected events – most notably the financial collapse of 2008 – a number of

multiemployer pension plans still stand on the brink of financial collapse. These deeply-troubled plans haveexhausted the remedies available under current law, and without additional options will face insolvency in therelatively near future. Unless these plans are allowed to reduce benefits, nothing can prevent some of these

plans from certain insolvency.

Without action by Congress, one very large multiemployer pension fund will become insolventand will seriously jeopardize the benefits of approximately 340,000 current retirees and 70,000 future retirees.Several other plans face similar circumstances. In an attempt to avert this crisis, labor and management from

numerous industries worked together for almost two years to analyze all possible solutions and develop aconsensus position. This joint labor-management effort led to a report issued earlier this year by the NationalCoordinating Committee for Multiemployer Plans (“NCCMP Recommendations”), which Kroger and theUFCW fully support. The NCCMP Recommendations offer a measured, fair, and viable solution to the difficult

but necessary task of rescuing troubled plans from the path to insolvency.

Regaining solvency and self-sufficiency for these plans will not come without sacrifice. The only

realistic way to avoid insolvency and preserve as much of the promised pension benefits as possible is to provide plan trustees the ability to, if necessary, reduce some of the accrued benefits – and only if such actionwill ensure the plan’s survival. The NCCMP Recommendations carefully limit this option allowing for the

necessary flexibility to salvage these plans while protecting the most vulnerable population and ensuring that benefits are preserved to the maximum extent possible.



Page 2 of 2

Joseph T. Hansen, International PrAnthony M. Perrone, International Secretary-Tr

United Food & Commercial Workers International Union, AFL-CIO

1775 K Street, NW•

Washington DC 2000Office (202) 223-3111 • Fax (202) 466-1562 • www.u

David B. Dillon, Chairman and CEOThe Kroger Co.

1014 Vine Street • Cincinnati OH 45202-1100

Office (513) 762-4000 • www.thekrogerco.com

Reducing benefits is not a tool the trustees could wield recklessly. In fact, labor and managementtrustees would need to agree that it is the last resort in order to save the plan and the Pension Benefit GuarantyCorporation (PBGC) would need to approve any reduction of benefits.

As Central States Executive Director Tom Nyhan recently testified before the House Education

and Workforce Committee Subcommittee on Health, Employment, Labor and Pensions:

“I agree that one of the fundamental rules of ERISA was the anti -cutback rule. But there is

another fundamental rule that is going to trump that and that is called arithmetic. It is not a

question of if there are going to be benefit cuts. There are going to be benefit cuts. The question

is when and how they are going to happen.”

Absent the reforms outlined in the NCCMP Recommendations, there is little doubt that deeplytroubled plans would enter insolvency and benefits would be reduced to the level guaranteed by the PBGC.Benefits for retirees would be drastically reduced ($12,870 for a retiree with 30 years of service). In addition,the PBGC already faces a very significant funding shortfall – in excess of eight billion dollars as ofSeptember 30, 2013. In order for the PBGC to fulfill its legal obligations should these plans become insolvent,

it would require billions of dollars in additional funding from Congress. Should Congress choose not toincrease funding for the PBGC, Government Accountability Office Director Charles Jeszeck testified that thePBGC would be forced to pay benefits from the cash flow produced by premium payments – thereby reducingthe maximum monthly benefit to below $125. That is not an acceptable solution for our employees andmembers.

Fortunately, the NCCMP Recommendations offer a less severe solution. The core objective ofthe NCCMP Recommendations is to help deeply troubled plans preserve benefits above the PBGC minimumguarantee levels. Modest changes to benefits now can responsibly sustain these pension plans for decades tocome.

The NCCMP Recommendations offer the most logical and least painful way forward. Providing

labor and management trustees of deeply troubled plans with the needed flexibility to rescue these plans is bestfor all parties concerned – retirees, workers, employers and taxpayers.

We appreciate your support and urge you to support legislation that will make the NCCMPRecommendations a reality. The website www.solutionsnotbailouts.com contains additional information thatmay be useful. Please contact us with any questions or concerns.

Sincerely,

Chairman and CEO International PresidentThe Kroger Co. United Food and Commercial

Workers International Union



January 22, 2014

Sent to the Chairmen and Ranking Members with copies to all members of:

U.S. Senate Health, Education, Labor and Pensions CommitteeU.S. Senate Finance Committee

U.S. House of Representatives Education and Workforce Committee

U.S. House of Representatives Ways and Means Committee

Washington, DC

Re: We support the Solutions Not Bailouts multiemployer pension plan reform legislation

Dear Chairman and Ranking Member:

The International Association of Sheet Metal, Air, Rail and Transportation Workers (SMART)i

and the Sheet Metal and Air Conditioning Contractors’ National Association (SMACNA)ii

urgeCongress to end the crisis of confidence facing multiemployer pension plans because of the

pressing need for comprehensive pension reform. For over 18 months, SMACNA and SMART

collaborated with more than 40 labor and business leaders in the Retirement Security ReviewCommission. The Commission’s specific and concrete recommendations – Solutions not

Bailouts - if enacted, will strengthen retirement security. For the specifics, please review

“Solutions Not Bailouts: A Comprehensive Plan from Business and Labor to SafeguardMultiemployer Retirement Security, Protect Taxpayers and Spur Economic Growth” at

http://www.solutionsnotbailouts.com/.

Our union members and our employers live and work in every state and territory of this nation.

Like over 10 million other working class Americans, 216,000 SMART members, retirees and beneficiaries rely on multiemployer plans for retirement security. SMACNA’s over 4,500

contractors are major stakeholders in multiemployer plans across the country.

In the sheet metal and transportation industry, many of our plans have successfully addressed

funding challenges because labor and management worked together using the tools under the

Pension Protection Act of 2006 (“PPA”). But for other plans and for the long-term future of themultiemployer system, PPA is not enough; the enactment of Solutions not Bailouts proposals is

critical.

Plans in other industries face imminent insolvency. The failure of one plan, even in a seemingly

unrelated industry, could have a ripple effect across the system. Not only pension plans can fail;higher contribution demands or increasing shares of unfunded vested benefits may pull down the

employers that remain in the plans. Unfunded liabilities create too much uncertainty in financingand bonding.

Further, Solutions not Bailouts can do more than strengthen retirement security; it can addressthe Pension Benefit Guaranty Corporation’s (PBGC) crisis. The PBGC lacks the full faith and

credit of the federal government and faces insolvency in the not-so-distant future. As you

know, the PBGC provides a limited backstop to insolvent plans and only “guarantees” benefits ata relatively low level.



2

Most opponents of Solutions not Bailouts fear the provisions to save the benefits of participants

in deeply troubled plans. For those plans, the recommendations would allow workers andretirees to maintain benefits above the PBGC guaranteed amount rather than the current law,

which “guarantees” a lower benefit if, and only if, the PBGC has the assets. The PBGC faces a

very significant funding shortfall – in excess of eight billion dollars as of September 30, 2013.

PBGC cannot meet its obligations to plans facing insolvency without billions in additionalfunding, or what some might call a “bail-out.” We are realists concerning the prospects of

additional funding.

We respect the views of those who say ERISA’s bedrock principle is the preservation of accrued

benefits. That protection is an illusion once a plan is insolvent; accrued benefits will be reduced.

Moreover, if PBGC is insolvent, its guarantee is not truly a “guarantee.”

The Solutions not Bailouts proposal would allow joint labor/management boards of trustees’

limited authority to act before it is too late so that workers and retirees receive more than the

PBGC “guarantee.” These last-resort suspensions, under PBGC supervision, would provide, at aminimum, 110% of PBGC guaranteed benefits and would be no larger than necessary to

prevent insolvency. Plans facing imminent insolvency could only use the tools if the joint

labor-management boards of trustees so decide. Neither labor nor management could force the

use of these tools. Labor and management trustees would need to agree to these tools as a lastresort to save a plan. In addition, the PBGC would need to approve any reduction of benefits.

Solutions not Bailouts also proposes encouraging voluntary innovative new plan designs forsecure lifetime retirement income. The voluntary adoption of flexible plan designs would be the

subject of collective bargaining. These plans could include, but would not be limited to, variable

annuity and “Target Benefit” plans, which would permit adjustment of accrued benefits.However, to protect participants from the risks of benefit adjustments, these models would

impose greater funding discipline than is required under current defined benefit rules. New

designs, and reforms for existing plans, can help insulate contributing employers from financial

volatility.

We respectfully urge Congress to move promptly to enact the Solutions not Bailouts plan which

will also extend the important tools PPA already provides. The private sector has supportedthese plans for decades and can continue to do so by extending and amending the PPA.

Thousands of participants, their families and employers will appreciate your support in this

endeavor.

Sincerely,

Randy Novak, President

SMACNA



3

! !"#$% was formed with the merger of the United Transportation Union and the Sheet Metal Workers’

International Association. The Union’s history extends back over 125 years. It is an international labor union, with

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May 8, 2013

Dear Senator/Representative:

As leaders of our respective organizations, the International Brotherhood of Electrical Workers (IBEW) and the

National Electrical Contractors Association (NECA), we write jointly as labor and management in support of the

National Coordinating Committee Multiemployer Plan’s (NCCMP) Retirement Security Review Commission’s

report entitled “Solutions not Bailouts: A Comprehens ive Plan from Business and Labor to Safeguard

Multiemployer Retirement Security, Protect Taxpayers and Spur Economic Growth.”

Two years ago, IBEW, NECA and more than forty labor and management stakeholders partnered up with the

NCCMP to form the Retirement Security Review Commission. The Commission’s goal was to create a proposal that

presents solutions that will ensure multiemployer pension plans can continue to provide a reliable retirement benefit

to millions of Americans while enabling the employers who fund them to remain strong contributors to the national

economy.

The proposal offers recommendations that address the deeply troubled plans heading toward insolvency, includes

technical provisions that will improve the current system and offers new flexible plan design options aimed to

reduce employers risk and eliminate withdrawal liabilities. There are several considerations of the proposal that

warrant our recommendations:

· Strengthen the Current Funding Rules to the Pension Protection Act of 2006 (PPA). While the PPA provided

some relief to multiemployer pension plans and helped companies recover losses incurred as a result of thefinancial crisis, IBEW and NECA believe that further changes to the PPA are necessary to improve the health

and viability of these plans. The Commission has offered an array of technical provisions that will improve the

current system by providing flexible rules to allow trustees of plans facing financial instability to adapt to

changing economic and market conditions as they occur.

· Provide Relief to Deeply Troubled Plans Heading Toward Insolvency. Severely troubled plans that are

projected to become insolvent need more tools to prevent the plans from exposure of the Pension Guaranty

Benefit Corporation (PBGC). Under the PPA, plan trustees were granted the authority to temporarily reduce

benefits for active participants. Unfortunately, there remain plans where those suspensions were not enough to

avoid insolvency. In these exceptional circumstances, these additional tools will grant plan trustees additional

authority to take appropriate measures to partially suspend accrued benefits for active and inactive vested

participants. Such suspensions would be limited to the amount of time essential to prevent the plan from

insolvency; the benefits could never go below 110 percent of the PBGC guaranteed amounts.

· Create New Flexible Plan Designs. A transient workforce, an aging population, and a weak economy have led

to unsustainable pension contributions and unfunded withdrawal liabilities that continue to put a strain on

contributing employers. These growing concerns led the Commission to recommend two new plan designs.

Both of the new plan designs are distinguished from a traditional defined benefit plan because they have shared

risk amongst the employer and the employee and they significantly reduce an employer’s exposure to

withdrawal liability.



· Solutions Not Bailouts: Revenue Neutral and Not Mandatory. All multiemployer pension plans are the

product of collective bargaining agreements. The proposed recommendations put forward by the Commission

will not mandate plan trustees to adopt these changes. Rather, they will provide the tools to provide relief to

multiemployer pension plans that have existing funding liabilities. If enacted as proposed, these legislative

changes will be revenue neutral, American taxpayers will not bear the cost of the plan, and multiemployer

pension plans will continue to provide financial security to retirees nationwide.

Since 1946, IBEW and NECA have worked together through the collective bargaining process to offer a pension

plan that would help bring security, dignity, and peace-of-mind to all plan participants. Today, our joint labor-

management, multiemployer pension plans have successfully provided coverage for millions of plan participants,

retirees and surviving spouses, as well as its contributing employers. We urge you to support the NCCMP proposal

and we look forward to working with you to ensure its passage this year.

Sincerely,

Edwin D. Hill John M. Grau

International President Chief Executive Officer

International Brotherhood of Electrical Workers National Electrical Contractors Association





Documents

Letters Urging Support of Multi-Employer Pension Reform