Capitol Hill Update: Pensions in Legislative Limbo

We now know that the House, White House and Senate could not work out a second COVID stimulus bill before the Presidential election. Pension relief and Composite Plans were in previous House-passed bills and Composites were included in the Grassley-Alexander pension proposal, so there had been high expectations pensions and Composite Plans would be included in a negotiated stimulus package.

Now SMACNA will look to the Lame Duck session for our next opportunity. Unfortunately, it is just not clear what the political incentives will be for COVID relief or pensions in a Lame Duck session for either party, win or lose. Composite Plans have been part of comprehensive pension reform since SMACNA began efforts to get the new plan design authorized, yet nothing has changed. Composite Plans, as outlined in the GROW Act in 2018, were included in both House-passed stimulus bills as part of relief for failing plans.

Composite Plans are also included the Senate Republican Grassley-Alexander pension proposal. SMACNA efforts remain focused on keeping Composite Plans as part of any pension relief legislation considered this session.

Contact Your Congressional Delegation
Because Congress is unpredictable, contacting your Congressional Delegation remains important. Congress may well act on pension relief and reform, and we want that reform to include Composite Plans. Continuing to sound the alarm is imperative.

Composite Plan adversaries are gaining ground in vocal opposition to Composites. Their strategy takes advantage of union disagreements on the issue of Composites, and urges members of Congress to pass only what everyone can agree on — to include pension relief for failing plans and shoring up the Pension Benefit Guaranty Corporation (PBGC).

Opponents use grassroots efforts in their fight to take GROW out of pension reform. However, grassroots works both ways. Employers must do their part on both sides of the aisle and in both the Senate and House to ensure Composites stay in any pension relief effort.

The time to speak out on the pension reform is now, while your legislators are home for campaigning and before they return for the Lame Duck session. Contact Republican and Democratic Congressional delegation members in the House and the Senate, and ask them to support Composite Plans.

The future of the multiemployer system and the PBGC depends on the viability of contributing employers (that’s you!). The future of contributing employers could depend on modernizing the system with a new option for plans.

What to Emphasize?
Emphasize your support of Composite Plan/GROW Act language using some of the following key points:

• Plans that aren’t failing need help too. It is unreasonable to support use of federal money to shore-up failing plans headed to the PBGC while opposing a voluntary solution for plans not yet failing, where labor and management agree to transition to Composite Plans, which also would provide a lifetime pension benefit.
• Composite Plans honor the collective bargaining system. Employers and a strong core of the building trades unions endorse authorizing the use of Composite Plans. Stress that you believe in the bargaining process to build a strong, resilient industry that survives into the very distant future.
• The multiemployer system needs Composite Plans. This is necessary to prevent the employer base in the defined benefit (DB) system from further shrinkage. Both Labor and Management seek to modernize the multiemployer benefit system with a new, voluntary retirement vehicle. Right now, the only choice is between a DB plan and a defined contribution (DC) plan. Single employer plans have already moved away from DB plans. The multiemployer system needs Congress to authorize the new hybrid option of Composite Plans.
• Protections for workers are deeply embedded in Composite Plan design. Composites would:
  • Provide a lifetime annuity, not a lump-sum payout that workers outlive.
  • Require conservative plan funding.
  • Include strict procedures that must be followed before changing core benefits in the event of severe economic distress.
  • Protect “Legacy Plan” benefits so no worker loses any benefits in their old plan.
• PBGC premiums. Would continue to be paid for all participants in the “legacy” plan and Pension Benefit Guaranty Corporation (PBGC) liabilities would go down as individual plan liabilities shrink.
• Call Your Congressional Delegation at their Capitol Hill or district offices. If pension legislation passes without Composite Plan/GROW Act language, it could be a long time before we get another chance.

Information on how to contact members of Congress can be found at contactingcongress.org.