The Treasury Department approved cuts to multiemployer pension plans in Oregon and Pennsylvania, according to letters made public today.
Treasury officials approved cuts to the Plasterers & Cement Masons Local No. 94 Pension Fund in Harrisburg, Pa., and to the Plasterers Local 82 Pension Fund in Portland, Ore., under the Multiemployer Pension Reform Act of 2014. Both funds had requested a reduction in benefits to restore long-term solvency, subject to a vote by their members.
Multiemployer plans are pension plans negotiated by labor unions with multiple employers. Once thought to be sturdier than single-company plans, multiemployer plans for industries that have undergone decline or consolidation have struggled in recent years to remain solvent.
Benefit cuts to 10 multiemployer pension funds have now been approved under the 2014 law (H.R. 83), putting more pressure on a bipartisan congressional “supercommittee” assigned to resolve the multiemployer pension crisis by Nov. 30. No bipartisan solution is expected to emerge. Instead, Republicans and Democrats are expected to deliver separate reports on how to fix the multiemployer crisis, according to sources on both sides. Members of the committee have expressed more optimism publicly.
“Since the stupidest thing on the table is doing nothing, I would hope that we take some action and actually solve the problem,” Rep. Bobby Scott (D-Va.) said in a recent interview with POLITICO.
Multiemployer plans that are “critical and declining” are eligible to apply for benefit reduction under the 2014 law so long as they can demonstrate that the reductions are “reasonably estimated to allow the plan to avoid insolvency.” The Treasury Department, the Labor Department and the Pension Benefit Guaranty Corporation review the plan to ensure that the changes will lead to solvency. Reductions must then be voted on by plan beneficiaries, but Treasury can override the vote if a failure to cut benefits would bankrupt the PBGC