AGC of America, Chapters and Members Respond to Multiemployer Pension Reform Criticisms

  AGC of America this week signed a letter to Congress with over 312 companies and 80 employer organizations to express concern about misinformation circulating regarding multiemployer defined benefit plan relief proposals before Congress.  Joining AGC of America in signing the letter are 11 AGC Chapters and 45 AGC member firms.  Recent press stories have referred to H.R. 3936, the Preserve Benefits and Jobs Act, and S. 3157, the Create Jobs and Save Benefit Act, as a "union bailout" and to multiemployer plans as "union plans."  The letter states that contributions to multiemployer plans are funded entirely by employers and not unions. The majority of defined benefit plans have been negatively impacted by the recent financial crisis, and the median investment loss by multiemployer plans has exceeded 20 percent.  The losses occurred in the first year of new aggressive funding rules required by the Pension Protection Act, giving rise to potential additional contribution increases, deep benefit cuts, or both.  The financial crisis also exacerbated funding problems that certain multiemployer plans were already facing prior to the market downturn.  For details on the House proposal, clickhere. Asreported on July 1, President Obama signed into law the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010, a stand-alone measure to prevent a scheduled cut in Medicare reimbursements to physicians.  While the relief now enacted into law is not the preferred language advocated by AGC and the multiemployer pension community, there may be an opportunity to enact "technical corrections" or otherwise provide Congressional guidance to the Treasury who will now interpret the law to ensure the intent of the preferred language is followed.  AGC and the multiemployer coalition is continuing to work on additional longer-term relief for more troubled multiemployer plans, including the "partitioning" proposal included in H.R. 3936 and S. 3157.  In May, the Senate Health, Employment, Labor, and Pensions Committee last Thursday held hearing on multiemployer pension plans, including S. 3157.  The hearing was a first step towards Congressional action on additional multiemployer plan relief called for in H. R. 3936 and S. 3157 that would facilitate mergers and alliances of funds and allow the Pension Benefit Guaranty Corporation (PBGC) to provide assistance to certain plans (e.g., Central States) through a process called "partitioning" to lower long-term costs.  The bill would also update PBGC benefit guarantees.