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house Bill H.R. 397

Should the Treasury Make Loans to Prop Up Insolvent & Suspended Multiemployer Pension Plans?

Argument in favor

Multiemployer pension plans are in crisis. If they fail, they’ll wipe out hardworking Americans’ retirement savings and leave them in dire financial straits through no fault of their own. The federal government needs to step in to bolster multiemployer pension plans and ensure they remain solvent.

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07/24/2019
Depends. Did corrupt Republicans deplete the pensions for their own personal gain? Did Company executives gamble the pension funds in hopes for huge windfalls (high risk with other people’s money signifies mental and pathological concerns)? If the pension funds are diminished due to unadulterated funds, then yes. If the funds were depleted due to unethical, immoral business practices and potentially illegal acts, then this perpetrators shall pay back all losses and bring the funds within appropriate balances. The perpetrators shall also never be employed again, serve on boards, trade stocks, or accept money or funds or compensation from any investments, other than minimum wage jobs, for community service type work.
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Lauren's Opinion
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07/24/2019
We cannot let the people who depended on and currently depend on these pensions fall through the cracks and be hung out to dry. As for the people who mismanaged these funds, they needs to be locked up and given the maximum amount of jail time. They need to be made examples of. Wall Street is corrupt and needs to be held accountable.
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Choky's Opinion
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07/24/2019
The republicans have a hand on the looting of pension plans by corporations. People put money on pension funds for retirement not to be lotted by others. Something must be done to protect the pension plans for hard working people.
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Argument opposed

This bill would be very expensive and it amounts to a bailout for poorly-managed multiemployer pension plans. Setting the precedent that these plans can rely on the federal government to back them up when they’re mismanaged is bad policy that could have significant repercussions down the line.

burrkitty's Opinion
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07/24/2019
No. Pursue criminal charges against the fund managers and administrators that destroyed the pension funds. We have let Wall Street walk away unscathed from their greed and destructive behavior for far to long. Stop protecting corporations and Wall Street at the expense of people. Our government is supposed to be “For the People”
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David's Opinion
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07/24/2019
We have a free market and congress has no business propping up mismanaged retirement funds or any business or any bank. Failure will help cleanup our economy by removing the high risk players and supporting the businesses or funds that make good decisions.
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jimK's Opinion
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07/24/2019
The biggest problem with this is that there is little evaluation proposed as to the Why pensions plans are no longer supported. I would be afraid to have a one size fits all solution. Way to easy to abuse. If a business fails and goes bankruptcy, I would encourage bankruptcy laws give top priority to the support employer sponsored retirement plans. Also, as a cost associated with sponsored plans, purchase insurance to guarantee say 10 years of pension payout, should the company not be able to honor their commitments in the future.
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bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
  • The house Passed July 25th, 2019
    Roll Call Vote 264 Yea / 169 Nay
      house Committees
      Committee on Appropriations
      Committee on Education and Labor
      Worker and Family Support
      Committee on Ways and Means
    IntroducedJanuary 9th, 2019

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What is House Bill H.R. 397?

This bill — the Rehabilitation for Multiemployer Pensions Act (aka the Butch Lewis Act) — would establish the Pension Rehabilitation Administration (PRA) within the Treasury Dept. The PRA would be authorized to issue bonds to finance loans to “critical and declining” status multiemployer pension plans, plans that have suspended benefits and some recently insolvent plans currently receiving financial assistance from the Pension Benefit Guaranty Corporation (PBGC). Loan approvals would be made in consultation with the Treasury Dept., Labor Dept, and the Pension Benefits Guaranty Corporation (PBGC).

The Treasury Dept. would issue bonds to fund the loan program and transfer the proceeds to the trust fund this bill established. The PRA would then be able to use the funds to 1) make loans; 2) pay principal and interest on the bonds; and 3) for administrative and operating expenses without further appropriation.

Plans that receive a loan would be required to fund their obligations to those in pay status through: 

  • Annuity purchases;
  • Cash matching or duration matching portfolios; or
  • Some other portfolio prescribed by the Treasury Secretary in regulations with a similar risk profile as cash matching and duration matching and is equally protective of participants’ and beneficiaries’ interests.

This bill would allow the sponsor of a multiemployer pension plan which is applying for a loan under this bill to also apply to the PBGC for financial assistance if, after receiving the loan, the plan will still become (or remain) insolvent within the 30-year period beginning on the date of the loan.

This new agency would be headed by a presidentially-appointed Director, who would serve a five-year term. The Director would have the power to: 1) appoint deputy directors, officers and employees; and 2) enter contracts for financial and actuarial services. The agency would be funded from Treasury’s appropriated budget.

Under the terms of the loans that’d be made until this bill, plans wouldn’t be allowed to increase benefits and employers’ contributions to the plans couldn’t be reduced.

Impact

Multiemployer pension plan participants; multiemployer pension plans; Treasury Dept.; Labor Dept; and the PBGC.

Cost of House Bill H.R. 397

$64.40 Billion
The CBO estimates that this bill would have a net cost of $48.2 billion over the period 2019-2024 and $64.4 billion over the period 2019-2029.

More Information

In-DepthHouse Ways and Means Committee Chairman Richard Neal (D-MA), a longtime proponent of enhancing workers’ retirement preparedness, reintroduced this bill from the 115th Congress to address the United States’ worsening multiemployer pension crisis

“We all know retirees with failing multiemployer pension plans who now find themselves in a devastating predicament – from truck drivers to autoworkers to ironworkers, these Americans live in all of our communities. In fact, there are 1.5 million Americans who are in plans that are quickly running out of money. These are American workers who planned for their retirement, who year after year chose to contribute to their pensions instead of taking a wage increase. Now, after working for decades, their planned retirements may be taken away from them.  And taken away at a time when they no longer have time to prepare for retirement because they’re now in retirement. There’s no time to waste in addressing this crisis, and that’s why I’ve chosen to make this the first piece of legislation I introduce as Chairman of the Ways & Means Committee. This is not a bailout. These plans would be required by law to pay back the loans they receive from the PRA – the federal government is simply backstopping the risk. Importantly, my bill does not allow for any cuts to the benefits these workers and retirees earned through years on the job. Americans need our help, and it’s time to answer that call.”

The Teamsters Union expressed its support for this bill in the 115th Congress. In a joint press conference with Rep. Neal and Teamsters Local 122 members, the Teamsters’ International Vice President, John Murphy, said

“This legislation offers a real solution to the growing pension crisis. Rep. Neal and Sen. Brown are fighting for every active and retired worker that could see their hard-earned retirement destroyed through no fault of their own.”

Although it passed the committee, this bill’s markup in the House Education & Labor Committee was contentious, as Republican committee members alleged that the committee hadn’t adequately considered this bill’s ramifications and had shut down debate on it. Rep. Virginia Foxx (R-NC), the ranking Republican on the committee, said, “It is simply irresponsible to bring a bill addressing such a complex and far-reaching issue before the Committee for markup with only days’ notice.”

After the HELP Committee passed this bill, Rep. Neal said

“More than a million Americans are in multiemployer pension plans that are quickly running out of money, putting families across the country at risk of unexpected financial hardship. It’s simply not right that – by no fault of their own – these workers and retirees could lose decades’ worth of savings they earned and chose to take instead of wage increases.”

This bill passed the House Ways and Means Committee by a 25-17 vote with the support of 209 bipartisan cosponsors, including 200 Democrats and nine Republicans, in the 116th Congress. Last Congress, it had 174 bipartisan cosponsors, including 160 Democrats and 14 Republicans, and didn’t receive a committee vote.

The National United Committee to Protect Pensions and the Pensions Rights Center expressed their support for this bill in 2017. Both organizations wrote letters to Sen. Sherrod Brown (D-OH), who sponsored the Senate version of this legislation that year, expressing their support. 


Of NoteThere are about 1,400 multiemployer pension plans across the U.S., covering about 10 million people. Although these pension plans have been historically successful, a number are facing funding problems today and are almost certain to run out of money. If these plans run out of money, retirees, workers, and their families would lose benefits earned over lifetimes of work through no fault of their own.

This bill is a rebranded version of the Butch Lewis Act, which Sen. Sherrod Brown (D-OH) first introduced in the Senate in 2017. It comes after the Joint Select Committee on Solvency of Multiemployer Pension Plans failed to advance a rescue package at the end of the last Congress after holding five hearings on the topic of underfunded multiemployer plans. Democrats on the committee had lobbied for the Butch Lewis Act as the basis for a rescue package, but Republicans on the committee expressed concerns over the funds’ abilities to repay the loans and negotiations over the question of benefit cuts stalled. 

The Pension Rights Center notes the urgency of Congressional action on this issue. In March 2019, it wrote:

“There is an urgent need for congressional action to develop a common sense, comprehensive solution to save underfunded pension plans, protect the benefits of workers and retirees, and also to put the Pension Benefit Guaranty Corporation (PBGC), the federal agency that insures these pension plans, on a path to solvency. If nothing is done, it is estimated that the PBGC will run out of money for its multiemployer insurance program in about six years.”

At the 2018 ASPPA annual conference, PBGC Director Tom Reeder told attendees “the multiemployer insurance program is in dire straits.” He said that unlike the single-employer plan, “it is not possible to earn your way out of this deficit” and said the program is at “a critical crossroads we’re going to have to cross over very soon.”


Media:

Summary by Lorelei Yang

(Photo Credit: iStockphoto.com / Bill Oxford)

AKA

Rehabilitation for Multiemployer Pensions Act of 2019

Official Title

To amend the Internal Revenue Code of 1986 to create a Pension Rehabilitation Trust Fund, to establish a Pension Rehabilitation Administration within the Department of the Treasury to make loans to multiemployer defined benefit plans, and for other purposes.

    Depends. Did corrupt Republicans deplete the pensions for their own personal gain? Did Company executives gamble the pension funds in hopes for huge windfalls (high risk with other people’s money signifies mental and pathological concerns)? If the pension funds are diminished due to unadulterated funds, then yes. If the funds were depleted due to unethical, immoral business practices and potentially illegal acts, then this perpetrators shall pay back all losses and bring the funds within appropriate balances. The perpetrators shall also never be employed again, serve on boards, trade stocks, or accept money or funds or compensation from any investments, other than minimum wage jobs, for community service type work.
    Like (72)
    Follow
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    No. Pursue criminal charges against the fund managers and administrators that destroyed the pension funds. We have let Wall Street walk away unscathed from their greed and destructive behavior for far to long. Stop protecting corporations and Wall Street at the expense of people. Our government is supposed to be “For the People”
    Like (69)
    Follow
    Share
    We have a free market and congress has no business propping up mismanaged retirement funds or any business or any bank. Failure will help cleanup our economy by removing the high risk players and supporting the businesses or funds that make good decisions.
    Like (40)
    Follow
    Share
    The biggest problem with this is that there is little evaluation proposed as to the Why pensions plans are no longer supported. I would be afraid to have a one size fits all solution. Way to easy to abuse. If a business fails and goes bankruptcy, I would encourage bankruptcy laws give top priority to the support employer sponsored retirement plans. Also, as a cost associated with sponsored plans, purchase insurance to guarantee say 10 years of pension payout, should the company not be able to honor their commitments in the future.
    Like (35)
    Follow
    Share
    We cannot let the people who depended on and currently depend on these pensions fall through the cracks and be hung out to dry. As for the people who mismanaged these funds, they needs to be locked up and given the maximum amount of jail time. They need to be made examples of. Wall Street is corrupt and needs to be held accountable.
    Like (31)
    Follow
    Share
    No way! Hold the company owners PERSONALLY responsible for any mismanagement. Take away their mansions, fancy cars, bank accounts, whatever. Put them in jail, too. That ought to be a deterrent. We, the taxpayers, should not be responsible for bailing these companies out. We cannot set a precedent to do this or we’ll be on an unsustainable road here. Get rid of farm subsidies, oil subsidies, mining subsidies - any and ALL subsidies. If you’re not self-sustainable, perhaps you shouldn’t be in business.
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    I can’t believe I am saying this but no. It is not up to the federal government to bail everybody out. Poorly operating companies go under all the time. Ask POTUS. Labor Unions used to fight for pensions And monitor investments but the country seems to be headed towards right to work laws. No organization, no muscle. But then that’s a choice freely made. If you want companies to go bankrupt like Sears and still be able to hand out CEO bonuses but default on pensions, look hard at what you’re voting for and for whom you’re voting. If you don’t, well it’s your own damn fault.
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    The republicans have a hand on the looting of pension plans by corporations. People put money on pension funds for retirement not to be lotted by others. Something must be done to protect the pension plans for hard working people.
    Like (17)
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    We bailed out banks and we’ve bailed out the car industry. People who have worked and paid into these plans should not be penalized. This is the reason we need tough regulation of pensions, banks, interest rates and fees. To protect the US worker from predatory practices and incompetence.
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    They are going to make loans to pension plans that have no money to pay them back! Is congress going to investigate and possibly prosecute the people who ran these plans? Are these plans in trouble because those in charge took use amounts of money for them selves or sweet heart loans to their friends? We had trillions of dollars disappear in derivative bonds about ten years ago and the government pumped trillions of dollars to save those companies.
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    What’s a pension?
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    That is why there are leaders to handle union dues, it is not up to all the taxpayers to bailout every inadequacy. Hold those involved accountable not taxpayers.
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    1) Are private employee pensions the Government’s responsibility to fund? 2) How will these “loans” be repaid? 3) Do a better job of monitoring these plans instead of waiting until they fail to react. 4) Hold corporations responsible for fulfilling commitments to their employees. No bailouts for failure. 5) You’re saying the Government has money to lend; but it can’t bolster Social Security, which IS a Government responsibility and which the Government stole from?
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    Absolutely , these plans benefits areEARNED by the long term employees! The employees trusted their employers! Now the pensioners in retirement will suffer unless the government helps! The Govt bailed out the banks n auto companies.. and continues to subsidize the oil and railroad among other Industries! Isn’t it time that the people that have paid taxes all these years get some help instead of big business! If the pension plans fail..who will be buying the oil, autos etc? Retirees area huge part of the Economy! Please vote yes!
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    Seize the total assets of all the people who contributed to the shortfall.
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    We bailed out banks, that was one time too many.
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    There’s a reason the pension plans are not working. They have failed because they were either placed into the wrong program or mismanaged by corporate financial firms. For the most part, the Treasury department should not be propping up these pension programs. The companies knew the risks and failed to uphold their end of their bargain. Instead, it should be up to the bank that the pension program was built into to solve this. Employees should take companies to court for their financial stupidity and allow the courts to solve this, not the Treasury department.
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    No but instead make those plans eligible for fines or costs if they fail due to their poor planning or investments
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    Not the responsibility of the federal government
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    There's no reason to throw good money after bad, and in this case, that's exactly what this bill would do. There's a reason thesemultiemployer pension funds are insolvent or bankrupt and that's because of mismanagement of funds. If the government gives money to prep them up, that money will soon go the way of the test of it, and not into the pockets of those who worked for it. This bill needs to be killed.
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