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Rep. Kline: Multi-employer Pension System "Ticking Time Bomb," Requires Multi-faceted Approach

House Committee on Education and the Workforce Chairman Rep. John Kline (R-Minn.) didn’t mince words at a May 1 event on multiemployer pension plan reform: the current state of affairs “will inflict a lot of pain on homes and workplaces,” and something needs to be done. He made his remarks at an event the Quality Construction Alliance and Bloomberg Government held in Washington, D.C. 

Kline said he believes that pension reform should occur “because the path we’re on is not sustainable” and will force businesses to close and lay off employees, expose taxpayers to the greater risk of a multi-billion dollar bailout and destroy retirement security. And he noted that millions of people worked with the promise that their pensions would give them a financially secure retirement, but that “for many Americans, this promise is now in jeopardy.” 

Kline said that “a persistently weak economy” is the “leading culprit” to blame for the precarious state of multiemployer pension plans, and that the policies that lead to high unemployment and stagnant wages exacerbate the challenges facing the pension system. He argued for policies that would “promote robust growth” which he said “would go a long way toward restoring the prosperity every working family needs.” 

But he also noted that fostering economic growth alone will not be enough to save the most troubled pension plans from insolvency. He said PBGC handling of those accounts was not ideal, since it would mean reduced benefits for many people and could overwhelm the agency and render it unable to help anyone. 

Kline expressed support for a plan created by the National Coordinating Committee for Multiemployer Plans, (NCCMP) which he said “reflects key principles that should be a part of any serious legislative reform.” Highlights of the plan include: 

Creative options workers can use to plan for retirement that are appropriate for the 21st century need to be developed. 
Remove barriers that discourage employers from participating in the multiemployer system, to expand the pool of participating employers, reduce risk and strengthen the system. 
Provide trustees with new ways to restore the health of deeply troubled plans. 

Another advantage of this plan, says Kline, is that it will protect taxpayers since it would end the threat of a taxpayer bailout. 

Kline noted that there is bipartisan work being done to address the solvency of multiemployer pension plans and invited dialogue from differing perspectives. He acknowledged that addressing the matter involves difficult decisions, but warned that they will only become harder the more time passes before something is done.

 

John Iekel is Senior Writer and Editor for the ASPPA Net and NTSA Net portals.