Will the Multiemployer Funding Crisis Drive the Next Retirement Bill?

While regulators in Washington are just getting started on drafting guidance for the newly enacted SECURE Act, on Capitol Hill, attention is already turning to the next major retirement legislation. 

 

In this instance, the funding crisis facing multiemployer pension plans is getting the attention of lawmakers on both sides of the aisle. Republicans and Democrats agree that a fix is needed, but so far, an agreement on what that fix should be has been elusive. 

 

If and when policymakers are able to craft a multiemployer plan bill, will other retirement policy legislation move with it? 

 

When the SECURE Act and a fix for miners’ pensions were added to the year-end spending bill, Rep. Richard Neal (D-MA), Chairman of the House Ways & Means Committee, noted that he was happy to see those priorities included, but suggested there was an “egregious omission” in not including the House-passed Rehabilitation for Multiemployer Pensions Act (H.R. 397), commonly referred to as the “Butch Lewis Act.” 

 

Today the multiemployer funding issue persists. A Jan. 31 letter addressed to the House and Senate leadership signed by more than half of the New York State congressional delegation, including members from both parties, underscores the urgency of this issue and calls for action this year. “While we were heartened to see that the year-end spending agreement will ensure miner’s pensions remain solvent, it is imperative that Congress acts immediately to address this growing crisis for the rest of the workforce and prevent further benefit cuts to our constituents in New York and retirees all across the country,” the letter states. 

It further notes that both chambers of Congress have already taken up efforts to develop a bipartisan solution, including House passage of H.R. 397 and the release of a proposal by Sens. Charles Grassley (R-IA), Chairman of the Senate Finance Committee, and Lamar Alexander (R-TN), Chairman of the Senate Health, Education, Labor and Pensions Committee.

 

The issue also has the attention of the Trump administration. The administration’s FY 2021 budget, released Feb. 10, notes that the PBGC’s multiemployer plan program is in “dire financial condition” and projects that it will be insolvent by 2025, at which point participants in insolvent plans would see their guaranteed benefits cut by as much as 90%. 

 

 

When a measure is considered “must-pass” on Capitol Hill, it often has other legislation attached to it as part of the “policymaking train.” Similar to how the SECURE Act and the miners’ fix were added to the spending bill, a multiemployer funding bill may serve as a vehicle for other pending retirement policy ideas. 

 

In this case, waiting in the wings is potential legislation from Rep. Neal in the House and the comprehensive Retirement Security and Savings Act reintroduced in the Senate in May 2019 by Sens. Rob Portman (R-OH) and Ben Cardin (D-MD), who both serve on the Senate Finance Committee. 

 

While some of the issues were addressed in the SECURE Act, the Portman-Cardin bill includes more than 50 provisions designed to strengthen Americans’ retirement security and simplify some of the existing retirement rules. Among these are a new safe harbor rate for automatic default deferrals, treating student loan debt payments as elective deferrals for purposes of matching contributions, increasing the catch-up limit, expanding the Saver’s Credit and expanding the Employee Plans Compliance Resolution System (EPCRS). 

 

Additionally, when the SECURE Act was moving through the House last spring, Ways & Means Committee Chairman Neal announced that he and Rep. Kevin Brady (R-TX), the Ranking Republican on the committee, were planning to work on a second, more comprehensive retirement bill. “While we are taking an important first step today, much more needs to be done,” Neal stated in April 2019. “Over the coming months, the Ranking Member and I plan to put together another bill that will close the coverage gap, simplify the retirement system, and help Americans preserve their assets in retirement.” 

 

Brady has championed the creation of a “Universal Savings Accounts,” while Neal has advocated for legislation that would require all employers to maintain a 401(k) or 403(b) plan, subject to certain exceptions. 

 

Since the SECURE Act was enacted in December, Neal and Brady have not indicated either way whether they are working on a second retirement bill. What’s more, with this being an election year, time could become a factor, as well as whether there is still a desire among policymakers to work on a bipartisan basis to address the multiemployer funding issue and additional retirement policy reforms.