AGC-Backed Pension Reform Signed Into Law
On December 16, 2014, the president signed into law the $1.1 trillion spending bill, which eventually passed both the U.S. House and Senate after a tumultuous week filled with partisan politics on unrelated provisions. This nine-month bill funds federal agencies through the end of the fiscal year with the exception of the Department of Homeland Security – which is only funded through Feb. 27. The new law includes a series of association-backed multi-employer pension reforms, all designed to allow employers and employees the opportunity to protect and improve retirement programs.
The pension provisions included in the Multiemployer Pension Reform Act of 2014 were largely based off a national labor-management commission, the National Coordinating Committee of Multiemployer Plans’ Retirement Security Review Commission, which met over an 18-month period to develop reforms to the multiemployer plan system. AGC had a representative on the commission, which studied the challenges facing the multiemployer pension system and designed a series of recommendations that safeguard retirement security and specifically address the challenges facing multiemployer plans. In February 2013, the Commission released the report, “Solutions Not Bailouts: A Comprehensive Plan from Business and Labor to Safeguard Multiemployer Retirement Security, Protect Taxpayers and Spur Economic Growth.” Following the release of the report, AGC testified before Congress and lobbied with other stakeholders to enact the ‘Solutions Not Bailouts’ proposal into law. The culmination of those efforts concluded on Tuesday, when the legislation was signed into law.
Proposals enacted include: technical corrections and enhancements to PPA and prior laws; provisions for mergers of plans when heading for insolvency; and remediation measures for critical and declining plans (provides trustees the authority to suspend benefits if doing so would avoid plan insolvency).
The act also expands PBGC partition authority of eligible multiemployer plans and includes a premium increases for multiemployer plans. The premium increase was added to the bill and was not an original recommendation from the commission. The premiums for the PBGC multiemployer guaranty fund would increase from $13 to $26 per participant for the plan year beginning after Dec. 31, 2014, and would subsequently be indexed.
A significant provision proposed in ‘Solutions Not Bailouts’ not a part of the final legislation was the inclusion of new structures to foster innovative plan designs. The new plan design concept was among AGC’s top priorities and was, unfortunately, dropped prior to the enactment of the law. However, AGC has received favorable reaction from Congressional leaders that the new plan design concepts will be debated and addressed early in the next Congress. The reason for its omission from the final law was not policy related.
For more information, please contact Jim Young at (202) 547-0133 or firstname.lastname@example.org.
Return to Top