UA EVP Rick Terven Testifies at House Hearing on Composite Pension Plans

September 24, 2016

United Association Executive Vice President Rick Terven testified before the House Education and Workforce Committee on September 22nd on Chairman John Kline’s proposals to modernize multiemployer pensions.

In his testimony, Terven stressed that “If composite plans are not made available, we believe that many existing defined benefit plans will eventually be replaced with defined contribution plans. The opportunity for creative solutions to our retirement income challenges is within our grasp. We strongly encourage Congress to take advantage of it and expand available offerings to enable labor and management to find solutions which best meet their specific needs.”

Read Terven’s testimony.

The Committee press release answering questions on the Chairman’s proposal can be found here. The discussion draft, which was released two weeks ago, contains new multiemployer composite plan designs that were part of the Solutions Not Bailouts proposals held back when the Kline-Miller pension reform law was enacted in 2014. The composite plans were developed by the National Coordinating Committee for Multiemployer Plan’s Retirement Income Security Review Commission, which included MCAA and the United Association.

Chairman Kline has invited interested parties to provide input into the draft’s features. He has also requested comments and proposals on how to shore up funding for the Pension Benefit Guaranty Corporation (PBGC) multiemployer plan insurance fund, which is headed for insolvency within 10 years without major changes to its program and insurance premium funding.

In releasing the discussion draft Chairman Kline stated:

“For years, the committee has worked on a bipartisan basis to improve multiemployer pensions and safeguard the retirement security of workers and retirees. We have already made significant progress, and the draft proposal released today represents the next step in this important effort.

This proposal will provide more retirement choices for workers, more flexibility for employers, and greater protection for taxpayers. It reflects the input of business and labor leaders, as well as retiree advocates who have long recognized the need to strengthen the retirement security. I encourage other concerned individuals to share their views and ideas.

There is still a lot of work to be done, including tackling the fiscal challenges facing the PBGC. Improving the multiemployer pension system is an urgent priority for employers and labor leaders that will benefit America’s workers and taxpayers. I hope my colleagues in the House and Senate will make it an urgent priority as well.”

The composite plans are new plan design options that plan sponsors can choose to adopt or not in plan amendments. The discussion draft envisions adoption of a composite plan by amendment to a traditional multiemployer defined benefit plan that suspends future accruals into the former (legacy) plan (Red Zone plans cannot convert). All future accruals then flow into the new composite plan.

In the new composite plan, annual one-year and 15-year funding projections must maintain 120% funding. Shortfalls must be addressed by added contributions, future accrual cuts, and other benefit adjustments to meet the 120% funding safeguard. The legacy plan also must be funded under current funding rules, and there are minimum funding requirement contributions for all employers that enter the composite plan.  And, because the benefits in the composite plan are not insured by PBGC, no PBGC premiums are paid on those participants. Legacy plan participants still pay the PBGC premiums at whatever new higher level may be imposed.

The UA and MCAA also submitted a joint statement of support to lawmakers on Capitol Hill. Chairman Kline’s call for urgent Congressional action is fully warranted, as the composite plan models have been thoroughly vetted in Congress over the past several years.  Action this year will stem the need for consideration by the next Congress, which would take a year or more, and thereby diminish the remedial benefits of the composite plan model for the entire system.  MCAA, the UA and the NCCMP coalition continue to press lawmakers to honor Mr. Kline’s perseverance on this most important issue and to heed his call for timely and effective action this year, even though time is short.

Related Articles
MCAA’s Government Affairs Committee offers an update on the latest happenings on Capitol Hill, including a big victory for prevailing wage policy, possible upcoming positive administrative reforms in the federal prevailing wage program, a shift in construction workforce policy in MCAA members’ favor, an update on PBGC grants for critical and declining multiemployer pension plans, and MCAA advocacy for COVID-19 pandemic cost escalation adjustment clauses in federal contracts. The committee remains busy protecting our MCAA members’ interests on Capitol Hill and providing members with the latest information through programming like the virtual MCAA/CEA National Issues Conference slated for July 21 from 11:00 a.m. to 3:00 p.m. EDT.…
MCAA’s Government Affairs Committee offers an update on the latest happenings on Capitol Hill, including tax credits available to employers under the American Rescue Plan (ARP) and the rescinding of the Trump Administration’s pending regulations that would have relaxed safeguards against worker misclassification. The committee remains busy protecting our members’ interests on Capitol Hill.…
Effective public policy advocacy and non-partisan political activities go hand-in-hand with a broader suite of association member services at MCAA. When MCAA’s Board of Directors re-instituted MCAA’s Political Action Committee over 20 years ago, they did so with a renewed commitment to building the profile of pipe trades union-signatory employers’ key role in the industry, and in policy deliberations in Washington, DC. That foresight and initiative have paid off and will continue to do so into the future with our members’ and local affiliates’ ongoing commitment to that vision.…
What do the multiemployer pension reforms in the Butch Lewis Emergency Pension Plan Relief Act of 2021 (signed into law by President Biden in the American Rescue Plan Act of 2021 on March 11, 2021) mean for your company? MCAA's John McNerney is joined by leading industry experts Earl Pomeroy of Alston & Bird and Josh Shapiro of The Groom Law Group to lay out the details of the law, the questions remaining to be answered in regulations issued by the Pension Benefit Guaranty Corporation in the 1,200 days from enactment, and what it will mean for your plans and the industry overall.…

Are you joining us THIS THURSDAY for a very special webinar with football legend turned entrepreneur, @JoeMontana? Co-hosted by BuildOps, you’ll hear Joe’s take on leadership, teamwork, and how to be your best in every situation. Don't forget to register –http://ow.ly/QeYM50Fadq5

.@Havtech and @MacDonaldMiller are among the MCAA members using @XOiTechnologies to capture facilities information that helps them improve service and better communicate with clients.

http://ow.ly/xmnX50F7Jy4

Tune in on Friday, June 18th at 2pm Eastern for MCAA’s Sponsor Spotlight #22 with Bob Bolton, MCAA President-Elect and Wayne Garrett, Managing Director, NA Applied Equipment for @carrier. Register today at http://ow.ly/fOVh50EREzC

Make complying with the OSHA hazard communication standard easier by subscribing to SDS Binderworks today! There is a subscription plan to meet a variety of budgets and needs. Learn more at http://ow.ly/g4wY50F7Nfp

Load More...