A Republican-led proposal to reform the multiemployer pension system released Wednesday calls for workers to contribute more to shore up the system.
Dubbed the Multiemployer Pension Recapitalization and Reform Plan, the proposal unveiled by Senate Finance Committee Chairman Chuck Grassley, and Senate Health, Education, Labor and Pensions Chairman Lamar Alexander, would also give new authority to the Pension Benefit Guaranty Corporation, or PBGC, the federal agency that backs pension programs, to make it easier to take workers from companies that exited pension programs and place them in ‘sick pensions’ that are separate from other pension recipients.”
“We need to act quickly, but we can’t just pour money into failing and mismanaged funds,” said Grassley. “Our plan will provide relief and reform now, without it our retirees will be left without the future they worked for.”
Multiemployer plans involve several companies collectively funding plans. Should one employer go bankrupt or otherwise leave, the remaining ones are obligated to take up the slack. Unions favor multiemployer plans because workers can remain in them even if they lose or switch jobs. But if several companies leave, the plans can become a financial burden on the remaining businesses, creating a vicious cycle that threatens their solvency.