Without reform, pension benefits as well as the companies still contributing to plans and paying for the pension benefits of companies no longer contributing
CARLISLE, PA—U.S. Senator Bob Casey (D-PA), a member of the Health, Education, Labor and Pensions Committee, today announced new legislation to strengthen the current funding status of multi-employer plans, protect the pensions for hundreds of thousands of current and future retirees and also protect companies contributing to these pension plans. Senator Casey unveiled his Create Jobs & Save Benefits Act of 2010 at an event in Carlisle at YRC Transportation.
“Pension plans across the country have taken major losses because of the near economic collapse and the decline in the stock market,” said Senator Casey. “Multi-employer plans face unique challenges that are overburdening pension plans and the bottom lines of companies. My legislation would help correct these problems to protect the pensions of workers and unburden companies stuck paying a crippling expense that threatens its existence and the jobs of its employees.”
Multi-employer plans face additional challenges as many firms in these plans have shut down during the recession without funding their pension obligations. Many multi-employer pension plans now run the risk of insolvency.
As more companies leave the pension plan, the costs left to the remaining companies increase to cover the pension benefits of all employees covered by the plan. Companies still contributing to the plans also run the risk of bankruptcy because of the additional burden of being forced to pay for the pensions of the employees of other companies.
Senator Casey’s legislation would make a number of changes to help ensure solvency of multi-employer pension plans and protect current and future retirees.
Specifically, Senator Casey’s Create Jobs and Save Benefits Act would strengthen the funding status of multi-employer plans by making the following changes:
• Mergers and Alliances – The language in the bill would enable multi-employer funds to combine resources for purposes of reducing administrative costs.
• Partition (ERISA Section 4233) – If a plan satisfies certain requirements, the plan will transfer to a separate account all benefit liabilities attributed to orphans (participants of employers who withdrew from the plan without paying withdrawal liability) and assets equal to a maximum of 5-years of projected benefit payments. The PBGC will handle the initial application, drafting of partition agreement and monitor financial assistance to the plans. PBGC does not provide notices, calculate benefits or in any other form administer the plan. The orphans benefit will be fully guaranteed as if the orphan was still receiving benefits from the multi-employer plan.
• Order the Department of Labor and Department of Treasury to prepare a report on whether the qualified partition program has strengthened the financial condition of the original plans and improved the ability of the contributing employers to these plans to remain in business.
Senator Casey was joined at the event in Carlisle by representatives from YRC Transportation, ABF Freight Systems and the International Brotherhood of Teamsters.