Welcome
Benefits & Executive Compensation News

New Pension Coalition Demands Action on Long-Term Solvency (3)

July 17, 2019, 2:59 PMUpdated: July 17, 2019, 6:32 PM

Former House Speaker John Boehner (R-Ohio) and former Rep. Joe Crowley (D-N.Y.) are recruiting retirees, unions, corporations, and lawmakers to help the nascent Retirement Security Coalition halt a looming pension solvency crisis.

The political odd couple, who tangled with the economics of righting underfunded multiemployer pension plans while serving on the House’s labor and tax-writing panels, told Bloomberg Law they have joined forces to prod Congress into acting before the situation gets out of control. They cited a 2018 report from Washington consulting firm Matrix Global Advisors projecting that the U.S. could lose up to 55,000 jobs and $1.2 billion in federal tax revenue by 2025 if the struggling Central States pension plan totally collapses.

The decades-old retirement plan represents hundreds of thousands of participants—including Teamsters, bakers, and miners—who are in danger of losing their promised benefits because of financial instability.

“It’s going to take some political courage on all asides to effect the change that is needed,” Crowley said ahead of the RSC’s formal rollout on July 17.

Coalition spokeswoman Megan Taylor told Bloomberg Law the group’s four guiding principles for potential fixes are:

  • Protecting retirees;
  • Maintaining solvency of the PBGC;
  • Creating incentives for increased funding of failing pensions; and
  • Adding new tools to reduce plan liabilities

A bicameral supercommittee in Congress last year attempted to find common ground on pension issues but fell short.

Some of the ideas tossed around included government-backed loans, increased premiums to the Pension Benefit Guaranty Corporation—which expects its multiemployer arm to run out of money by 2025—and benefit cuts. One of the worst-case scenarios presented to lawmakers earlier this year projected nearly $500 billion lost over the next decade if nothing is done.

House Ways and Means Chairman Rep. Richard Neal (D-Mass.), an alum of the supercommittee, moved a 30-year loan program through the panel earlier this month. Speaker Nancy Pelosi (D-Calif.) told reporters July 17 that the House would vote on Neal’s pension bill next week.

Sens. Rob Portman (R-Ohio) and Sherrod Brown (D-Ohio) have repeatedly said they are working on a broader alternative which remains in flux.

Crowley declined to comment on any of the existing legislative proposals. “We’ll let Congress develop the solution,” he said.

Boehner said raising awareness about the problem is paramount. “We need voices from back home contacting their members,” he said.

Others lending their support at this point include trade groups (U.S. Chamber of Commerce, American Bakers Association) and corporations (UPS). Taylor said the coalition plans to bring others on board by circulating letters in Congress and around the business community. She said events on Capitol Hill will likely follow.

“Stay tuned,” Boehner said of his latest campaign.

(Deletes extraneous sentence in ninth paragraph.)

To contact the reporter on this story: Warren Rojas in Washington at wrojas@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com; Brent Bierman at bbierman@bloomberglaw.com

To read more articles log in. To learn more about a subscription click here.