House and Senate Republicans are putting pressure on the Obama administration to release reports on the viability of multi-employer pension plans, retirement funds that are popular with unions and other groups of small employers.
In a letter to Labor Secretary Hilda L. Solis, Treasury Secretary Timothy F. Geithner and Joshua Gotbaum, director of the Pension Benefit Guaranty Corp., four GOP lawmakers asked for two overdue reports from the PBGC. The first report is supposed to examine whether premium levels are high enough to support guaranteed benefits, while the second report is expected to make suggestions for legislative fixes.
The letter was signed by House Education and the Workforce Chairman John Kline of Minnesota; House Ways and Means Chairman Dave Camp of Michigan; Senate Health, Education, Labor and Pensions ranking member Michael B. Enzi of Wyoming; and Senate Finance ranking member Orrin G. Hatch of Utah.
The reports are mandated by a 2006 law (PL 109-280) that increased the disclosure requirements of multi-employer pension plans. The reports were due Dec. 31, 2011. The letter asked that the agency provide them by Nov. 2.
“We remain concerned about the challenges facing these plans,” the Republicans wrote in their letter, dated Friday.
Recent reports have raised troubling questions about the financial health of multi-employer plans. Many of the plans are still suffering from the aftereffects of the stock market drop during the recession and the subsequent low interest rates. Rising numbers of retirees are also putting pressure on the plans, raising the risk that they may have to be bailed out by the PBGC, the federal agency in charge of making sure that workers’ retirement accounts are safe. In addition, many employers have dropped out of plans or gone bankrupt, leaving the other employers in the group to pick up the slack for their retirees.
More than 10 million workers and retirees rely on multi-employer pension plans, according to the PBGC. By the end of fiscal 2011, those plans faced a $2.8 billion funding gap, double what they faced the previous year, according to an agency report. In 2011, the agency spent $115 million bailing out insolvent plans, $18 million more than in 2010. More plans are expected to become insolvent as an increasing number of retirees start receiving their guaranteed benefits.
Lawmakers from both parties have expressed interest in finding ways to strengthen multi-employer pension plans. The relevant House and Senate committees have held hearings looking at problems in the pension system during the past six months. But lawmakers have yet to make a concerted legislative push.
Vice President Joe Biden waits to conduct a mock swearing-in ceremony with Sen. Brian Schatz, D-Hawaii, in the Capitol's Old Senate Chamber, December 2, 2014. Schatz was sworn in to serve the remainder of his term since he was appointed to the seat after Sen. Daniel Inouye, D-Hawaii, passed away.