Composite bill: Another threat to multiemployer pension plans
Earlier this fall, a U.S. House of Representatives subcommittee held a hearing on draft legislation that has the potential to undermine the stability of the multiemployer pension system. What’s worse is the fact that this proposal, called the composite bill, has a real chance of being slipped into year-end omnibus legislation, not unlike the way the Multiemployer Pension Reform Act (MPRA) became law two years ago. In fact, at the September hearing, Representative Joe Courtney (D-CT) pointed out that the proposal was following a path dangerously similar to that of MPRA and put at risk the pensions of millions of workers and retirees without giving them a say in the process.
The composite bill is an idea designed and promoted by the National Coordinating Committee on Multiemployer Plans as its final step in its MPRA agenda. Where MPRA allows trustees of severely-underfunded plans to apply to cut their retirees’ benefits, the composite bill creates incentives for employers paying into relatively well-funded guaranteed pension plans to shift a portion of their contributions to riskier inferior retirement plans for their active workers. The draft composite bill could turn well-funded pension plans into poorly-funded plans while also allowing for cuts to retirees’ and active workers’ benefits in both the old and new plans.
The Center is working with a broad coalition of organizations – including AARP, the International Brotherhood of Teamsters, the Western Conference of Teamsters, the International Brotherhood of Boilermakers, and the United Steelworkers – to oppose the composite bill. In addition, the Administration has expressed its concerns about the proposal, saying that it “would put workers’ and retirees’ existing pension benefits at greater risk and that the new type of pension it would create would unacceptably shift the risk to workers without adequate safeguards or transparency.”
Congress should not act in an impulsive, ill-considered manner in passing the composite bill. Instead, Congress should hold hearings and work with retirees, unions, employers, trustees, and others to develop a comprehensive solution that addresses the concerns both of the stakeholders urging the enactment of the composite bill and those committed to saving severely-underfunded plans and the federal pension insurance program.
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Did You Know?
A 401(k) plan is a retirement savings plan in which the benefit is based on contributions to an individual account and the investment return on those contributions. Typically, employees make contributions to the plan and, in many cases, employers match the employees' contributions. These plans are called defined contribution plans. In most 401(k) and other retirement savings plans, the employee is responsible for choosing among the investments offered by the plan. Other types of retirement savings plans are 403(b) and 457 plans.