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  #761  
Old 07-17-2019, 09:20 AM
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Mary Pat Campbell
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WITHDRAWAL LIABILITY

https://www.jdsupra.com/legalnews/an...on-fund-85721/

Quote:
Another Multiemployer Pension Fund Cautionary Tale: Employer Does Not Owe Withdrawal Liability, But May Still Owe An "Exit Fee"

Spoiler:
Employers that completely or partially withdraw from underfunded multiemployer pension funds are well aware that they may owe the fund withdrawal liability—an assessment against the employer of its allocable share of the fund’s underfunding, provided under ERISA. Imagine an employer that finds out its withdrawal liability is reduced to zero under the “de minimis reduction,” an exception under ERISA which reduces or eliminates withdrawal liability when the amount would be relatively small (under $150,000). Now imagine that employer’s reaction when it finds out that even though it owes no withdrawal liability based on the de minimis exception, it may still have to pay the fund an “exit fee” built into the fund’s trust agreement.

The Four-C-Aire Case

In Sheet Metal Workers’ National Pension Fund v. Four-C-Aire, Inc. (4th Cir. July 3, 2019), the pension fund’s trust documents provided that an employer would be required to pay the fund an “exit fee” if the employer ceased having an obligation to participate in the fund resulting in a withdrawal with no withdrawal liability (e.g., because of the de minimis reduction). The exit fee equaled the employer’s contributions to the fund for the 36-month period preceding the month the employer ceased having an obligation to contribute to the fund. By adding this exit fee to its trust documents, the fund created a mechanism to require withdrawing employers to pay to leave the fund, even when no statutory withdrawal liability was owed.

In the case, the participating employer, Four-C-Aire, withdrew when its CBA expired without any new agreement to contribute to the fund but did not owe any withdrawal liability due to the de minimis reduction. Four-C-Aire failed to pay the exit fee. The fund sued under ERISA Section 515, seeking payment of the exit fee as a delinquent contribution. Four-C-Aire argued that its obligations under its CBA, including the obligation to pay the exit fee, ceased when its CBA expired. However, during the term of the CBA, the pension fund amended its trust documents to provide that the exit fee was independent of any CBA and continued to apply after the termination of a CBA, regardless of any CBA language to the contrary.

The Fourth Circuit Court of Appeals ruled that the fund’s exit fee delinquent contribution action could go to trial. The court said that Four-C-Aire was a party to a CBA which incorporated by reference the fund’s trust documents, including any amendments to those documents and any policies and procedures adopted by the fund’s board of trustees. Because of this incorporation, Four-C-Aire was bound by the terms of the trust documents, including the amended language added during the term of the CBA providing that the obligation of an employer to pay the exit fee survived expiration of the CBA.

Consequences for Employers Participating in Multiemployer Pension Funds

The take-away of this case for employers participating in multiemployer pension funds is that in many cases, the employer will be bound by the terms of its CBA, and by the terms of the pension fund’s trust documents, and fund policies and procedures, including amendments to those documents adopted while the employer is participating in the fund. The broad nature of many fund documents arguably gives considerable power to pension funds to impose onerous terms on participating employers mid-CBA. To protect their interests, participating employers should obtain copies of all fund trust and other documents, read them carefully, and consult with experienced benefits counsel, so they can understand their obligations and options, which may include both ERISA withdrawal liability and fund imposed contractual liability.


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  #762  
Old 07-17-2019, 01:39 PM
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https://www.forbes.com/sites/ebauer/...M#2739f6776f4c

Quote:
Some Good News On Multiemployer Pensions

Spoiler:
How, you ask, can there possibly be good news on multiemployer pensions?

The updated 2019 PBGC projections aren't out yet but there's no reason to believe the numbers are any better than last year's "insolvency in 2025" multi-employer PBGC fund projections; likewise, the government's form 5500 data, the source for publicly-available information on plan funded status, only has updated data for a handful of plans.

The House is getting closer to voting on the same bill that failed last year, the Butch Lewis Act, which promised to save multiemployer solutions through the gimmick of long-term, low-interest, and ultimately forgivable loans, having passed a replica of this bill through the House Education and Labor Committee in early June and through the Ways and Means Committee just last week. There's no bill at all in the Senate.


I get e-mails from workers or retirees who are counting on these pensions, or from concerned family members, and they see no sign of hope.

And so on.

But I recently had a conversation with Michael Scott, Executive Director of the National Coordinating Committee for Multiemployer Pensions (NCCMP), who surprised me with his optimism about the situation, because he believes that Congress is actually following their tradition of finding bipartisan solutions when it comes to pensions, and is working hard to come up with a legislative solution.

And, after all, we actuaries like to comfort ourselves with the notion that major pension reform legislation has a history of bipartisanship, and we're not entirely wrong. As nwLaborPress.org reported at the time, the most recent pension reform, the Multiemployer Pension Reform Act of 2014, itself took the form of an amendment to a budget bill, without much debate on the pension changes because of the rushed and behind-closed-doors of the entire budget process. The prior overhaul in pension legislation, the Pension Protection Act of 2006, passed by a vote of 93-5 in the Senate and 279 - 131 in the House. And at present, we have further retirement legislation winding its way through Congress in the form of the SECURE Act, which (though it has since stalled in the Senate), passed the House by a vote of 417-3.

So what would a multiemployer rescue bill look like if it isn't the Butch Lewis (forgivable, low-interest) loan program? Scott pointed me to the NCCMP "Common Sense Principles for Multiemployer Pension Reform," which he believes reflects the contours of a solution, and, yes, among these is what we'll inevitably have to call "the B word," a bailout, though in the document it's more gently called a "liability removal tool," which will

[e]xpand upon existing partitioning rules to allow plans to regain solvency by transferring pension liabilities to the PBGC. The liability removal tool will be a one-time program to address the existing funding problems for critical and declining status plans.

There is no getting around this; back in December, I detailed the ways in which the original pension legislation, ERISA, and subsequent laws, put roadblocks in front of plans trying to properly fund their plans, and suggested that a better framing than "bailout" is that idea that the government would be making "restoration payments" in acknowledgement of these regulatory flaws. As a reminder, too, any such program would not be dealing with existing employers having failed to set aside enough money for their employees but has to do with "orphan liabilities" in plans where so many past participating employers have gone bankrupt. (Recall that, at the extreme, over 90% of United Mine Workers plan participants are retired, and nearly 85% of the Central States/Teamsters participants.)

But the NCCMP's Principles go beyond a simple bailout for existing underfunding. Here are two further items which are key to the future of the plans:

First, they write, new legislation should

Ensur[e] that the Crisis is Not Repeated – Trustees need additional tools to proactively manage plans to improve plan funding, react more effectively to market volatility, and to ensure that multiemployer plans remain well funded once the current crisis is resolved.

This is, yes, easier said than done, but this aligns with the point that I attempted to drive home back in the fall. In House Committee testimony in the spring (or, more precisely, in written replies to follow-up questions), the NCCMP detailed exactly these issues, and concluded,

The bottom line is that the current state of financially distressed multiemployer pension plans can be directly traced back to the actions and inactions of the U.S. government.

(Is the federal government the only party to blame? No, of course not -- my quality time at the microfilm reader with the 1975 Wall Street Journal on Mafia corruption at Central States says otherwise. But it's an important part of the story.)

Second, the NCCMP writes,

New Plan Designs Need to be Created – Funds must be given the option to adopt new plan designs, such as variable defined benefit plan design modifications, enabling legislation for 414(k) plans, composite plans, and other new plan designs, which will allow them to attract new employers, eliminate underfunding, and prevent any reoccurrence of the current funding crisis.

What's a 414(k) plan? This isn't a typo for 401(k) but a hybrid plan which is intended to have a mix of defined benefit and defined contribution (401k) features; however, even though it is defined in Internal Revenue Code Section 414(k) in the same manner as 401(k) plans are defined in that section of Code, such plans have never really come into use. (Yes, I had to look this up; you can read more at this link.)

What's a composite plan? This is a proposal developed by the NCCMP for another sort of hybrid plan, which is intended to provide for a greater degree of risk-sharing and risk-smoothing among participants, with more flexibility to adjust benefits as needed, to promote more reliable funding. It's modeled, in part, on similar plans in Europe, which themselves were a response to the decline in employers' willingness or ability to take on the risk of sponsoring pension plans.

Now, all that being said, it is highly likely that whenever legislation does come out -- whether it's passed in a whirlwind like the 2014 reform act or debated as thoroughly as the SECURE Act -- I'll pick it apart and find all manner of things I disagree with, especially the degree to which federal cash is balanced by participant and employer sacrifices, but that's in the nature of legislation, right?

And, again, what's at stake here is not simply whether teamsters and miners have the pensions they expected to be awaiting them upon retirement, or whether ultimate cuts to their benefits are manageable or so harsh they can't pay their bills.

To get back up on my soapbox (yes, once again), we, as a nation, and our politicians and leaders, cannot continue to long for the traditional defined benefit pension plan; that's gone and it's not coming back. Instead, we need new ideas for ways to go beyond the divide between traditional pension and retirement savings account. And right now, the prospect of fixing the multiemployer system and setting up a regulatory environment in which such plans can succeed in the future, as well as such plans as the fully-funded risk-sharing pension plan in place for Wisconsin public workers, are the best shot we have at defining a system, yes, however far into the future, which can offer all American workers a means of sharing risk in our retirement system.
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  #763  
Old 07-22-2019, 09:33 AM
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BAILOUT

https://burypensions.wordpress.com/2...ll-report-out/

https://www.congress.gov/116/crpt/hr...116hrpt159.pdf

https://burypensions.wordpress.com/2...ort-1-summary/
Quote:
Bailout Bill Report (1): Summary
Spoiler:
Here is what I got from reading the Ways & Means Committee Report on H.R. 397 starting with this blog summarizing the salient points in the bill:

Pension Rehabilitation Administration to be established within the Department of the Treasury.

Pension Rehabilitation Trust Fund to be established consisting of:

amounts transferred under section 6 of this act (see entirety of section 6 below)
loan interest and principal
amounts received from Treasury for operating expenses
Expenditures from the fund:

loans to seriously underfunded multiemployer plans
payment of principal and interest on obligations issued under section 6
administrative and operating expenses
Loans can be made to multiemployer plans in:

critical and declining status (73)
critical status with modified funded percentage of less than 40% and with a raaio of active to inactive participants less than 2 to 5
insolvent per IRC 418E if not terminated and insolvent after 12/16/14
Loan terms:

interest only for 29 years with balloon payment in year 30
interest rate no lower than rate on 30-year Treasury securities
Plans that have already cut benefits under MPRA must apply for loans and restore benefits.

If a plan is unable to make any payment on a loan when due: negotiation to revise terms.

SEC. 6. ISSUANCE OF TREASURY BONDS. The Secretary of the Treasury shall from time to time transfer from the general fund of the Treasury to the Pension Rehabilitation Trust Fund established under section 9512 of the Internal Revenue Code of 1986 such amounts as are necessary to fund the loan program under section 4 of this Act, including from proceeds from the Secretary’s issuance of obligations under chapter 31 of title 31, United States Code.





https://burypensions.wordpress.com/2...senting-views/
Quote:
Bailout Bill Report (2): Dissenting Views
Spoiler:
Still trying to find anything on how the Treasury would come up with the money to make the loans but dissenting views by Kevin Brady, Republican Leader on the Ways & Means Committee, make the case for killing this bill.


Promising more than they can provide may have helped these plans attract employers and workers, but at the cost of exploiting these union members who are now at risk of losing their hard-earned pensions. (page 2)

A careful review of the testimony provided by representatives of multiemployer plans, sponsoring unions and employers, participants and independent financial and actuarial experts at numerous Congressional hearings leads to the conclusion that the most likely explanation is that this crisis was caused by the mismanagement of the plan trustees who made pension promises to hardworking Americans that they knew, or should have known, they could not keep. Congress should act on a bipartisan basis to protect these workers and retirees. H.R. 397 would instead exacerbate the crisis, do nothing to fix these plans, and cost taxpayers tens of billions of dollars in the short-term, and likely hundreds of billions, or even trillions of dollars, over the long-term. (page 3)

Some have argued that asset smoothing is appropriate because it allows plans to mitigate volatility in funding levels and therefore required contributions resulting from significant volatility in investment returns. However, volatility in required contributions is already addressed through relatively long amortization periods, rather than having to immediately pay down all underfunding. Plans that need additional protections against volatility due to investment return fluctuations should not be in investments with such high levels of volatility. Allowing plans to “smooth” assets instead of measuring assets at fair market value inappropriately encourages aggressive investment strategies. (page 7)

Both asset smoothing and credit balances make it much easier for plans to meet required contributions by lessening the burden on contributing employers without the need to decrease the level of pension promises, but do so in a manner that makes plan underfunding opaque and allows plans to avoid taking the steps necessary to address that underfunding. (page 8)

Because of the interpretation by plan trustees of the multiemployer plan funding rules, employers sponsoring multi employer plans receive a competitive advantage over employers sponsoring single-employer plans in that employers in multi employer plans make much smaller contributions for the same pension promise. (page 8)

The withdrawal liability rules arc complex and opaque. Employers, especially small employers, have little if any insight into plan underfunding or the risks that plans will become underfunded in the future, or the degree to which that underfunding translates into withdrawal liability. (page 9)

Under PPA, multiemployer plans that claim they are unable to meet required contributions or are otherwise in the red zone receive a waiver from required contributions. There are no objective criteria used to determine whether a plan can afford required contributions. Such plans are under a requirement to take “reasonable measures” to improve funding levels, or if that is not reasonable, to forestall insolvency. There is good reason to believe that many plans are taking advantage of this waiver to avoid doing what they can to reduce underfunding. (page 10)

Letting underfunded plans continue to make new promises and dig themselves into ever deeper holes also carries significant risk to the entire system. It is true that absent the enactment of PPA, many multiemployer plans would have terminated. However, allowing plans that claim they cannot meet required contributions a waiver from required contributions has made the crisis much deeper. At the beginning of 2007, multiemployer plans were $193 billion underfunded; in 2015 multiemployer plans were $638 billion underfunded. PBGC, the federal insurer of these plans, went from a deficit of $739 million in 2006, to a deficit of $53.9 billion in 2018. (page 12)

Multiemployer pension benefits are generally in the form of annuities, just like those provided by insurance companies, payable upon retirement. Like insurance companies, multiemployer plan trustees should have used reasonable assumptions to measure the cost of liabilities, and invested in high-quality bonds matching the duration of those liabilities. Alternatively, trustees may finance the annuities promised to workers by purchasing them from insurance companies. Had plan trustees acted prudently and followed either course of action, the plans and PBGC would not be in crisis. (page 13)

Trustees must manage the plans in the interest of participants, not the unions and employers that appointed them. Congress should consider whether trustees should be completely independent from the unions and employers. This would prohibit trustees of any plan from simultaneously working for the union or employers in the plan. Additionally, the plans should be required to disclose much more information so that employers and participants, as well as the government regulators, have more insight into plan operations and financing. (page 18)

It is crucial to note that it is the trustees who made the promises to union members that trustees now cannot keep. Taxpayers had no role in making those promises. (pages 19-20)

And Congress revoked PBGC’s limited authority to borrow from the Treasury Department in 2012 legislation, MAP-21, signed into law by President Obama. (page 20)

It is not clear how, without reforms, these plans are supposed to pay back the loan with interest. Are the plan’s current assets sufficient to pay back the loans? It would seem not, as the plans can only be eligible for the loans under the bill in the first place because their assets are insufficient to pay the plan’s pension liabilities. (page 23)

Committee Democrats argued that H.R. 397 is simply a loan program under which loans will be paid back. But the bill contains an entire section providing financial assistance to plans that cannot certify that they can pay back the loans. This “financial assistance” provided to plans will not be paid back and carries no interest. Committee Democrats refused Republican suggestions to simply delete that section of the bill. And Committee Democrats also rejected a Republican amendment to have an independent analysis of whether plans taking the loans would actually be able to pay back the loan. (pages 23-4)

H. R. 397 would set a precedence of a full taxpayer bailout, which may lead to public pension plans accelerating the pace at which they arc digging. (page 25)

Committee Democrats are moving a partisan bill they know has no chance in the Senate. They moved this bill through Committee before Senate Democrats would even introduce a companion bill. Committee Democrats should put this bill aside, and work on serious bipartisan solutions. (page 25)


https://burypensions.files.wordpress...ntingviews.pdf

I see the last footnote referred to Jeremy Gold's testimony in 2014. This:
https://gop-waysandmeans.house.gov/U...ony_091714.pdf

The 2014 hearings:
https://gop-waysandmeans.house.gov/e...nsion-plans-2/
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  #764  
Old 07-22-2019, 02:28 PM
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Mary Pat Campbell
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https://www.actuary.org/node/12920

Quote:
The American Academy of Actuaries is hosting a series of briefings to provide a comprehensive look at the multiemployer pension crisis. Together, they will equip attendees with a solid foundation of the past, present, and potential future of multiemployer pension plans.

UPCOMING SESSIONS

Session 2: Possible Approaches for Addressing Failing Plans
July 22, 2019 | Noon to 1 p.m. | G11 Dirksen Senate Office Building (SD-G11) | RSVP here.
This session will review and analyze various possible approaches for addressing failing multiemployer plans.

Session 3: Strengthening the System for the Future
August 2, 2019 | Noon to 1 p.m. | 485 Russell Senate Office Building | RSVP here.
This session will focus on potential long-term reforms to the multiemployer system to stabilize plans and minimize the possibility that there will be another crisis in the future.

PREVIOUS SESSIONS

Session 1: Background and Current State
This session was held on July 15, 2019, and provided an introduction to multiemployer pension plans and the serious challenges currently facing them, including a review of the basics of multiemployer defined benefit pension plans and their unique characteristics.

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  #765  
Old 07-22-2019, 02:43 PM
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https://burypensions.wordpress.com/2...rt-3-crs-take/

Quote:
Bailout Bill Report (3): CRS Take
Spoiler:
The Congressional Research Service (CRS) came out with their take on H.R. 397. Excerpts below:


The financial assistance would consist of loans with a 30-year repayment term and, if the loan were insufficient to restore a plan to solvency, additional financial assistance.

A Senate version of the proposal has not been reintroduced in the 116th Congress as of July 19, 2019.

The Congressional Budget Office’s (CBO’s) preliminary estimate of H.R. 397vindicated that the bill would increase the deficit by $64.4 billion over 10 years. CBO’s preliminary analysis of S. 2147 in the 115th Congress indicated that budgetary effects were highly uncertain because of difficulty in projecting how the loan proposal would be implemented.

About 10% to 15% of multiemployer DB plan participants are in plans that are projected to become insolvent within 20 years.

When a multiemployer DB pension plan becomes insolvent,the Pension Benefit Guaranty Corporation (PBGC) provides financial assistance to the plan to pay participants’ benefits. However, PBGC will likely become insolvent by 2025. The federal government has no obligation to provide assistance to PBGC. In the absence of enactment of legislation to address the insolvency of multiemployer plans or the PBGC, participants in insolvent multiemployer DB plans may face large benefit reductions, likely receiving less than $2,000 per year.

Some proponents view federal financial assistance to multiemployer plans as fulfilling part of a promise made to workers. Opponents argue that no precedent exists for the federal government to bail out private-sector pension plans.

The PRA would provide a loan as a lump sum for the amount of the plan’s current liabilities (e.g., to participants in pay status). However, there could be other ways to provide the loan. For example, the loan could be provided on an annual basis for the amount of each year’s benefit payments to those in pay status when the loan was approved.

H.R. 397 would not require any changes that might return plans to solvency, such as a reduction in plan liabilities, increases in employer contributions, or incentives for new employers to join existing plans. There would continue to be no restrictions on the investment of existing plan assets that are not loan proceeds. These assets would continue to be subject to gains and losses in financial markets.

Certain employers (e.g., United Parcel Service and Kroger) have promised to top up the benefits of some retired former employees in certain plans if the benefits were reduced as a result of PBGC financial assistance or MPRA. Because the proposals would not reduce participants’ benefits, these employers could benefit financially by not having to make the top-up payments.


https://crsreports.congress.gov/product/pdf/IF/IF11144
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Old 07-22-2019, 06:09 PM
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BAILOUT

https://www.realclearmarkets.com/art...le_103819.html

Quote:
Congress Moves to Put Pension Benefit Guaranty Corporation On Taxpayer Dole

Spoiler:
The Ways and Means Committee of the House just approved a bill for a big taxpayer bailout of private multi-employer/union-sponsored pension plans. Many of these plans are hopelessly insolvent. In other words, they have committed to pay employee pensions far greater than they have any hope of actually paying. In the aggregate, the assets of multi-employer plans are hundreds of billions of dollars less than what they have solemnly promised to pay.

There is an inescapable deficit resulting from past failures to fund the obligations of these plans. This means somebody is going to lose; somebody is going to pay the price of the deficit. Who? Those who created the deficits? Or instead: How about the taxpayers? The latter is the view of the Democratic majority which passed the bill out of committee in a 25-17 straight partyline vote on July 10.

“Wait a minute!” every taxpayer should demand, “aren’t all these pension plans already guaranteed by an arm of the U.S. government?” Yes, they are--by the government’s Pension Benefit Guaranty Corporation (PBGC). But there is a slight problem: the PBGC’s multi-employer guarantee program is itself broke. It is financially unable to make good on its own guarantees. The proposed taxpayer bailout is also a bailout ofthis deeply insolvent government program.

This was not supposed to be able to happen. In creating the PBGC, the Employee Retirement Income Security Act (ERISA) required, and has continued to require up to now, that the PBGC be self-financing. But it isn’t--not by a long shot. Its multi-employer program shows a deficit net worth of $54 billion. The PBGC was not supposed ever to need any funds from the U.S. Treasury. But it is now proposed to give it tens of billions of dollars from the Treasury, and the bill does not have any limiting number.

“ERISA provides that the U.S. government is not liable for any obligation or liability incurred by the PBGC,” says the PBGC’s annual report every year. But here we have another of the notorious “implicit guarantees,” which pretend they are not guarantees until it turns out that they really are. Consider that if the PBGC’s multi-employer program were a private company, any insurance commissioner would have closed it down long ago. No rational customer would pay any premiums to an insurer which is demonstrably unable to pay its committed benefits in return. Only the guarantee of the Treasury, “implicit” but real, keeps the game going.

Bailing out guarantees which were claimed not to put the taxpayers on the hook, but in fact did, is the familiar pattern of “implicit” guarantees. They are originally done to keep the liability for the guarantees off the government’s books, an egregious accounting pretense, because everybody knows that when pushing comes to shoving, the taxpayers will be on the hook, after all.

In such “self-financing,” off-balance sheet entities, the government generally does not charge the fees which their risk economically requires. This is true even if their chartering acts theoretically require it. Undercharging for the risk, politically supported by the constituencies who benefit from the cheap guarantees, allows the risk to keep increasing. So in time, the day of the taxpayer bailout comes.

Notable examples of this are the bailouts of the Farm Credit System, the Federal Savings and Loan Insurance Corporation (FSLIC), Fannie Mae, and Freddie Mac. However, the bailout of Farm Credit included serious reforms to the System, and the bailout of FSLIC, serious reforms to the savings and loan industry. The bailouts of Fannie and Freddie were combined with putting them in conservatorship under the complete control of the Federal Housing Finance Agency, where they remain today.

Now for the PBGC, when we read all the way to the very last paragraph on the last page of the bill, page 40, we find that the PBGC’s multi-employer program, which was supposed never to need any appropriated funds, is to get generous taxpayer funds forever. “There is appropriated to the Director of the Pension Benefit Guarantee Corporation,” says this paragraph, “such sums as may be necessary for each fiscal year.” The multi-employer pensions would thus become an entitlement, on the taxpayer dole. There is no limiting number or time. Nor in the previous 39 pages is there any reform of the governance, operations, or ability of these pension plans to finance themselves on a sustainable basis.

In short, the bill passed by the Ways and Means Committee is a bailout with no reform. But the governing principle for all financial bailouts should be instead: If no reform, then no bailout.

Alex J. Pollock is a distinguished senior fellow at the R Street Institute in Washington, D.C. He was President and CEO of the Federal Home Loan Bank of Chicago from 1991-2004.


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Old 07-22-2019, 08:10 PM
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BAILOUT

https://www.daytondailynews.com/news...0LrCcHE5fVPLJ/
Quote:
Former Speaker Boehner joins fight to save pensions for 1.3 million retirees

Spoiler:
Former House Speaker John Boehner is getting involved in the fight to save the pensions of nearly 1.3 million retirees.

Boehner, a former local congressman who retired in 2015, said Wednesday that he and former House Democratic Caucus Chair Joe Crowley will lead the Retirement Security Coalition, which is billed as “a diverse group of employers, labor unions and policy experts dedicated to finding a common ground solution to the crisis.” The coalition includes UPS, the United Association of Plumber and Fitters and the U.S. Chamber of Commerce.The plan is straightforward: Boehner and Crowley plan to make as much noise as possible to raise awareness of the plight of retirees in endangered multiemployer benefit plans.
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About 10 million people participate in multiemployer pension plans, which enable groups of employers to pool their retirement resources. But about 120 plans covering 1.3 million workers are expected to become insolvent over the next two decades, and the Pension Benefit Guaranty Corporation, which assists endangered and failed pension plans, is expected to run out of money by 2025, which means there will be no backup for those whose pension plans go bankrupt.The two are introducing their coalition a week before the House is expected to take up a $64 billion plan that aims to help troubled pensions. The proposal would provide low-interest, 30-year loans to troubled multiemployer pension plans. The prospects for that plan passing the Senate, however, appear grim.
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START TODAY Though Boehner and Crowley say their coalition intends to raise awareness, some in Congress are acutely aware of the pension issue. A joint committee of House members and senators last year co-chaired by Sen. Sherrod Brown, D-Ohio failed to find a solution. Brown and Sen. Rob Portman, R-Ohio, who also served on the committee, have more than 60,000 constituents in the troubled plans.Boehner and Crowley said they have no plans of endorsing a specific plan, but said instead their goal simply is to heighten awareness. “I’m not sure there’s broad knowledge in our country or on Capitol Hill about how serious this problem is,” said Boehner.
Their goal, Boehner said, is to “let Congress develop a solution.”“It’s certainly not up to Joe and I,” he said. “We’re not legislators any more. We’re going to let the legislators be the legislators.”Crowley said if the systems collapse, those who had pensions of $15,000 a year would see it shrink to $300 annually. “That’s about a cup of coffee per week,” he said.Both said that the failure of the system would decimate the rest of the economy, potentially leading to increased unemployment and layoffs.“What we’re bringing to the table is an alarm bell that this issue needs to be addressed,” Crowley said. “Because millions of Americans — not just a few thousand — face real hardship if their pensions are slashed or cut or compromised.”
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Old 07-25-2019, 04:04 PM
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Mary Pat Campbell
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BAILOUT

https://burypensions.wordpress.com/2...inority-views/
Quote:

Bailout Bill Report (4): E & L Minority Views
Spoiler:
Just announced that the multiemployer bailout bill will get a vote in the House this week.

Whereas Ways and Means calls them dissenting views, the Committee on Education and Labor in their report on H.R. 397 calls them minority views and they are the most enlightening section.

Excerpts below.


H.R. 397 is an appalling departure from the bipartisan reforms to the multiemployer defined benefit plan system which is the past have been enacted with protections for plan participants and beneficiaries. In stark contrast, this sweeping legislation is drafted to avoid any necessary and responsible changes on the part of the plan trustees and their approach to managing these vast pension funds. (page 126)

An inaccurate measurement of plan liabilities additionally does not facilitate an accurate comparison of the funded statuses of plans for government and other interested parties that monitor the condition of multiemployer plans. (page 128)

[T]he existing withdrawal liability rules are complex and opaque. (page 129)

Throughout PBGC’s history, its obligations have not been backed by federal funding, and Congress revoked PBGC’s limited authority to borrow from the Treasury in a 2012 bill signed into law by President Obama. (page 132)

The new loan p0rogram also establishes a dodgy, biased, and fiscally irresponsible loan structure and equally flawed payment terms for certain pension plans….Remarkably, the loans would be forgiven if they are unable to be repaid….There are essentially no limits on the loan amounts available to plans as loans are authorized to cover all liabilities. (page 134)

The flawed, costly, and alarming policy contained in H.R. 397 puts taxpayers on the hook for likely loan defaults, creates incentives for plans to continue to underfund and eventually fail, and endangers the retirement security of millions of pensioners. The majority’s political choice to consider this flawed bill – which has no chance of moving forward in the Senate – will result in delays and not solutions for workers and retirees. (page 142)


https://burypensions.files.wordpress...l-minority.pdf

https://burypensions.wordpress.com/2...cost-estimate/
Quote:
Bailout Bill Report (5): CBO Cost Estimate
Spoiler:
The Congressional Budget Office [CBO] estimates that 157 multiemployer pension plans would be eligible to apply for loans under the criteria set forth in H.R. 397…. Of those 157 plans, CBO estimates that 8 would be ineligible for loans, 19 would receive loans but not grants, and 130 would receive loans and grants … CBO estimates that loans disbursed in 2020 would total $43.3 billion; $3.6 billion of that amount would be for plans required to apply for loans.”

More excepts from CBO Report:


If the PRA evaluated the application and determined that a plan could not repay a loan in full and still remain solvent, the plan would receive a smaller loan, and the difference would be covered by grants from PBGC. Those grants could not exceed the estimated value of benefits that would otherwise be guaranteed under current law by PBGC if the plan was insolvent on the day of its application. Pension plans would not be required to repay the grants received from PBGC. (page 2)

The bill also includes several provisions that would increase revenues, including ones that would modify the required distribution rules for certain beneficiaries of tax-favored retirement plans after the death of the employee or account holder, increase penalties for certain required filings and notices, and require information sharing related to heavy vehicle use tax. (page 2)

As of 2015, almost 300 plans were classified as critical and more than 80 of those were classified as critical and declining. Currently, 14 plans have been approved to suspend benefits under MPRA. (page 3)

Under the bill, the PBGC generally would disburse grants to plans slowly, releasing funds only in years when the fair-market value of a plan’s assets is less than five times its expected expenditures for benefits and administrative expenses for the year. Most plans’ assets are defined as any assets it holds at the beginning of a year plus any expected loan disbursements for that year. However, for plans that fit certain criteria, assets are defined as excluding any loan disbursements anticipated to be received in the coming year. The only plan that meets those criteria is the Central States, Southeast & Southwest Areas Pension Plan; as a result, that plan would receive about $3 billion in grants in 2020. (page 5)

Under current law, CBO projects, PBGC’s multiemployer revolving fund will be exhausted in 2025 and PBGC will reduce current-law assistance to amounts that can be supported with premium income. CBO projects that under H.R. 397, the revolving fund would be exhausted about 15 to 20 years later because the plans receiving loans and grants would draw down significantly less current-law assistance from PBGC. However, CBO expects that some multiemployer plans that did not receive loans or grants under H.R. 397 would become insolvent and draw PBGC financial assistance after 2029. As a result, direct spending for PBGC’s current-law assistance would increase by about $3 billion over the 2030-2039 period. (page 14)

CBO also anticipates that most multiemployer pension plans that received loans under H.R. 397 would become insolvent within a few years after the end of their loan repayment periods. (page 15)


https://www.cbo.gov/publication/55485
https://www.cbo.gov/system/files/2019-07/hr397_2.pdf


https://burypensions.wordpress.com/2...-passes-house/
Quote:
Breaking News: H.R. 397 Passes House
Spoiler:
According to an email blast from one of the multiemployer plans that applied to suspend benefits under MPRA, and was denied:


Late tonight the House of Representatives with Bipartisan support passed HR 397, the Butch Lewis Act. This marks the first big step in passage of pension relief legislation. Also todaythe Butch Lewis Act was reintroduced by 28 Democratic Senators in the US Senate. Any final Bill needs to be passed by both the House and the Senate and signed by the President to become law. Although there is still much to be done to get to the finish line, today was a very good day. Both the House and the Senate arein the August recess at the end of this week.

H R 397 RECORDED VOTE 24-Jul-2019 8:34 PM
QUESTION: On Passage
BILL TITLE: Rehabilitation for Multiemployer Pensions Act

Ayes Noes PRES NV
Democratic 235
Republican 29 168
Independent 1
TOTALS 264 169
http://clerk.house.gov/evs/2019/roll505.xml#Y
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Old 07-26-2019, 05:55 AM
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BENEFIT CUTS

https://burypensions.wordpress.com/2...-mpra-filings/

Quote:
Breaking News: Two New MPRA Filings
Spoiler:
Even with the possibility of a bailout there is a multiemployer plan in critical status that is applying to cut benefits under MPRA. It is the I.B.E.W. Local Union No. 237 Pension Plan out of Niagara Falls, NY which withdrew their application last April and has refiled.

There was also an initial filing by the Composition Roofers Local 42 Pension Plan out of Cincinnati, OH.

From their latest 5500 filings:


lBEW 237:

Plan Name: IBEW Local Union 237 Pension Fund
EIN/PN: 16-6094914/001
Total participants @ 12/31/17: 399 including:
Retirees: 169
Separated but entitled to benefits: 60
Still working: 170

Asset Value (Market) @ 1/1/17: $19,142,431
Value of liabilities using RPA rate (3.05%) @ 1/1/17: $118,333,315 including:
Retirees: $62,935,406
Separated but entitled to benefits: $11,928,472
Still working: $43,469,437

Funded ratio: 16.18%
Unfunded Liabilities as of 1/1/17: $99,190,884

Asset Value (Market) as of 12/31/17: $19,322,588
Contributions: $2,981,401
Payouts: $4,929,863
Expenses: $228,712

Composition Roofers 42:

Plan Name: Composition Roofers Local 42 Pension Plan
EIN/PN: 31-6127285/001
Total participants @ 12/31/17: 485 including:
Retirees: 235
Separated but entitled to benefits: 77
Still working: 173

Asset Value (Market) @ 1/1/17: $25,154,117
Value of liabilities using RPA rate (3.05%) @ 1/1/17: $76,256,368 including:
Retirees: $48,723,550
Separated but entitled to benefits: $9,362,750
Still working: $18,170,068

Funded ratio: 32.99%
Unfunded Liabilities as of 1/1/17: $51,102,251

Asset Value (Market) as of 12/31/17: $26,053,645
Contributions: $1,132,719
Payouts: $3,372,256
Expenses: $179,951
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Old 07-26-2019, 06:23 AM
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BAILOUT

https://www.thinkadvisor.com/2019/07...&utm_term=tadv
Quote:
House Multiemployer Pension Rescue Bill Gets 29 Republican Votes
Virginia Foxx said H.R. 397 would really cost hundreds of billions of dollars and lacks plan funding reforms.
Spoiler:
Supporters of H.R. 397, the “Rehabilitation for Multiemployer Pensions Act of 2019″ bill, may have attracted enough Republican support for the bill to give the bill some hope in the Senate.
Members of the House voted 264-169 Wednesday on final passage of H.R. 397.
Democrats voted 235-0 in favor of the bill.
Republicans voted 29-168 against the bill.
If H.R. 397 becomes law and is implemented as written, it could provide about $70 billion in loans for struggling multiemployer plans over the next 10 years. Plan sponsors could use the loans to transfer responsibility for the pension obligations to private life insurers, by buying group annuities.
(Related: Pension Bill Could Add $70 Billion in Group Annuity Sales)
Sponsors of single-employer U.S. defined benefit pension plans made about $26 billion in group annuity-based pension risk transfer deals in 2018, according to the LIMRA Secure Retirement Institute.
H.R. 397 Background
House Ways and Means Chairman Richard Neal, a Democrat from Massachusetts, introduced H.R. 397 in January.
The bill, which is often called the Butch Lewis Act bill, has attracted 209 cosponsors, including nine Republicans.
The bill lets plans use the new loans to build their own plan funding portfolios but gives the sponsors strong incentives to transfer risk by buying group annuities. If eligible sponsors used most of the pension rehabilitation loans to buy group annuities, the bill could lead to private life insurers taking responsibility for providing the promised pension benefits for about 1 million plan participants and dependents.
Vote Details
House members hold many “procedural votes” on a major bill before actually voting on the bill.
House members voted entirely, or almost entirely, along party lines for many of the procedural votes that led up to the final vote on H.R. 397.
On the first vote, on whether to bring up the bill for debate on the House floor, Democrats voted 234-0 to bring up the bill for consideration.
Republicans voted 0-197 against bringing the bill up for discussion.
But, on the vote on final passage, about 15% of House Republicans crossed party lines to vote for the bill.
Supporters of an ordinary bill need 60 votes to bring the bill up for a vote on the Senate.
The Republicans hold 53 seats in the Senate, and the Democrats hold 47 seats. If 15% of Republicans crossed party lines to support H.R. 397, or a similar bill, in the Senate, then the bill would get 55 votes in Senate.
House Floor Debate
The House streamed video of the H.R. 397 floor debate on the web.
Democrats who talked about H.R. 397, including Rep. Frederica Wilson, D-Fla., focused mainly on the need to help people who might be hurt by the failure of multiemployer pension plans.
“This issue has no party, no race, no religion,” Wilson said. “We are all in the same boat, and we are running out of time.”
Republicans who spoke in opposition to the bill blamed the problems in the multiemployer plans on union and employer negligence.
Rep. Virginia Foxx, R-N.C., the highest ranking Republican on the House Education and the Workforce Committee, may have given bill supporters some ideas about ways the bill could be made more likely to pass.
Foxx said one big problem with the current version of H.R. 397 is that the bill sets no limits on pension risk transfer loans.
“We’re giving failed union pensions a blank check,” Foxx said.
The current version of the bill also lacks on provisions designed to improve future multiemployer plan pension funding levels, Foxx said.
Foxx also called for H.R. 397 supporters to be more open about what the bill would really cost.
The bill seems, on the surface, to be likely to add $48 billion to the federal budget deficit over 10 years, but a closer look shows it could have a price tag of hundreds of billions of dollars over 30 years, Foxx said.
Resources
The House Rules Committee site for its H.R. 397 meeting, which includes links to several versions of the bill, is available here.
The latest CBO analysis of the bill is available here.
https://www.cbo.gov/publication/55485
https://rules.house.gov/bill/116/hr-397
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