NATIONAL COORDINATING COMMITTEE FOR MULTIEMPLOYER PLANS

815 16th Street, N.W., Washington, DC 20006 Phone 202-737-5315 Fax 202-737-1308

Randy G. DeFrehn
Executive Director
E-Mail: [email protected]

December 9, 2014
U.S. House of Representatives
Washington, D.C. 20515
Re:

Support for Multiemployer Pension Reforms

Dear Representative:
The National Coordinating Committee for Multiemployer Plans (NCCMP) strongly supports the
bipartisan agreement between Chairman John Kline and Ranking Member George Miller of the
House Education and Workforce Committee to reform the multiemployer pension system and
implement key provisions of the Solutions Not Bailouts proposal.
The Solutions Not Bailouts proposal was the result of 18 months of deliberation by the
NCCMPs Retirement Security Review Commission which, was made up of approximately 40
labor and management organizations. The proposal helps troubled plans avoid insolvency, puts
the plans recovering from the economic downturn on firmer ground, and helps those plans and
retirees in trouble avoid losing everything. Importantly, this proposal also protects taxpayers by
avoiding a massive taxpayer-funded bailout that would cost billions. We stand with both labor
and business leaders today in support of those recommendations and urge you to pass the
bipartisan proposal being finalized in the Education and Workforce Committee.
Critics of the proposal and the bipartisan agreement claim that they take benefits away from
retirees. The hard truth is that the retirees in troubled plans are going to lose benefits under
current law, and these vital reforms will preserve benefits above what current law provides. For
example, an actual construction industry plan in the Midwest will exhaust its assets in
approximately 15 years, at which point current law will impose a mandatory benefit reduction of
50% on all participants, including retirees. These reforms will provide the trustees with the
option of voluntarily adopting a 10% benefit reduction today, which would prevent the looming
catastrophe. This is what we mean when we say that the proposal preserves benefits.
The most recent claim from those who stand in the way of the bipartisan agreement is that it has
been rushed through and debated in secret. For nearly two years, and following five
Congressional hearings and several public forums, we have worked with both labor and business
stakeholders, and importantly, Members of Congress, to debate and act on the provisions of the
Solutions Not Bailouts. Our most prominent critic, AARP, has testified before Congress and

participated in public forums in opposition to the proposal. While they have produced no
alternative proposal, they have had extensive opportunity to participate in the process and voice
their opinion. The time for debate is over. Now is time for action.
Our critics have been very vocal, yet they remain highly outnumbered by our
supporters. Attached to this letter are numerous letters of support that the proposal has received
from various labor and management organizations. Each and every one of these organizations
remains 100% committed to the enactment of these reforms.
Thank you for your attention to these important matters. We encourage you to pass these muchneeded, bipartisan reforms.

Sincerely,

Randy G. DeFrehn

PENSIONS & INVESTMENTS: CONGRESS MUST ACT TO SAVE MULTIEMPLOYER

PENSION PLANS
BY STEPHEN SANDHERR AND SEAN MCGARVEY | SEPTEMBER 26, 2013

Stephen Sandherr is the CEO of the Associated General Contractors of America and is based in Arlington, Va. Sean
McGarvey is the president of the Building and Construction Trades Department, AFL-CIO, and is based in Washington.
Retirement security for millions of skilled American workers is at stake without Congress taking action to
shore up multiemployer plans.
Tight credit markets and a slowly recovering American economy are wreaking havoc with employers that
contribute to multiemployer defined benefit plans and to these pension programs.
Business and labor leaders, recognizing the challenge ahead, spent 18 months working together, culminating
with a report issued early this year, to find private-sector solutions to
shore up these plans and protect benefits for current and future retirees
and preserve sponsor companies that provide jobs for active members.
Business and labor leaders,
recognizing the challenge ahead,
These solutions, which are supported by both business and labor,
spent 18 months working
are outlined in Solutions Not Bailouts: A Comprehensive Plan from
together, culminating with a
Business and Labor to Safeguard Retirement Security for Multiemployer
report issued early this year, to
Plan Participants, Protect Taxpayers and Spur Economic Growth, issued
find private-sector solutions to
last February by the National Coordinating Committee for Multiemployer
Plans. While this report calls on Congress to give employers and
shore up these plans and protect
employees the tools they need to make tough choices to preserve these
benefits for current and future
plans, what it does not do is call on American taxpayers to bail them out.
retirees and preserve sponsor
companies that provide jobs for
Multiemployer pension plans hold nearly $500 billion in assets
active members.
that play a significant role in generating broader economic activity. If
these plans fail, our economy will suffer a devastating blow. These
innovative retirement plans for decades have allowed skilled workers to move from job to job while providing
portability by maintaining their ability to contribute to a pension.

Multiemployer pension plans hold

nearly $500 billion in assets that
play a significant role in generating
broader economic activity. If these
plans fail, our economy will suffer a
devastating blow. These innovative
retirement plans for decades have
allowed skilled workers to move
from job to job while providing
portability by maintaining their
ability to contribute to a pension.

Conflicting tax policies made it harder for employers to

maintain the solvency of these plans. In addition, current law prevents
employers and employees from taking common sense steps to secure
them.
For years, tax laws actually prohibited firms from overfunding
their plans. At that time, more than three-fourths of fully funded plans
had to increase benefits to increase plan liabilities and avoid paying tax
penalties. As a result, even greater liabilities were created that needed to
be funded from future contributions or investment returns. Today,
because of the recession and these misguided rules, nearly a quarter of
all multiemployer pension plans are categorized as critical
requiring the adoption of aggressive rehabilitation plans to return to
financial health and nearly a quarter of those, including some of the
oldest and largest plans, are facing insolvency in the next 10 to 20 years.

PENSIONS & INVESTMENTS: CONGRESS MUST ACT TO SAVE MULTIEMPLOYER

PENSION PLANS
For example, a participant who
retired at age 65 with 35 years of
service, who would normally
receive a benefit of $2,000 per
month, would see that benefit
reduced to $1,251 per month if
the PBGC takes over their plan,
and to as low as $125 per month
if the PBGC becomes insolvent.

What happens if these plans fail? The Pension Benefit Guaranty

Corp. is legally obligated to backstop these plans from the multiemployer
guaranty fund. The PBGC itself is facing insolvency and could leave
workers and retirees at serious risk of dramatic and unnecessary benefits
cuts, sticking taxpayers with the bill.
For example, a participant who retired at age 65 with 35 years of
service, who would normally receive a benefit of $2,000 per month, would
see that benefit reduced to $1,251 per month if the PBGC takes over their
plan, and to as low as $125 per month if the PBGC becomes insolvent.

The challenges facing multiemployer pension plans can be

overcome without costing the taxpayers a dime. Congress should give us
the tools we need to preserve benefits, as well as strengthen and secure the
current multiemployer system for the long term.
The Solutions Not Bailouts plan provides early intervention for the small percentage of deeply troubled
multiemployer plans, allowing workers and retirees in those plans to maintain benefits above the PBGC guaranteed
amount, and strengthens the majority of plans that have successfully weathered the recent economic crisis and are
not threatened.
Using the same example noted above, the Solutions not
Bailouts plan could maintain lifetime benefits at amounts far greater
than the $1,251 or $125 guaranteed by the PBGC. If the plan
required benefit reductions of just 5% to maintain solvency, those
benefits would be preserved at $1,900 per month, and if 15% reductions
were required, benefits would be preserved at $1,700 per month. Even
under the most extreme case, participants' benefits in this hypothetical
plan would never fall below $1,375. Of course, any plan modifications
would not be approved without agreement from both labor and
management and would only be adopted if the results were materially
better for workers and retirees than plan insolvency.

Millions of Americans rely on the

retirement security provided by
multiemployer plans while many
millions more benefit from the
investments those plans make
throughout our economy. We don't
want a taxpayer bailout. We need
Congress to embrace reforms that
give employers and employees the
tools to work together to fix their
pension plans.

Millions of Americans rely on the retirement security provided

by multiemployer plans while many millions more benefit from the
investments those plans make throughout our economy. We don't want
a taxpayer bailout. We need Congress to embrace reforms that give employers and employees the tools to work
together to fix their pension plans.
Tools such as innovative plan designs can insulate contributing employers from financial volatility in the
future and shield participants from risk by requiring greater funding discipline. We also think any plan should
include safeguards to guarantee regular and reliable retirement security as well as a way to support the long-term
preservation of benefit levels above the PBGC guarantee. Solutions not Bailouts includes these provisions, and as
Congress begins to craft and consider legislation on this topic in the coming months, we hope the policymakers heed
these recommendations and this critical moment. By taking these steps, we can make retirement more secure for
millions of Americans and protect our emerging economic recovery.

April 16, 2014

Sent to the Chairmen and Ranking Members with copies to all members of:
U.S. Senate Health, Education, Labor and Pensions Committee
U.S. Senate Finance Committee
U.S. House of Representatives Education and Workforce Committee
U.S. House of Representatives Ways and Means Committee
Washington, DC
Re: Please support the Solutions Not Bailouts multiemployer pension plan reform proposal
Dear Representative:
The Association of Union Constructors (TAUC) and the International Association of Bridge, Structural,
Ornamental and Reinforcing Iron Workers have joined together as representatives of labor and
management to urge Congress to support the multiemployer pension plan proposal that has been
developed by the Retirement Security Review Commission of the National Coordinating Committee for
Multiemployer Plans (NCCMP). This proposal is known as Solutions Not Bailouts, and it will
significantly benefit both the 100,000 skilled men and women in the Iron Workers and the 2,100
employers that belong to TAUC by making the retirement plans in our industry more secure. This will be
done without a government handout. It will be accomplished by labor and management working out
solutions together through collective bargaining and cooperation at the pension fund management level.
If left unresolved, or if the relief comes too late, the crisis facing multiemployer pension plans will be
devastating not only to our members, employees and retirees, but potentially harmful to many others,
including the nations entire pension retirement system.
Absent the reforms outlined in the Solutions Not Bailouts proposal, it is an absolute certainty under
current law that many deeply troubled plans will become insolvent and benefits received by both current
and future retirees will be reduced at best, to the level guaranteed by the Pension Benefit Guaranty
Corporation (PBGC).
Even under the most optimistic scenario, benefits for retirees would be drastically reduced. For instance a
retiree with 30 years of service would see their pension reduced to a mere $12,870 annually.
Unfortunately, , the PBGC already faces a very significant funding shortfall in excess of eight billion
dollars as of September 30, 2013 which calls into question its ability to provide the statutorily guaranteed
benefits. In order for the PBGC to fulfill its legal obligations should these plans become insolvent, it
1501 Lee Hwy, Ste 202 Arlington, VA 22209 703-524-3336 Fax: 703-524-3364 www.tauc.org
1750 New York Ave. NW, Ste 400 Washington, DC 20006 202-383-4800 Fax: 202-347-1496 www.ironworkers.org

would require billions of dollars in additional funding from Congress, or through crushingly high
increases in the PBGC premium structure. Should Congress choose not to increase funding for the PBGC,
Government Accountability Office Director Charles Jeszeck testified that the PBGC would be forced to
pay benefits from the cash flow produced by premium payments thereby reducing the maximum
monthly benefit to below $125. That is not an acceptable solution for anyone involved.
Since the passage of the bipartisan Pension Protection Act (PPA) in 2006, TAUC and the Iron Workers
have worked together to improve the status of many multiemployer pension plans. This has meant
significant increases in pension contributions, reductions to the retirement accruals of future retirees
(todays active employees), and the consolidation of some plans. These aggressive actions taken jointly
by labor and management have helped place many plans on the path to long-term sustainability.
Undoubtedly, these actions have strengthened the retirement benefits of these plans participants.
Yet, due to the unexpected financial collapse of 2008, a number of multiemployer pension plans still
stand on the brink of financial collapse. These deeply troubled plans have exhausted the remedies
available under current law, and without additional options, they will face insolvency in the relatively
near future.
In an attempt to avert this crisis, labor and management from numerous industries worked together for
approximately eighteen months to analyze all possible solutions and develop a consensus position. This
joint labor-management effort led to a report issued in 2013 by the NCCMP, which TAUC and the Iron
Workers fully support. The NCCMP Recommendations included in the proposal Solutions Not Bailouts
offer a measured, fair, and viable solution to the difficult but necessary task of rescuing troubled plans
from the path to insolvency.
The proposals recommendations fall into three basic categories: (1) recommendations that will preserve
and strengthen the current system; (2) measures designed specifically to help deeply troubled plans; and
(3)innovative proposals for alternative plan design structures to address the structural deficiencies of the
current system and enhance retirement security by expanding the current base of contributing employers.
Proposals to preserve and strengthen the current system include technical corrections to the PPA
designed to strengthen the financial well-being of plans that have been able to regain green zone status
and facilitate the more financially challenged plans to access the tools of the PPA. Measures designed to
help deeply troubled plans have been carefully constructed to enable plans that face impending insolvency
to gain early access to statutory requirements that are imposed upon them by current law when they
become insolvent the reduction of accrued benefits - but only to the extent necessary to preserve
solvency, with the net result of preserving such plans and preserving participants benefits (usually
substantially) above those which they will receive when the plans ultimately become insolvent. In doing
so, the Commission recommended strong participant protections including the ability to protect
vulnerable retirees and survivors (e.g. those of advanced age or are disabled) and requiring government
approval of fund trustees decisions to utilize such measures. Reducing benefits is not a tool the trustees
could wield recklessly. In fact, labor and management trustees would need to agree that it is necessary in
order to save the plan and the PBGC would need to approve any such plan to ensure that the interests of
all plan participants were given equitable consideration.

1501 Lee Hwy, Ste 202 Arlington, VA 22209 703-524-3336 Fax: 703-524-3364 www.tauc.org
1750 New York Ave. NW, Ste 400 Washington, DC 20006 202-383-4800 Fax: 202-347-1496 www.ironworkers.org

Finally, the Commission proposes changes to the tax code to encourage the creation of innovative plan
designs beyond the current defined benefit or defined contribution models, that will provide participants
with the regular monthly income they have earned and come to expect from the defined benefit model,
but will limit the contributing employers residual liabilities currently provided by defined contribution
plans by greatly reducing or completely eliminating withdrawal liability. This strategy offers the real
prospect of plan expansion and positive demographic trends. One new plan design would retain the
lifetime annuity income feature of defined benefit plans for participants and their beneficiaries so no
participant has to fear outliving their retirement savings, along with pooled longevity risks; and the
generally higher returns and lower fees obtained from trustee negotiated professional asset management.
While the elimination of withdrawal liability will shift the risk of asset performance to plan participants,
the Commissions recommendations include significantly more conservative funding targets and other
protections designed to make it less likely that benefits would require future adjustments. Also, the fact
that these designs minimize or eliminate withdrawal liability for the benefits accrued prospectively will
encourage continued participation by current employers as well as permitting the entry of new employers.
We understand from various publicly available reports that currently insolvent multiemployer plans, as
well as multiemployer plans projected to become insolvent within the foreseeable future, will eventually
exhaust the PBGC multiemployer fund and there will be no money to pay out benefits. The only ways to
prevent this from happening are to either arrange for a taxpayer bailout (which we understand is highly
unlikely) or reform the system by adopting the reasonable remedies outlined in the Solutions Not
Bailouts proposal. This is the reality that opponents of reform fail to address, which is why they have not
offered any constructive alternatives. Permitting the most troubled plans to reduce benefits is a better
solution than the complete loss of benefits, which is where we are headed if action is not taken right
away.
Please join us in supporting Solutions Not Bailouts. We ask you to focus on the balanced merits of the
proposal.
The NCCMP recommendations offer the most logical and least painful way forward. Providing labor and
management trustees of deeply troubled plans with the needed flexibility to rescue the retirements of
thousands of Americans is best for all parties concerned retirees, workers, employers and taxpayers.
We appreciate your support and urge you to support legislation that will make the Solutions Not Bailouts
proposal a reality. The website www.solutionsnotbailouts.com contains additional information that may
be useful. Please contact us with any questions or concerns.
Sincerely,

Walter W. Wise, General President

International Association of Bridge, Structural,
Ornamental and Reinforcing Iron Workers

Tom S. Felton, President

The Association of Union Constructors
(TAUC)

1501 Lee Hwy, Ste 202 Arlington, VA 22209 703-524-3336 Fax: 703-524-3364 www.tauc.org
1750 New York Ave. NW, Ste 400 Washington, DC 20006 202-383-4800 Fax: 202-347-1496 www.ironworkers.org

Via Facsimile
December 5, 2013

The Honorable Harry Reid

The Honorable Mitch McConnell
Members of the U.S. Senate HELP Committee
Members of the U.S. Senate Finance Committee
Dear Senators:
The Kroger Co. (Kroger) and the United Food and Commercial Workers International Union
(UFCW) urge that Congress take quick action to address the looming multiemployer pension crisis. If left
unresolved, this crisis will be devastating not only to our members, employees, and retirees, but potentially
harmful to many others, including the nations pension retirement system.
Since the passage of the bipartisan Pension Protection Act (PPA) in 2006, Kroger and the UFCW
have worked together to improve the status of many multiemployer pension plans that we co-sponsor. This has
meant significant increases in pension contributions, changes to the retirement benefits of our employees, and
consolidation of some plans. These aggressive actions, jointly taken, have placed many plans on the path to
long-term sustainability. Undoubtedly, these actions have strengthened the retirement benefits of our
employees and members.
Yet, due to unexpected events most notably the financial collapse of 2008 a number of
multiemployer pension plans still stand on the brink of financial collapse. These deeply-troubled plans have
exhausted the remedies available under current law, and without additional options will face insolvency in the
relatively near future. Unless these plans are allowed to reduce benefits, nothing can prevent some of these
plans from certain insolvency.
Without action by Congress, one very large multiemployer pension fund will become insolvent
and will seriously jeopardize the benefits of approximately 340,000 current retirees and 70,000 future retirees.
Several other plans face similar circumstances. In an attempt to avert this crisis, labor and management from
numerous industries worked together for almost two years to analyze all possible solutions and develop a
consensus position. This joint labor-management effort led to a report issued earlier this year by the National
Coordinating Committee for Multiemployer Plans (NCCMP Recommendations), which Kroger and the
UFCW fully support. The NCCMP Recommendations offer a measured, fair, and viable solution to the difficult
but necessary task of rescuing troubled plans from the path to insolvency.
Regaining solvency and self-sufficiency for these plans will not come without sacrifice. The only
realistic way to avoid insolvency and preserve as much of the promised pension benefits as possible is to
provide plan trustees the ability to, if necessary, reduce some of the accrued benefits and only if such action
will ensure the plans survival. The NCCMP Recommendations carefully limit this option allowing for the
necessary flexibility to salvage these plans while protecting the most vulnerable population and ensuring that
benefits are preserved to the maximum extent possible.
David B. Dillon, Chairman and CEO
The Kroger Co.
1014 Vine Street Cincinnati OH 45202-1100
Office (513) 762-4000 www.thekrogerco.com

Joseph T. Hansen, International President

Anthony M. Perrone, International Secretary-Treasurer
United Food & Commercial Workers International Union, AFL-CIO, CLC
1775 K Street, NW Washington DC 20006-1598
Office (202) 223-3111 Fax (202) 466-1562 www.ufcw.org

Page 2 of 2

Reducing benefits is not a tool the trustees could wield recklessly. In fact, labor and management
trustees would need to agree that it is the last resort in order to save the plan and the Pension Benefit Guaranty
Corporation (PBGC) would need to approve any reduction of benefits.
As Central States Executive Director Tom Nyhan recently testified before the House Education
and Workforce Committee Subcommittee on Health, Employment, Labor and Pensions:
I agree that one of the fundamental rules of ERISA was the anti-cutback rule. But there is
another fundamental rule that is going to trump that and that is called arithmetic. It is not a
question of if there are going to be benefit cuts. There are going to be benefit cuts. The question
is when and how they are going to happen.
Absent the reforms outlined in the NCCMP Recommendations, there is little doubt that deeply
troubled plans would enter insolvency and benefits would be reduced to the level guaranteed by the PBGC.
Benefits for retirees would be drastically reduced ($12,870 for a retiree with 30 years of service). In addition,
the PBGC already faces a very significant funding shortfall in excess of eight billion dollars as of
September 30, 2013. In order for the PBGC to fulfill its legal obligations should these plans become insolvent,
it would require billions of dollars in additional funding from Congress. Should Congress choose not to
increase funding for the PBGC, Government Accountability Office Director Charles Jeszeck testified that the
PBGC would be forced to pay benefits from the cash flow produced by premium payments thereby reducing
the maximum monthly benefit to below $125. That is not an acceptable solution for our employees and
members.
Fortunately, the NCCMP Recommendations offer a less severe solution. The core objective of
the NCCMP Recommendations is to help deeply troubled plans preserve benefits above the PBGC minimum
guarantee levels. Modest changes to benefits now can responsibly sustain these pension plans for decades to
come.
The NCCMP Recommendations offer the most logical and least painful way forward. Providing
labor and management trustees of deeply troubled plans with the needed flexibility to rescue these plans is best
for all parties concerned retirees, workers, employers and taxpayers.
We appreciate your support and urge you to support legislation that will make the NCCMP
Recommendations a reality. The website www.solutionsnotbailouts.com contains additional information that
may be useful. Please contact us with any questions or concerns.
Sincerely,

Chairman and CEO

The Kroger Co.

David B. Dillon, Chairman and CEO

The Kroger Co.
1014 Vine Street Cincinnati OH 45202-1100
Office (513) 762-4000 www.thekrogerco.com

International President
United Food and Commercial
Workers International Union

Joseph T. Hansen, International President

Anthony M. Perrone, International Secretary-Treasurer
United Food & Commercial Workers International Union, AFL-CIO, CLC
1775 K Street, NW Washington DC 20006-1598
Office (202) 223-3111 Fax (202) 466-1562 www.ufcw.org

January 22, 2014

Sent to the Chairmen and Ranking Members with copies to all members of:
U.S. Senate Health, Education, Labor and Pensions Committee
U.S. Senate Finance Committee
U.S. House of Representatives Education and Workforce Committee
U.S. House of Representatives Ways and Means Committee
Washington, DC
Re: We support the Solutions Not Bailouts multiemployer pension plan reform legislation
Dear Chairman and Ranking Member:
The International Association of Sheet Metal, Air, Rail and Transportation Workers (SMART)i
and the Sheet Metal and Air Conditioning Contractors National Association (SMACNA)ii urge
Congress to end the crisis of confidence facing multiemployer pension plans because of the
pressing need for comprehensive pension reform. For over 18 months, SMACNA and SMART
collaborated with more than 40 labor and business leaders in the Retirement Security Review
Commission. The Commissions specific and concrete recommendations Solutions not
Bailouts - if enacted, will strengthen retirement security. For the specifics, please review
Solutions Not Bailouts: A Comprehensive Plan from Business and Labor to Safeguard
Multiemployer Retirement Security, Protect Taxpayers and Spur Economic Growth at
http://www.solutionsnotbailouts.com/.
Our union members and our employers live and work in every state and territory of this nation.
Like over 10 million other working class Americans, 216,000 SMART members, retirees and
beneficiaries rely on multiemployer plans for retirement security. SMACNAs over 4,500
contractors are major stakeholders in multiemployer plans across the country.
In the sheet metal and transportation industry, many of our plans have successfully addressed
funding challenges because labor and management worked together using the tools under the
Pension Protection Act of 2006 (PPA). But for other plans and for the long-term future of the
multiemployer system, PPA is not enough; the enactment of Solutions not Bailouts proposals is
critical.
Plans in other industries face imminent insolvency. The failure of one plan, even in a seemingly
unrelated industry, could have a ripple effect across the system. Not only pension plans can fail;
higher contribution demands or increasing shares of unfunded vested benefits may pull down the
employers that remain in the plans. Unfunded liabilities create too much uncertainty in financing
and bonding.
Further, Solutions not Bailouts can do more than strengthen retirement security; it can address
the Pension Benefit Guaranty Corporations (PBGC) crisis. The PBGC lacks the full faith and
credit of the federal government and faces insolvency in the not-so-distant future. As you
know, the PBGC provides a limited backstop to insolvent plans and only guarantees benefits at
a relatively low level.

Most opponents of Solutions not Bailouts fear the provisions to save the benefits of participants
in deeply troubled plans. For those plans, the recommendations would allow workers and
retirees to maintain benefits above the PBGC guaranteed amount rather than the current law,
which guarantees a lower benefit if, and only if, the PBGC has the assets. The PBGC faces a
very significant funding shortfall in excess of eight billion dollars as of September 30, 2013.
PBGC cannot meet its obligations to plans facing insolvency without billions in additional
funding, or what some might call a bail-out. We are realists concerning the prospects of
additional funding.
We respect the views of those who say ERISAs bedrock principle is the preservation of accrued
benefits. That protection is an illusion once a plan is insolvent; accrued benefits will be reduced.
Moreover, if PBGC is insolvent, its guarantee is not truly a guarantee.
The Solutions not Bailouts proposal would allow joint labor/management boards of trustees
limited authority to act before it is too late so that workers and retirees receive more than the
PBGC guarantee. These last-resort suspensions, under PBGC supervision, would provide, at a
minimum, 110% of PBGC guaranteed benefits and would be no larger than necessary to
prevent insolvency. Plans facing imminent insolvency could only use the tools if the joint
labor-management boards of trustees so decide. Neither labor nor management could force the
use of these tools. Labor and management trustees would need to agree to these tools as a last
resort to save a plan. In addition, the PBGC would need to approve any reduction of benefits.
Solutions not Bailouts also proposes encouraging voluntary innovative new plan designs for
secure lifetime retirement income. The voluntary adoption of flexible plan designs would be the
subject of collective bargaining. These plans could include, but would not be limited to, variable
annuity and Target Benefit plans, which would permit adjustment of accrued benefits.
However, to protect participants from the risks of benefit adjustments, these models would
impose greater funding discipline than is required under current defined benefit rules. New
designs, and reforms for existing plans, can help insulate contributing employers from financial
volatility.
We respectfully urge Congress to move promptly to enact the Solutions not Bailouts plan which
will also extend the important tools PPA already provides. The private sector has supported
these plans for decades and can continue to do so by extending and amending the PPA.
Thousands of participants, their families and employers will appreciate your support in this
endeavor.
Sincerely,
Randy Novak, President
SMACNA

SMART was formed with the merger of the United Transportation Union and the Sheet Metal Workers
International Association. The Unions history extends back over 125 years. It is an international labor union, with
216,000 members in the AFL-CIO and the Canadian Labour Congress, providing policy direction and program
support on behalf of its membership in maintaining the union's jurisdiction over various types of work in the
United States, Canada and Puerto Rico. Sheet metal members perform work in the building and construction
trades, in production manufacturing, railroad shops, and shipyards. Transportation members are employed in
railroad, bus, transit and airline operations.
ii
SMACNA was founded in 1943 and is supported by more than 4,500 construction firms engaged in industrial,
commercial, residential, architectural and specialty sheet metal and air conditioning construction in public and
private markets throughout the United States. SMACNA contractors specialize in heating, ventilating and air
conditioning; architectural sheet metal; industrial sheet metal; kitchen equipment; specialty stainless steel work;
manufacturing; siding and decking; testing and balancing; service; and energy management and maintenance.
SMACNA has 103 national and international chapters.

January 13, 2014

The Honorable John A. Boehner, Speaker of the House
The Honorable Nancy Pelosi, Minority Leader
Members of the House Committee on Ways & Means
Members of the House Education & the Workforce Committee
RE: Please support the Solutions Not Bailouts multiemployer pension plan reform proposal
sponsored by the National Coordinating Committee for Multiemployer Plans (NCCMP)
and by national labor and management organizations.
Dear Representatives:
We are joining together as representatives of labor and management to ask for your strong support
of the multiemployer pension plan proposal that has been developed by the Retirement Security
Review Commission of the National Coordination Committee for Multiemployer Plans. Their
proposal is known as Solutions Not Bailouts (SNB). It will significantly benefit both the 325,000
skilled craft men and women in the United Association of Plumbers and Pipefitters (UA) and the
2,800 employers that belong to the Mechanical Contractors Association (MCAA) by making the
retirement plans in our industry more secure. This will be done without a government handout. It
will be done by labor and management working out solutions together through bargaining and
through cooperation at the pension fund level.
The UA and the MCAA together, both nationally and in local collective bargaining, sponsor more
multiemployer defined benefit pension plans than any other trade in the construction industry150
multiemployer defined benefit plans, covering 429,000 participants and their families, with at least
$25.5 billion in assets nationwide. We are jointly committed to saving and strengthening
multiemployer defined benefit plans, in accordance with SNB, because these plans provide wellearned retirement security to our members/employees. And, it is our members/employees who are
the backbone of our industry. They make America strong by working hard at a skilled trade during
their careers, and they deserve retirement with dignity.
SNB is sound, fair, balanced and judicious. It was developed and agreed to by a wide array of labor
and management groups representing all of the industries in which multiemployer defined benefit
plans provide retirement security. SNB was crafted in detail by a host of our nations leading
multiemployer plan experts across all retirement plan disciplinesactuaries, attorneys, plan
administrators, and labor and management negotiations representatives.
SNB represents a careful balance of the interests of business and plan participants and their
families. The goal of the reforms proposed in SNB is to preserve and strengthen the high-quality
Page 1 of 3
1385 Piccard Drive Rockville, MD 20850-4340 301-869-5800 Fax: 301-990-9690 www.mcaa.org
Three Park Place Annapolis, MD 21401-3687 410-269-2000 Fax: 410-267-0262 www.ua.org

retirement benefits that labor and management have developed in the multiemployer defined benefit
plan system.
SNB would not require changes to plans or to benefits. This point is either missed or ignored by
opponents of the proposal. SNB would provide multiemployer defined benefit pension plans with
additional tools to be used as determined by individual plans in strictly limited circumstances to meet
the particular needs of individual plans. The SNB proposals fall into three categories: (1) those
proposals that will preserve and strengthen the current system; (2) innovative proposals for
alternative plan design structures; and (3) measures designed to help deeply troubled plans.
Proposals to preserve and strengthen the current system include technical changes to the Internal
Revenue Code intended to clarify various aspects of the Pension Protection Act (PPA) and to make
the process for plans in critical and endangered status more workable.
SNB would also allow trustees and bargaining parties, if they so choose, to fundamentally rebalance
the risks in pension funding and put the plans on more solid footing going forward with innovative
benefit plan designs. This offers the real prospect of plan expansion and positive demographic
trends. The new plan designs would retain the lifetime income feature of defined benefit plans for
participants and their beneficiaries, with pooled assets, the generally higher returns from professional
asset management, and pooled longevity risks, so no participant has to fear outliving their retirement
savings. At the same time, the SNB proposal would allow for a significant rebalancing of the risk of
funding for sponsoring employers because the proposal would permit adjustment of some benefits
under specified circumstances.
The two examples discussed in the SNB proposal were not meant to be exclusive. The proposal
recommends that innovative designs should be permitted with greater ability to adjust benefits to
reflect the investment markets so long as such designs provide for a guaranteed core lifetime income
and protect vulnerable populations. A more conservative funding target will make it less likely that
benefits would be adjusted. The fact that these designs minimize or eliminate withdrawal liability for
the benefits accrued prospectively will encourage continued participation by current employers as
well as the participation of new employers.
These innovative designs will help stem the tide of withdrawals from defined benefit plans, and the
trend toward defined contribution plans, by providing a program with the lifetime benefit features
but without the withdrawal liability that has already caused so many employers to leave the system.
Continued and new participation in the new portion of a plan will help support and fund a plans
legacy liability.
We are aware of the vocal opposition to the measures proposed to save deeply troubled plans and
particularly the proposal to permit some plans to reduce benefits to retirees. These steps were not
Page 2 of 3

1385 Piccard Drive Rockville, MD 20850-4340 301-869-5800 Fax: 301-990-9690 www.mcaa.org

Three Park Place Annapolis, MD 21401-3687 410-269-2000 Fax: 410-267-0262 www.ua.org

taken lightly. It was only after considering all of the alternatives that these measures were proposed.
The opponents do not offer alternative solutions.
We want to emphasize several points:
1.
2.
3.
4.

The measures for deeply troubled plans are not mandatory and are available to plans
only after they have tried all other reasonable measures;
A plan may reduce benefits only if the plan is projected to become insolvent within a
specified time period and only if and to the extent necessary for the plan to avoid
insolvency;
Benefits may be reduced only to a level that is 110% of the benefit participants
would receive under the PBGC guarantee;
SNB includes an approval process for benefit reductions which is proposed to be by
application to PBGC.

We understand from various publically available reports that currently insolvent multiemployer plans
and multiemployer plans projected to become insolvent within the foreseeable future will exhaust
the PBGC multiemployer fund. Therefore, absent some alternative not yet proposed or a taxpayer
bailout, which we understand is highly unlikely, benefits of participants in deeply troubled plans (that
are not able to save themselves because tools such as those proposed in SNB are not available) will
eventually stop because the PBGC will have no funds to pay benefits. Opponents of the SNB
proposal do not address this problem and do not explain what will happen to those participants
when their plans become insolvent and there are no funds available from the PBGC to pay their
benefits. Permitting troubled plans to reduce benefits is a better solution than the complete loss of
benefits that appears to be the future for participants of insolvent or soon to be insolvent plans.
Please join us in supporting the SNB proposal. Despite the opposition of some who do so without
offering a constructive alternative, we ask you to focus on the balanced merits of the proposal
designed to address the challenges facing multiemployer plans by giving the plans the new tools they
need to ensure the long term viability of their plans for their participants and beneficiaries and their
sponsoring employers.
Sincerely,

William P. Hite, General President

United Association of Journeymen and Apprentices
of the Plumbing and Pipefitting Industry of the US
and Canada, AFL-CIO

Michael R. Cables, President

Mechanical Contractors Association
of America
Page 3 of 3

239904_2.DOCX

1385 Piccard Drive Rockville, MD 20850-4340 301-869-5800 Fax: 301-990-9690 www.mcaa.org

Three Park Place Annapolis, MD 21401-3687 410-269-2000 Fax: 410-267-0262 www.ua.org

May 8, 2013

Dear Senator/Representative:
As leaders of our respective organizations, the International Brotherhood of Electrical Workers (IBEW) and the
National Electrical Contractors Association (NECA), we write jointly as labor and management in support of the
National Coordinating Committee Multiemployer Plans (NCCMP) Retirement Security Review Commissions
report entitled Solutions not Bailouts: A Comprehensive Plan from Business and Labor to Safeguard
Multiemployer Retirement Security, Protect Taxpayers and Spur Economic Growth.
Two years ago, IBEW, NECA and more than forty labor and management stakeholders partnered up with the
NCCMP to form the Retirement Security Review Commission. The Commissions goal was to create a proposal that
presents solutions that will ensure multiemployer pension plans can continue to provide a reliable retirement benefit
to millions of Americans while enabling the employers who fund them to remain strong contributors to the national
economy.
The proposal offers recommendations that address the deeply troubled plans heading toward insolvency, includes
technical provisions that will improve the current system and offers new flexible plan design options aimed to
reduce employers risk and eliminate withdrawal liabilities. There are several considerations of the proposal that
warrant our recommendations:

Strengthen the Current Funding Rules to the Pension Protection Act of 2006 (PPA). While the PPA provided
some relief to multiemployer pension plans and helped companies recover losses incurred as a result of the
financial crisis, IBEW and NECA believe that further changes to the PPA are necessary to improve the health
and viability of these plans. The Commission has offered an array of technical provisions that will improve the
current system by providing flexible rules to allow trustees of plans facing financial instability to adapt to
changing economic and market conditions as they occur.

Provide Relief to Deeply Troubled Plans Heading Toward Insolvency. Severely troubled plans that are
projected to become insolvent need more tools to prevent the plans from exposure of the Pension Guaranty
Benefit Corporation (PBGC). Under the PPA, plan trustees were granted the authority to temporarily reduce
benefits for active participants. Unfortunately, there remain plans where those suspensions were not enough to
avoid insolvency. In these exceptional circumstances, these additional tools will grant plan trustees additional
authority to take appropriate measures to partially suspend accrued benefits for active and inactive vested
participants. Such suspensions would be limited to the amount of time essential to prevent the plan from
insolvency; the benefits could never go below 110 percent of the PBGC guaranteed amounts.

Create New Flexible Plan Designs. A transient workforce, an aging population, and a weak economy have led
to unsustainable pension contributions and unfunded withdrawal liabilities that continue to put a strain on
contributing employers. These growing concerns led the Commission to recommend two new plan designs.
Both of the new plan designs are distinguished from a traditional defined benefit plan because they have shared
risk amongst the employer and the employee and they significantly reduce an employers exposure to
withdrawal liability.

Solutions Not Bailouts: Revenue Neutral and Not Mandatory. All multiemployer pension plans are the
product of collective bargaining agreements. The proposed recommendations put forward by the Commission
will not mandate plan trustees to adopt these changes. Rather, they will provide the tools to provide relief to
multiemployer pension plans that have existing funding liabilities. If enacted as proposed, these legislative
changes will be revenue neutral, American taxpayers will not bear the cost of the plan, and multiemployer
pension plans will continue to provide financial security to retirees nationwide.

Since 1946, IBEW and NECA have worked together through the collective bargaining process to offer a pension
plan that would help bring security, dignity, and peace-of-mind to all plan participants. Today, our joint labormanagement, multiemployer pension plans have successfully provided coverage for millions of plan participants,
retirees and surviving spouses, as well as its contributing employers. We urge you to support the NCCMP proposal
and we look forward to working with you to ensure its passage this year.

Sincerely,
Edwin D. Hill

John M. Grau

International President

Chief Executive Officer

International Brotherhood of Electrical Workers

National Electrical Contractors Association