There is a crisis looming that has the potential of dramatically affecting both the retirement benefits of millions of retirees as well as multiple states and communities. I am referencing the Multi-Employer Pension Plan crisis.
What is a MEPP? They are pension plans collectively bargained (i.e., union pension plans) maintained by more than one employer. An estimated 100 MEPPs could fail in the next 10 years if Congress fails to enact reforms to these funds.
These plans cover 10 million Americans. In 2015, multi-employer plan participants (actives and retirees) were paid approximately $241 billion in wages and pension payments. Those participants also paid approximately $35 billion in federal and $8.4 billion in state and local taxes.
Recently, Congress formed a bipartisan Special Select Committee to review the situation and issue its recommendations no later than November 30. The worst mistake that could be made is to allow demands for a complete bailout or doing virtually nothing define the choices that exist. That simply is not the truth.
The placeholder piece of legislation, the Butch Lewis Bill (named for a retiree who died after cuts in retirement benefits forced him back to work) essentially is a “no cuts to any plan; send us your federal tax dollars” approach. This is otherwise known as a federal bailout. As a former Republican member of Congress from Florida, I can predict, without fear of contradiction, this position has zero chance of garnering sufficient support in a Congress where this could be seen as a bailout of the unions rather than the national economic crisis that it is.
Recently, Rachel Gresler of the Heritage Foundation detailed the flaws in a bailout approach, even if the bailout was “a poorly disguised bailout for pension plans.” As the newly announced chairman of Protect Our Workers Earned Retirement (POWER!), I agree.
However, doing nothing is not a real choice. If the plans fail, more than retirees and workers will suffer. The ripple effect is simple and obvious. When employers are bankrupted in their legally required efforts to continue funding the plans, those jobs are lost. So too are the taxes paid by the workers and the companies where they work.
We need a plan that is fair to retirees and workers who have spent their lives working with the expectation their retirement is taken care of. We also need a plan that is fair to the American taxpayer.
There are no easy or automatic solutions to this crisis. A resolution that is fair and that will move us past the situation at hand will require a willingness of Congress and the administration to discuss various alternatives without rancor or questioning the good faith of those involved. This is not a time that calls for lines in the sand. Instead, we need a bipartisan commitment to get the job done.
We have a chance to get this right in a way that is fair and reasonable. Let’s hope good intentions, coupled with good sense, will guide those in Congress to that conclusion.
Article by Inside Sources