2021 Brings New Hope for Pension Fund Solutions
While the AFM & Employers Pension Fund was recently forced to make a new application to the U.S. Treasury Department to reduce benefits under the Multiemployer Pension Reform Act (MPRA) — which could take effect starting January 1, 2022 — there is new hope for long sought legislative solutions to forestall these cuts and help rebuild the Fund.
House Democrats Introduce Emergency Pension Plan Relief Act
With a new President and Congress now in office, the AFM-EPF is joining other multiemployer plans, unions and employers to advocate for swift passage of legislation to address the multiemployer pension crisis. On January 20, U.S. Reps. Bobby Scott (D-VA 3rd District) and Richard Neal (D-MA 1st District) separately introduced the Emergency Pension Plan Relief Act, which had previously been included in the Democratic stimulus proposals last year.
This proposed legislation would allow struggling multiemployer pension plans – including the AFM-EPF – to “partition” in order to remain solvent in the future.
With a partition, the Pension Benefit Guaranty Corporation (PBGC) would assume financial responsibility over some of the benefits of an eligible plan so the plan can remain solvent, and the plan would be able to receive enough financial assistance to keep it solvent for 30 years without cutting earned benefits.
The legislation would also provide government funding to the PBGC, addressing the agency’s own projection of insolvency. It would also be funded to help cover participant benefits, while avoiding benefit reductions.
The Trustees strongly support this legislation, and the AFM is pursuing efforts at bipartisan support within a new climate at Capitol Hill. Passage of the Act would put an end to applying for reductions under the Multiemployer Pension Reform Act (MPRA). Nevertheless, the pending application remains the only way to save the Plan without these changes to current law.
Therefore, it is necessary for the Fund to continue its current application. But if legislation such as this is enacted that would allow the Fund to withdraw the MPRA application (or roll back benefit reductions while still avoiding insolvency), the Trustees plan to pursue that course.
This makes support of this legislation at this critical time more important than ever. The AFM is actively working to get the votes in Congress to make this happen. Please contact your representatives in congress and in the White House and let them know that you support this legislation.