House Education and Labor Committee Approved Bill to Assist Struggling Multiemployer Pension Plans
House Representatives are working on a solution to assist multiemployer pension plans that are under-funded. H.R. 397, the Rehabilitation for Multiemployer Pensions Act (also known as the Butch Lewis Act), is a bipartisan pension reform bill that would create a federal loan program for struggling multiemployer plans, to improve the plans’ prospects for paying participants and beneficiaries in the years to come.
The Butch Lewis Act would establish the Pension Rehabilitation Administration and a related trust fund within the Treasury Department. The Pension Rehabilitation Administration would then be empowered to make loans to multiemployer plans that are in “critical” and “declining” status and have been approved by Treasury to reduce benefits, or to plans that are already insolvent but not terminated. Plans receiving such loans would not be able to increase benefits or bargain for reduced contribution rates during the term of the loan.
The Treasury Department would fund the loan program by issuing bonds and transferring amounts equal to the bond proceeds to the trust fund established by the bill. The Pension Rehabilitation Administration would use the funds to make loans, pay principal and interest on the bonds, and for administrative and operative expenses. A plan receiving a Pension Rehabilitation Administration loan would still be able to apply to the PBGC for financial assistance if, after receiving the loan, the plan would still become (or remain) insolvent.
The bill was approved on June 11, 2019 by the House Education and Labor Committee, and will now go to the House Ways and Means Committee. No action on the bill has been scheduled in the Senate yet.
For more information, contact your trust fund counsel.
Author: Jerry Chang
