Reform the Multiemployer Pension System
Floor Speech
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Ms. FOXX. Mr. Speaker, Democrats keep forcing taxpayers to bail out failing and mismanaged union-run multiemployer pension plans, and it needs to stop.
The Committee on Education and Labor has dedicated considerable time and held countless hearings on the problems posed by multiemployer pension plans and the Pension Benefit Guaranty Corporation's, PBGC's, multiemployer insurance program.
Unfortunately, unlike previous bipartisan legislation to address the failing system, our Democrat colleagues decided to go it alone by enacting the deceitful American Rescue Plan Act, ARPA.
Under the guise of COVID relief, ARPA included an irresponsible and uncapped taxpayer bailout of failing and insolvent multiemployer pension plans. Let me repeat, there is no cap on the amount of taxpayer dollars that PBGC may send to multiemployer plans.
This is especially concerning given that multiemployer plans are currently underfunded by $756 billion.
Unsurprisingly, the cost of ARPA's pension bailout program continues to grow. The Congressional Budget Office originally estimated it would cost taxpayers $86 billion. Five months later, PBGC estimated it would likely distribute $94.2 billion. After 2 more months, PBGC estimated it would likely distribute $97.2 billion and, in one scenario, could distribute upward of $147 billion.
To date, PBGC has disbursed $6.7 billion to 26 plans, and this is just the beginning.
In April, the Central States, Southeast and Southwest Areas Pension Plan requested a staggering $35 billion from taxpayers. PBGC is reviewing an additional eight applications requesting a total of $1.1 billion. In all, PBGC is expected to send money to over 250 pension plans.
PBGC has confirmed what we knew to be true, but others refused to admit: ARPA's taxpayer-funded bailout will not fix a thing.
In September, the agency stated the massive influx of taxpayer dollars will only delay the immediate insolvency of the multiemployer insurance program, and insolvency is still likely. Simply throwing money at plans will not solve the problem.
ARPA failed to address the underlying structural issues in the multiemployer system that contributed to the crisis, thus ensuring that plan mismanagement and underfunding will persist. In fact, ARPA includes a galling provision that explicitly bars PBGC from reforming plan governance or altering plan-funding rules of plans receiving a bailout.
It is clear to me that the mismanagement of multiemployer plans and the risks they pose to workers, retirees, and the taxpayer cannot be ignored. Congress must require multiemployer plans to measure their liabilities accurately and collect adequate contributions to fund benefits.
Failing and insolvent plans must stop making promises that they are unable and unwilling to keep. It is common practice for insolvent plans, which do not have enough funds to pay current retirees, to continue allowing active participants to accrue benefits and enroll new workers into the plan. This is deceptive. This is wrong. This must stop.
Congress should increase multiemployer insurance premiums to account for the risk that underfunded plans pose to PBGC.
Multiemployer plans pay a meager flat-rate premium of $31 per participant. In contrast, the single-employer program requires plans to pay an $88 flat-rate premium in addition to a variable rate premium based on a plan's level of underfunding.
Decades of chronic underfunding and false promises have put millions of workers and retirees at risk. By propping up this clearly unsustainable system without enacting reforms, ARPA continues to enable and encourage the irresponsible behaviors that caused this crisis.
Taxpayers saving for their own retirements should not be on the hook to pay for the broken promises of union-run multiemployer pension plans.
There must be accountability for this gross mismanagement and real reform to ensure the multiemployer pension system does not continue to deceive workers and the American people.
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