Buyer’s Remorse and a Tough Sell

The Hill reports that Senate Democrats are pushing the PBGC to bypass the multiemployer pension provisions enacted as part of the American Rescue Plan Act. [https://thehill.com/opinion/finance/583184-democrats-want-to-rescue-union-pensions-from-the-partys-failed-bailout-plan?rl=1] These Legislators now realize that the provisions which mandate multiemployer pension plans seeking taxpayer funding adopt a 5.5% return assumption and only invest conservatively in investment grade fixed income, unless PBGC permits otherwise.

Most observers conclude that it is unlikely that a plan can earn 5.5% in fixed income. How did the bill end up this way? We don’t know. ERISANation is long out of the fray, but remembers when plan professionals were not listened to in crafting various provisions. Some multiemployer Trustees have long pinned their hopes on a sympathetic Congress and President, and condemned existing relief under the Pension Protection Act of 2006. After PPA, some of us in the multiemployer community pushed for further relief under the rubric Solutions not Bailouts [see http://nccmp.org/wp-content/uploads/2017/07/TalkingPointsFinal.pdf] but many in our community in fact longed for a “bailout.” They got one, but it won’t be enough, certainly not for any new participant. So how will Trustees of troubled plans, sell this relief – how will they convince an employer to enter a plan, or urge participants to defer wages for one?

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