By John D. McKinnon, Dan Fitzpatrick and Laura Stevens
House lawmakers on Tuesday announced an agreement on legislation
to avert a crisis that threatens pensions of hundreds of thousands
of retirees.
Sponsors of the bill were aiming to get it added as an amendment
to a spending bill by the House Rules Committee on Wednesday.
Some unions and employers have backed the measure's basic
outlines. But it has drawn criticism from some unions and
pension-rights activists. Its future remained unclear.
Reps. John Kline (R., Minn.) and George Miller (D., Calif.)
announced the bipartisan agreement on a conference call with
reporters Tuesday evening. Mr. Kline said the measure would protect
retirees from receiving "nothing or close to nothing" from their
pensions, and would shield employers from "pretty crushing"
liabilities for the shortfalls that plague the affected pension
plans.
"We have a plan that first and foremost works for the members of
the unions, the workers...and it works for the companies," Mr.
Miller said.
The deal drew praise from the head of a joint labor-management
group that had helped develop many of its major elements.
"Today, leaders from both parties came together under very
difficult circumstances and stood up for the employers, workers and
retirees who count on multiemployer pensions," said Randy DeFrehn,
executive director of the National Coordinating Committee for
Multiemployer Plans.
The proposal is aimed at forestalling a looming crisis in a type
of pension that is common in trucking, retail, construction and
some other industries. These plans, known as multiemployer plans,
are typically managed jointly by unions and employers.
Amid broad economic changes and light government oversight, some
large multiemployer plans have become badly underfunded and could
run out of money within a few years. The collapse of just one or
two of them in turn would quickly bankrupt a federal safety-net
program that backs up all of the plans, which cover more than 10
million people.
The safety-net program's unfunded long-term liabilities from
expected failures of multiemployer plans soared from $8 billion
last year to $42 billion in this year's annual report of the
Pension Benefit Guaranty Corp.
But the measure under consideration to fix the system's problems
requires some bitter medicine, and it has generated criticism in
recent days.
In broad terms, the bill is aimed at allowing deeply troubled
plans to trim benefits for current retirees to avoid running out of
money. It also would raise safety-net premiums on multiemployer
plans, to help shore up the PBGC.
Senior advocates have objected to the benefit cuts, contending
that they are unfair to retirees and would overturn a basic
principle of federal pension-protection laws.
In response, lawmakers said they have written provisions giving
participants the right to vote on proposed benefit cuts. But their
vote could be overridden in cases where a plan's failure would
threaten the entire safety net.
Some unions also have objected to big premium increases that are
under consideration. Mr. Kline said on Tuesday that premiums would
increase to $26 per worker from the current $13. That is down from
earlier proposals, however.
Still another provision could reduce pension-contribution
liabilities for delivery giant United Parcel Service Inc., and
potentially others. That drew fire on Tuesday from Teamsters head
James P. Hoffa, who criticized the provision as a "secret backroom
deal" for UPS. Lawmakers said on Tuesday that UPS had sought a
broader exemption but didn't get it.
UPS disputed the Teamsters' characterization of the measure,
saying it didn't initiate the legislation and has only recently
seen specifics. "UPS strongly disagrees with the International
Brotherhood of Teamsters' mischaracterization in a letter written
to Congress," the company said in a statement.
After negotiations with the Teamsters, UPS paid $6.1 billion to
exit the Central States plan in 2007, establishing a new
single-employer plan for about 45,000 employees and eliminating its
contribution requirements to the multiemployer plan. But many of
its retirees are getting pension payments from the Central States
plan.
In its master contract with the Teamsters, UPS is expected to
make up the difference if the Central States plan benefits are
"reduced as permitted or required by law."
In its response to the Teamsters letter, UPS added that it is
committed to maintaining its employees' long-term benefits, as well
as to addressing viability issues of multiemployer pension plans.
UPS is still involved in about 20 multiemployer pension plans,
according to its 2013 annual filing, and contributed $1.4 billion
to those plans last year.
Write to John D. McKinnon at john.mckinnon@wsj.com, Dan
Fitzpatrick at dan.fitzpatrick@wsj.com and Laura Stevens at
laura.stevens@wsj.com
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