The result would be significantly reduced contributions to the legacy plan. Under the proposal, such plans are permitted to refinance plan liabilities and pay them off over 25 years, about double the time permitted under current law. The legislation would create two underfunded plans for workers, who in turn would likely experience devastating cuts to their benefits.
"While action is needed to ensure retirement security for hard-working Teamsters and others who have paid into these plans for years, this is simply not the right fix," Teamsters General President Jim Hoffa said. "This legislation provides inadequate funding for composite plans and weakens the funding base for existing plans. That's not going to help workers or retirees."
Beyond the issue of inadequate contributions, the proposed legislation is flawed because composite plans are not protected by the Pension Benefit Guaranty Corporation (PBGC), which insures pension benefits. Such pension changes would also have the effect of reducing PBGC premium contributions dramatically, further depleting its already limited funds.
Taken together, this legislation is a significant departure from retiree protections granted under the Employee Retirement Security Act and it lacks even the weak procedural protections for plan participants offered in Multi-Employer Pension Reform Act language enacted in 2014.
The Teamsters appreciate the committee holding this hearing. The millions of workers whose retirement is at stake deserve a fair, thorough and open process to address these looming challenges. But given the serious ramifications for worker and retiree retirement security, Congress should not act on such a complex and consequential proposal in the short time remaining this year.
Founded in 1903, the International Brotherhood of Teamsters represents 1.4 million hardworking men and women throughout the United States, Canada and Puerto Rico. For more information, please visit www.teamster.org. Follow us on Twitter @Teamsters and "like" us on Facebook at www.facebook.com/teamsters.
Ted Gotsch, (202) 624-6911
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SOURCE International Brotherhood of Teamsters