Federal lawmakers are trying to come up with a way to protect the pensions of more than one million union workers. Several options have been offered, none have been accepted. The latest offer comes from union crony Ohio Senator Sherrod Brown and Massachusetts Representative Richard Neal. Their bills came the same day the Pension Benefit Guaranty Corporation – the federal agency that insurance pension plans – released a report saying the agency is running a $65.1 billion deficit and will be bankrupt by 2025.
Legislation by Brown and Neal is called the Butch Lewis Act. It would create a Pension Rehabilitation Administration, a new federal office within the Treasury Department (making government bigger) that would sell bonds to financial institutions to raise money to fund loans to financially troubled plans.
The UPS Loan Proposal is another option. UPS has a proposal that would provide up to three successive low interest long-term federal government loans to troubled pension plans to cover their cash flow shortage or 5 years each.
A third option is the New Design from NCCMP (National Coordinating Committee on Multi-employer Plans). There, the loan program would lend funds to qualifying “critical and declining” status pension plans at 1% interest for 30 years. The loans would be interest only for the first 15 years, and then require a level payment of principal and interest for the remaining 15 years.
Another option is funding from credit union profits. This proposal comes from the American Families for Pension Security nonprofit group. The group wants to create a federally chartered special-purpose credit union for the more than 10 million members of multi-employer plans and their families. The credit union would use its profits from loans and credit card operations to build a reserve pool to help plans repay and secure the loans.
There are drawbacks to each of the proposed plans. None have been accepted, and there is no telling whether any for of any of the plans will be implemented.
Matt Austin owns Austin Legal, LLC, a boutique law firm based in Ohio that limits its representation to employers dealing with labor, employment, and OSHA matters. You can reach Matt by calling him at (614) 843-3041 or emailing him at Matt@MattAustinLaborLaw.com.