July 1, 2010: A bill that could provide help to troubled pension plans is now stalled in the U.S. Senate, but it could still move forward this year, with a push from below.
The Create Jobs & Save Benefits Act (S 3157), sponsored by Senator Robert Casey (D-Pa), would allow multiemployer plans to segregate the benefit liabilities attributable to participants of bankrupt former employers who pull out of the program without funding their withdrawal liability.
Central States Could Go Insolvent in Ten Years
The importance of the bill was underscored in May 27 testimony before the Senate Health, Education, Labor and Pensions Committee indicating that the Central States Pension Fund could become insolvent within 10 or 15 years. The testimony was given by Central States Pension Director Thomas Nyhan.
Although Nyhan didn’t say this in his Senate testimony, the Central States situation was greatly worsened by the pull-out of UPS from the fund, a move agreed to by the Hoffa administration in the 2007 UPS contract as part of a deal to get UPS Freight into the union.
The Casey bill is backed by the IBT and is the companion bill to a bill in the House sponsored by Earl Pomeroy (D-ND) and Pat Tiberi (R-Ohio), that would allow seriously troubled funds to be partitioned, with so-called “orphan” credits then taken over by the Pension Benefit Guaranty Corporation (PBGC).
Assets equal to a maximum of five years of projected benefit payments would also be moved to the separate account where the PBGC, the nation’s private-sector pension insurer, would back the benefit payments.
The bill deserves our full support, provided that it continues to protect 100% of pension benefits for all Teamsters and all workers, regardless of what company they worked for. In June the House, by a vote of 417-1, passed a bill providing some funding relief for pension funds.
It had already passed the Senate, and was signed into law by President Obama on June 29. The law allows some relief by allowing longer amortization to pay off unfunded benefits and longer smoothing of market ups and downs.