COVID Relief Bill Could Save Distressed Union Pensions
Congress is working on a lengthy bill for further COVID relief. One small portion of it is modeled on the union-backed Butch Lewis Act, which passed the U.S. House in 2019 but not the U.S. Senate. Butch Lewis would provide loans cash grants to union-sponsored multiemployer pension plans that are otherwise headed toward insolvency.
About one in 10 multi-employer pension plans are in that situation thanks to stock market losses and declining numbers of active employees in the plans, and the wellbeing of up to 1.3 million union members and spouses is at stake. Butch Lewis would shore up declining pensions and restore benefits that were cut by some pensions in an effort to forestall insolvency.
If Congress does nothing, the Central States Teamster Pension is expected to run out of money in 2025. That would lead the Pension Benefit Guaranty Corporation (PBGC) itself to become insolvent. PBGC is a government insurance agency that guarantees pension benefits.
The Butch Lewis proposal was included in the COVID relief bill that passed the House Ways and Means Committee on Feb. 11 by a vote of 25-18. That cleared it for a vote on the House floor. The final version of the next COVID-19 relief bill is expected to be voted on in March.
A stand-alone version —The Emergency Pension Plan Relief Act of 2021 (EPPRA) — was introduced Jan. 21 by Rep. Richard Neal (D-MA), chair of the House Ways & Means Committee.
According to a summary of the bill, a troubled pension plan would receive enough financial assistance to keep it solvent and funded for 30 years—with no cuts to the earned benefits of participants and beneficiaries. Plans that previously cut benefits would have to restore them to the retirees who earned them. In exchange, each plan would have to comply with certain conditions and report to PBGC.
[NOTE: This article has been corrected. The Butch Lewis Act of 2019 (S.2254) would have rescued plans via a loan, but the pension rescue in Section H of the House COVID relief bill takes the form of a cash grant.]