Pension Funding Bill Doesn't Spell Relief for Multiemployer Plans

Special to CONTRACTOR

CHANTILLY, VA. — Despite last-minute efforts by the Sheet Metal and Air Conditioning Contractors’ National Association and the Mechanical Contractors Association of America to secure meaningful relief provisions for multiemployer plans in the Pension Funding Relief Act of 2004 (H.R. 3108/P.L. 108-218), the narrowly tailored relief reported by the Senate-House conference committee was approved 78 to 19 in final passage by the Senate.

Reportedly, the White House told House-Senate conferees that relief for multiemployer plans was a union initiative and Republican leadership in the House killed the provision.

It is estimated the law will provide relief to only about 2% of multiemployer pension plans facing a funding deficiency. The law provides $80 billion in relief over two years for more than 31,000 companies that operate traditional pension plans, including relief for struggling industries exposing the Pension Benefit Guaranty Corp. to significant risk.

Labor/management-sponsored multiemployer plans became the sole political flashpoint in the debate, as the Bush administration backed down House and Senate conferees who were prepared to provide parity for multiemployer plans in the bill, which grants substantial relief to single-employer plans, according to MCAA.

“Still, while taking only a token concession in the measure that passed, the labor/management coalition that backed parity in treatment nevertheless gained substantial profile in the debate, and made some progress in getting policymakers to recognize the actual factual characteristics of multiemployer plans and their substantial differences from single-employer plans,” John McNerney, MCAA’s director of government relations reported to his members

Sen. Edward Kennedy, D-Mass., among the staunchest proponents for relief parity in the Senate, has pledged to bring back the original Senate proposal. The coalition will take on many of the same issues again as Congress begins to address comprehensive pension reform later in the session.

The final version unfairly discriminates against 60,000 small businesses that hire union workers, almost 1,700 pension plans and 9.7 million beneficiaries, SMACNA said. The multiemployer plan relief previously passed by the Senate but rejected by House Republicans would have provided meaningful relief to plans, would have been at no cost to the Treasury and would not have put the PBGC at risk, SMACNA said.

Ultimately, lobbying by core single-employer constituencies in major industries in many states assured final passage of H.R. 3108 without appropriate relief for multiemployer plans, SMACNA said.

In a letter to President Bush, prior to the Senate vote, SMACNA urged that the administration reconsider its opposition to temporary, modest relief for multiemployer pension plans facing technical funding deficiencies within the next few years.

SMACNA wrote on behalf of 4,500 contributing contractor firms: “We are not asking for relief from a substantial portion of funding obligations. The plans simply want a modest deferral of the amortization of recent investment losses so that the bargaining parties and plans can fix our own problems. This modest relief will not put plans or the PBGC in jeopardy and will not impose any cost on the Treasury.”