PRESIDENT SIGNED PENSION OVERHAUL MEASURE

The Senate passed the Pension Protection Act (H.R. 4) on a 93-5 vote August 3rd, completing congressional action on the measure and President Bush signed the bill into law on August 17th.

Among both union and employer groups in the construction industry, which funds more than 40 percent of all multiemployer pension plans, approval of the legislation was widely applauded.

When representatives of the CAWP Board of Governors met with Senator Santorum on May of 2005 to discuss the pending highway reauthorization bill, they also discussed the importance of multiemployer pension plan reform.  During this time, CAWP was informed that potential legislation was close to being proposed in the Senate, but was suddenly pulled.  CAWP then contacted Senator Santorum's office and requested that he introduce his own bill.  On October 5, 2005, Senator Santorum introduced the Multi-Employer Plan Funding and Deduction Reform Act of 2005.

While this important legislation was being debated in Congress, CAWP was busy meeting with Congressional representatives from western Pennsylvania, urging their support of multiemployer pension plan reform.  CAWP joined AGC, the unions, and other trade associations in promoting Multi-Employer Pension Plan Reform.  CAWP met with Senator Santorum, Congresswoman Hart, Congressmen Murphy, Doyle, English and Shuster to gain their support for such reform.

The massive measure includes provisions to:

- allow reductions to existing benefits from multiemployer plans that are funded at less than 65 percent of obligations; and

- provide a new legal basis for cash-balance retirement plans.

Universal support for Senate passage of H.R. 4 was expressed by the Multiemployer Pension Plan Coalition, a consortium of labor unions, employers, plan trustees, and trade associations.

Stephen Sandherr, chief executive for the Associated General Contractors, called the bill "an important addition to retirement security for unionized labor in our industry." He noted the importance of portability under multiemployer plans for construction workers as they move to different job sites and new employers.

One change in the legislation that is important for multiemployer plans, Sandherr said in an August 4th statement, is raising the current maximum deductibility limit from 100 percent to 140 percent. This "will allow plans to save more for future retirees and avoid future funding shortfalls," he said.

AGC supported provisions in the bill that require plans to improve their funding status and remain fully funded, he said. For plans that are funded at less than 80 percent, trustees now will be required to develop a schedule for restoring full funding over a 10-year period, he said, as well as notifying plan participants. "These two requirements will ensure plan solvency by guaranteeing that all stakeholders are involved in decisions impacting the solvency of their plans," Sandherr said.


Source:  BNA Construction Labor Report 8-9-06