Plan Strengthens the Multiemployer Pension Plan System and Gives Retirement Options to Workers
CHANTILLY, VA – In response to the growing retirement uncertainty faced by millions of Americans who participate in the Multiemployer Pension Plan system, U.S. Representatives Phil Roe (R-1st-Tenn.) and Donald Norcross (D-1st-N.J.) have introduced bipartisan legislation called the Give Retirement Options to Workers Act (GROW), H.R. 4997.
The GROW Act, which focuses on the risks facing multiemployer pension plans, authorizes a new composite multiemployer pension plan design.
The Sheet Metal and Air Conditioning Contractors’ National Association (SMACNA) strongly endorses the GROW Act, which is designed to modernize and strengthen the multiemployer pension system for the future. The bill would safeguard and restructure the multiemployer pension plans by authorizing composite plans, which are hybrid plans designed to bridge the gap between existing defined benefit plans and the defined contribution plans.
The GROW plan offers a fiscally responsible way forward, which enables pensions to maintain fiscal solvency. “The bill is a refreshing, bipartisan effort that has support from management and labor,” said SMACNA CEO Vincent R. Sandusky. “This innovative approach allows plans to voluntarily transition to a new more secure plan design. Workers keep all the benefits they earned in the old system and move to a plan that continues to offer a lifetime benefit.”
At a roundtable discussion on Capitol Hill before the plan was introduced, SMACNA contractor Carol Duncan, CEO, General Sheet Metal, Clackamas, Ore., said the GROW plan would benefit both employers and workers. It will allow her to invest in the future, create more jobs, and one day hand down her business to her daughter, Ashley Duncan, GSM project manager.
“My daughter works for our family’s small business and would likely become a third-generation owner,” Duncan said. “But without structural changes to the multiemployer pension system, I do not know if she should. We have grown a successful business, but the defined benefit plans we contribute to have unfunded liabilities caused by circumstances beyond our control. I’m looking for solutions. I want to offer a good, lifetime pension benefit.”
“What makes this solution so appealing, is it does not depend on a taxpayer bailout and allows plans to help themselves,” she said. “The GROW plan would help with the withdrawal liability problem and still allow employers like me to provide a lifetime pension benefit.”
SMACNA believes that moving forward, composite plans will provide lifetime benefits and eliminate withdrawal liability for employers. With many employers rapidly leaving the defined benefit model for a defined contribution model, this would be an enormous step forward.
The pending insolvency of many defined benefit plans shows that the country needs a better way to provide retirement security. Plans would have the option to change before they fail, protecting employers, workers, the taxpayer, and the Pension Benefit Guaranty Corporation (PBGC).
Even with future negotiated contribution rate increases to properly fund the new plan and to provide benefit improvements, employers contributing to composite plans would have peace-of-mind knowing there would never be unfunded liabilities under this design. At the same time, employers would gradually pay down the liabilities in the old plan, so they could bring the next generation into the business without fear of expanding liability and uncontrollable risk. In fact, the GROW Act would remove a significant barrier for attracting new employers to the industry.
SMACNA is supported by thousands of construction firms in the industrial, commercial, residential, architectural, and specialty sheet metal and air conditioning construction market throughout the United States. Most of these contractors run small, family-owned businesses, many of which are multi-generational. It is time to move composite plans forward.
SMACNA, an international trade association representing 3,500 contributing contractor firms, is a leader in promoting quality and excellence in the sheet metal and air conditioning industry. SMACNA has national offices in Chantilly, Va., outside of Washington, D.C., and on Capitol Hill. Visit www.smacna.org.