Although the Senate voted to acquit President Donald Trump of impeachment charges, Congress has also been attending to other legislative business in 2021.
The Senate is concentrating on Biden Administration Cabinet appointments, and the Senate and House both remain focused on producing a COVID-19 relief package that meet budget and reconciliation rules to avoid a Senate filibuster. Budget reconciliation votes require only a simple majority, but the rules on reconciliation are restricted to items that affect the budget.
The House committees of jurisdiction are holding hearings on their portion of the package, with House floor action expected before the end of February, with Senate action to follow. Democrats want to have a package ready for President Biden’s signature before mid-March.
Ways and Means COVID Bill Includes Pensions
The House Ways and Means committee published its half of the $1.9 trillion relief package in February. Of interest to SMACNA members is Subtitle H relating to pensions. Key Senate and House leaders have indicated more pension relief and reform would be undertaken later this year because alternative plan design, including Composite Plans, would not qualify for the reconciliation process.
Other types of reforms to make it easier for plans to take earlier action on unstable plans were also excluded from this bill. However, the Ways and Means proposal would provide relief to plans with losses related to the pandemic.
The bill includes provisions for plans with pandemic-related losses similar to legislation passed after the 2008 market crash. If passed as written, plans that suffer losses from the pandemic would be able to:
- Utilize a zone freeze to avoid designation to lower plan status as endangered, critical, or critical and declining
- Stretch funding improvement and rehabilitation periods
- by 5 years
- Extend amortization to 30-years for asset losses and other losses, such as loss of man-hours or increased retirements due to the pandemic
The main feature of the bill is a rescue of failing plans. The bill would provide money to the Pension Benefit Guaranty Corporation (PBGC) and failing plans would apply for funds needed to pay full benefits for 30 years. It is anticipated that about 120 plans would qualify. The rescue would require plans to restore any previous benefit cuts from MPRA relief and once rescue money is provided from PBGC, plans could not later request MPRA relief. The proposal has guard rails which would prohibit plans from taking unwarranted action, such as reducing plan assumptions contrary to plan experience, to make them eligible for the rescue money.
NCCMP and other proponents for rescue of failing plans have long emphasized that delaying action on rescue of failing plans would be more costly to the government than taking action now because the PBGC, which insures these plans in the event of plan insolvency, would also become insolvent and unable to pay guaranteed benefits.
In particular, NCCMP notes that employers and participants have paid more than $698 billion in federal taxes and $374 billion in state and local taxes and that if 1.3 million participants lose their pension and are forced onto social safety net programs, the government would lose $20 billion a year in taxes combined with increased spending in safety net programs.
COBRA Relief in Ways and Means Proposal
The Ways and Means bill proposes subsidizing premiums for COBRA coverage at 85 percent. In 2010, the subsidies were only 65%. This larger premium subsidy should help keep more health and welfare contributions coming in to plans from workers who lost employment during the pandemic. The subsidy would go directly to plans in the form of an advanceable tax rebate.