Law360 (April 15, 2020, 10:26 PM EDT) -- Union pension funds — already ailing and facing the possibility of a faster demise in a strained economy — are pushing Congress to use the next round of coronavirus relief legislation to give them the help they need to avoid going belly up.
A coalition of more than two dozen unions, retirement funds and pension-protection activist groups urged congressional leadership in a recent letter to include retirement security measures in whatever legislation they send to the president's desk.
In the April 9 letter, publicized Wednesday, the coalition asked Senate Majority Leader Mitch McConnell, R-Ky., Senate Minority Leader Chuck Schumer, D-N.Y., House Speaker Nancy Pelosi, D-Calif., and House Minority Leader Kevin McCarthy, R-Calif., to include a Senate Democrat proposal called the Emergency Pension Plan Relief Act of 2020 in the next COVID-19 relief legislation.
Under the proposal, failing pension plans could more easily transfer their liabilities to the Pension Benefit Guaranty Corp., a government-chartered insurance company for American pension plans. The PBGC, which currently accepts no federal money, would get an infusion of government cash to help take care of the liabilities. Without such an infusion, its insurance program for union pension plans is on track to run out of money by 2026, according to PBGC projections.
Failing to offer a lifeline to union pension plans, also called multiemployer plans, could have dire consequences, particularly in a bad economy, the coalition said.
"The existing crisis in multiemployer pensions has been deeply exacerbated by the COVID-19 market collapse," wrote the coalition, which includes the Actors' Equity Association and the Central States Pension Fund. "Without U.S. government assistance, this crisis will threaten the existence of the 200,000 employers in these plans, their 3.8 million active workers, and the retirement income for 10.4 million participants."
Benefits attorneys contacted Wednesday supported Congress addressing the pension funding crisis, although some were skeptical Republicans would include retirement relief in the next coronavirus package, which lawmakers will pursue after returning to the Hill in May.
"My instinct is that's not an item everyone's willing to fall on their sword for to get the package through," said Eric Keller, a Paul Hastings LLP partner and member of the firm's global compensation, benefits and ERISA practice group. "As with most things in Washington, there's a political difference of opinion regarding the best way to reform the system."
Keller said lawmakers know they need to address the multiemployer plan funding crisis at some point, but whether they will perceive it as an emergency now is an open question.
Kevin Walsh, a partner at Groom Law Group, said a complete relief package for Americans impacted by the coronavirus crisis should include measures to protect retirement security, particularly since previous relief efforts made it easier for people to raid their 401(k) plans to pay expenses now.
"Retirement is an important part of the economy, and a recovery or stabilization package that doesn't include retirement is an incomplete package," Walsh said. "Tapping retirement assets now has provided people with a real bridge through financial difficulties, but Congress needs to help get people back on path to retire after the crisis ends."
The unions, retirement funds and pension-protection activist groups said in their letter that President Donald Trump has previously expressed support for a multiemployer pension system fix.
"The Democrats' proposal was supported by President Trump and we continue to support it, as well," the coalition wrote.
Trump's support could push Senate Republicans in the direction of supporting the Emergency Pension Plan Relief Act, said Norman Stein, a pension law expert who teaches at Drexel University.
"The president has a lot of influence with people in his party, and I think the case [for helping pension plans] is very strong," Stein said. "There's bipartisan support in the House. And in the Senate, you have some senators on both sides of the aisle that have been working for some kind of package that would help these plans."
--Editing by Breda Lund and Jay Jackson Jr.
CORRECTION: An earlier version of this story listed the Teamsters as one of the groups that sent the April 9 letter. The union said its name had been added to the letter without its consent. The error has been corrected.
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