At the end of 2017, the Pension Benefit Guaranty Corporation (PBGC) estimated that multiemployer plans were underfunded by $65.1 billion, an increase of $6.3 billion from the end of 2016.
The Budget Act of 2018 established the “Joint Select Committee on Solvency of Multiemployer Pension Plans.” This committee held its first meeting on March 14, 2018 and has until the end of November 2018 to provide recommendations and legislative language to significantly improve the financial conditions of multiemployer plans and the PBGC.
In an interesting nod to bipartisanship, the 16-member committee consists of eight Republicans and eight Democrats, and any proposed legislation that receives affirmative votes from four members of each party will be fast-tracked for a vote on the House and Senate floors.
While several large plans face imminent insolvency, there seems to be little optimism for a solution. Historically, Republicans have favored a solution involving benefits cuts and premium increases, while Democrats have focused on government assistance (including low-interest loans). At this point, there has been little talk of how a compromise would work.
To learn more about the Bipartisan Budget Act of 2018 and its impact on the retirement services industry, download our new guide.