In its first action in the 116th Congress, the House Ways and Means Committee introduced a bipartisan bill that would channel loans to collectively bargained pensions destined for insolvency.
Introduced by Rep. Richard Neal, D-MA, the newly minted chair of the House Ways and Means Committee, the Rehabilitation for Multiemployer Pensions Act has a total of 10 sponsors, five from each party.
A rebranded version of the Butch Lewis Act that was first introduced in the Senate by Sherrod Brown, D-OH, in 2017, the bill would establish the Pension Rehabilitation Administration within the Treasury Department.
The PRA would operate the Pension Rehabilitation Trust Fund, which would include proceeds from specially issued Treasury bills sold to institutional investors, and loan and interest repayments made from borrowing pensions. Payments to institutional investors in the Treasury bills would be paid from the Trust Fund.
Pensions in “critical and declining” status that are projected to be insolvent within 20 years would be channeled enough assets to fund pension obligations for all participants in pay status at the time the loan is made.
No benefit cuts would be required to qualify for the loans. Pensions that have already suspended benefits under the Multiemployer Pension Reform Act would be required to apply for loans.
Loans would be extended over a 30-year period. Borrowing pensions would make interest payments for 29 years, and in the 30th year full principal repayment is due.
As was the case with the Butch Lewis Act, the latest iteration of a rescue package for upwards of 130 multiemployer plans includes a provision that allows for loan forgiveness if a plan is unable to repay the principal.
The PRA will have the authority to renegotiate revised repayment terms to avoid benefit suspensions.