At last the actual language has been released of the backroom, last-minute congressional deal allowing benefits of millions of retired workers to be shredded.
It's even worse than its critics anticipated.
We've tracked this inexcusably hasty, secretive maneuvering during the last week, reporting that it allows extreme, potentially premature cuts in benefits for retirees who are members of multi-employer pension plans. Such plans typically are sponsored jointly by unions and employers in given industries, like trucking. See our posts here and here for more background.
Click here to read more at the Los Angeles Times.
Dave Erickson of Isanti, Minn., believed his pension benefits were guaranteed when he contributed a fixed portion of his pay into the Teamsters Central States Pension Fund.
On Wednesday, Erickson learned that those benefits might be cut under a provision that Minnesota Rep. John Kline aims to tack onto the new federal budget bill.
Click here to read more at the Star Tribune.
A bipartisan group of congressional leaders reached a deal Tuesday evening that would for the first time allow the benefits of current retirees to be severely cut, part of an effort to save some of the nation’s most distressed pension plans.
The measure, attached to a massive $1.01 trillion spending bill, would alter 40 years of federal law and could affect millions of workers, many of them part of a shrinking corps of middle-income employees in businesses such as trucking, construction and supermarkets.
Click here to read more at The Washington Post.
A provision that would suspend parts of an hours of service rule has been included in a $1 trillion bill congressional lawmakers plan to advance to President Obama’s desk this month to keep federal agencies funded through fiscal 2015.
The provision, offered by Sen. Susan Collins (R-Maine), would suspend for a year a requirement that drivers take off two consecutive periods of 1 a.m. to 5 a.m. during a 34-hour restart. It also would require the Federal Motor Carrier Safety Administration to provide Congress with an extensive study detailing the rule’s safety benefits.
The bill language says that within 90 days of the enactment of the act, "the Secretary shall initiate a naturalistic study of the operational, safety, health and fatigue impacts of the restart provisions." It would suspend the current restart provisions through Sept. 30, 2015, "and the restart rule in effect on June 30, 2013, shall immediately be in effect."
American Trucking Associations’ leadership had urged its membership to press federal representatives to back the HOS suspension language in the omnibus.
"We're pleased that the Collins language is included in the fiscal 2015 omnibus spending bill. We now urge the House and Senate to pass the overall bill and that the president sign it into law," said Sean McNally, ATA vice president of public affairs.
The bill also would provide $500 million for U.S. Department of Transportation infrastructure grants that have become popular with states and municipalities.
Congressional leaders are now in a race against the clock, as they look to advance the massive multi-bill legislation through the chambers. A short-term funding law expires Dec. 11. Without an omnibus package or another short-term funding measure reaching the president’s desk by that date, a government shutdown is likely.
“As we close in on our Dec. 11 deadline, we now ask that the House and Senate take up and pass this bill as soon as possible, and that the president sign it when it reaches his desk. The American people deserve the certainty of a continuously functioning and responsible government, and the knowledge that both parties in Congress have heard their demands and have worked cooperatively on their behalf,” said the chairmen of the House and Senate Appropriations panels, Rep. Hal Rogers (R-Ky.) and Sen. Barbara Mikulski (D-Md.).
Opposition to Collins’ proposal has come from the Obama administration, a small number of groups, and Democratic Sens. Cory Booker of New Jersey and Richard Blumenthal of Connecticut.
The two Democrats had asked Senate Majority Leader Harry Reid (D-Nev.) to remove the HOS suspension in the omnibus.
In addition to the $500 million in TIGER grants, the bill also provides:
- $40.3 billion for the federal-aid highways program (MAP-21), which is equal to the level enacted for fiscal year 2014.
- $1.39 billion for Amtrak
- $830 million for the National Highway Traffic Safety Administration (NHTSA), to allow NHTSA to make important investments in its safety defects analysis and investigation programs and improve the agency’s ability to aggressively screen defect trends.
- $104 million for the National Transportation Safety Board (NTSB).
View the full bill here. HOS section begins at page 1443.
UPDATED December 13, 2014: There's still time to fight Congress's last-minute pension cut deal by calling and emailing your Senators today. Do it now. The vote could come Monday on the budget bill.
Click here to read AARP's letter of opposition.
Click here to read a Statement from the Pension Rights Center.
Click here to read a Statement by Senator Tom Harkin.
The proposed pension cuts amendment has now moved on to the Senate. They need to vote on it. We still have a chance to shoot down the earmark.
Our allies in Washington encourage the following:
Contact your Senators ASAP.
We need them to say NO to the earmark on pensions. The legislation was developed behind closed doors. The 163 pages have barely been seen and have not been debated. There has been no discussion of the earmarked legislation. This is not a consensus proposal and is opposed by AARP, the Pension Rights Center, The International Association of Machinists, The Teamsters, The Steelworkers, and other organizations.
Adding this earmark to the Funding Bill is a last minute maneuver to allow pension cuts that have been protected by ERISA for forty years. There is no reason to rush this through in this manner.
As lawmakers pressed Monday to finalize the legislative language of a must-pass omnibus spending bill, labor unions and retiree groups were mobilizing to defeat what they are characterizing as a lame-duck sneak attack on the pensions of some already-retired workers.
At issue is an effort led by Reps. John Kline and George Miller, the top Republican and Democrat on the House Education and the Workforce Committee, to bring reforms to troubled multiemployer pensions. The exact language of the proposal had not yet been announced, and it was not clear whether House leaders had in fact decided whether it would be attached to the spending bill.
Click here to read more at National Journal.
Dear Member of Congress:
On behalf of the 1.2 million active and retired members of the United Steelworkers Union (USW), I urge you to oppose last minute legislation added to year-end spending legislation which will dramatically reform the multi-employer pension system and cut benefits to existing retirees. The lack of transparency and the inability to provide significant input into legislation which impacts close to 250,000 USW members and retirees in multi-employer pension plans is the wrong approach to former workers who deferred decades of wages into this retirement option.
The multi-employer pension system does need assistance to create long term stabilization and we applaud the efforts to craft a solution. However, the issue is a long term one. Many plans which are facing financial burdens have 10 years or more to find methods to fund the liabilities owed to participants. The proposal which from our understanding, dramatically reduces benefits to retirees in pay status is an extraordinary change to long standing ERISA “anti-cutback” rules and deserves intense scrutiny before being considered as a viable solution. Every effort should be made to find solutions that do not force retirees in pay status to bear the brunt of massive cuts when many employers who withdrew from these pension plans paid pennies on the dollar to get out.
Retirement Security for Americans is an issue that is intensifying in importance for our nation. The average working household has virtually no 2 retirement savings. When all households are included— not just households with retirement accounts —the median retirement account balance is $3,000 for all working-age households and $12,000 for near-retirement households. The failure of individual savings accounts to adequately prepare working Americans for retirement highlights the importance of well-run defined benefit plans, including multi-employer pension plans.
Belonging to a union, and participating in a defined benefit pension plan like a multi-employer pension is the best way to reverse the growing retirement security crisis. That is why USW opposes this last-minute, backroom deal that did not have adequate stakeholder engagement, will potentially force massive benefit cuts to retirees, and could undermine the full faith and promise of the entire pension system.
A report on the deal being made behind closed doors in Congress states that we should be happy that it will preserve some benefits.
Really....so I should be happy that I might get $1,200 a year more than what I would get if my plan went to the PBGC? I should be happy that I would LOSE $24,000 a year to get that!? Might as well take it all so I can get on every government program I can, maybe I can get free health care too!
So instead of the House and Senate considering other possible and feasible solutions presented by the like of AARP, The Pension Rights Center, Teamsters for Democratic Union, etc., so that I may support myself, the government would rather support me?! Have you looked at the 2014 US Census report to see how much money the elderly put back in the economy compared to the 50 and under? Did you read that 1/3 of all retirees have less than $1,000 in savings?
Senators and Congressman, wake up, look at the solutions presented by all, not just the NCCMP. Many of their members do not agree to this, take your time, do it right, let all the people you represent have a voice, not just big money. Since the big player in this is Central States Pension Fund and they say they may become insolvent in 12-15 years with their $18-19 billion dollars in their fund, is it really worth destroying peoples lives, the economy and costing the government, in the long run, when they have to enter into government programs to survive? Is it worth trying to push this through the House and Senate, on secret bills that only they know what they are attached to, in the 4 days left to meet, as opposed to an extension, to look and exhaust all solutions presented by all, not just one organization whose members are not all in agreement?
Maybe look into the funds themselves. Possibly they are mismanaged, possibly their trustees do not have the expertise to manage that much money. After all, why have so many recovered from the stock market crash under the current Pension Protection Act? Why are so many well funded at this time? Maybe they are mismanaged like some of the companies that contribute to them.
Congress, do the right thing, extend this, look at all not just one, if a fund says they have at least 12 years till they become insolvent, don’t ruin the lives of individuals and families in the next 4 meeting days.
Keep in mind that the retirees and active workers did not create the underfunded pension funds. Wasn’t it Wall Street, big banks and legislation against good paying jobs? So the retirees possibly have to carry the burden of their undermining?
Is this the country that I sacrificed my life for at the age of 18, in Vietnam, as a United States Marine, that 58,000 of my brothers gave the ultimate sacrifice for (and that’s just one war). Is this the country that is trying to keep people living longer with different health programs, medication, etc., but wants to dwindle down their fixed income to where many, if not the majority, will lose everything they worked for and will have no desire to live?
To all of the Senators and Congressmen/women that will be voting to change our lives drastically, consider this.....look at your income now, look at your expenses (food, house, car, medical, donations, children, grandchildren, vacations, maintenance, insurance, taxes, etc., etc.,....get the point?) and then look at your income again with the thought that you will never get a raise again, the rest of your life (fixed income). Now watch all the costs of your expenses rise every year while your income does not. Now take 30-65% of your fixed income away knowing you’ll never get it back, knowing you’re too old to get another job. Can you survive? Now watch someone vote to take your money away who has no clue what they are doing to you, who doesn’t even try to exhaust all solutions to avoid taking your income away, who just lets someone do that to you.
We The People....really?
Retired member of Akron Ohio Teamster Local 24
Passing legislation on a tight deadline--especially a bogus deadline--is invariably a formula for serious mischief. That's what's happening with a proposal to deal with a supposed crisis in worker pensions by allowing trustees to slash the pensions of already-retired workers to shreds.
Members of the House Education and the Workforce Committee are trying to slip the measure into an omnibus spending bill to be passed before Dec. 11, when Congress leaves Washington for its vacation recess. Pension advocates are up in arms, not least because the measure's actual language hasn't been made public. (It's still in negotiation, committee staffers say.) What is known is that it would change four decades of labor law in a way that mostly affects the oldest and most vulnerable workers.
"There's no bill, no legislative language," David Certner, legislative counsel to AARP, told me Friday. "To attach this big a change to a year-end spending bill is outrageous."
What's at issue is the condition of so-called multiemployer pension plans. These are defined benefit pensions in industries comprising lots of relatively small employers. The plans often are sponsored by unions, who share trustee duties with employer representatives.
Thanks to changes in the workplace, the 2008 crash, and the long recession, many--but by no means most--of these plans are underfunded and in danger of going bust sometime in the next decade or two. In those cases, the pensions will become the responsiblity of the federal Pension Benefit Guarantee Corp.
That's a concern for two reasons: First, the PBGC, which also takes over single-employer plans that run out of money, is already in serious financial trouble. Second, although the PBGC guarantees single-employer pension benefits up to about $59,318 a year (as a straight-life annuity for someone retiring this year at 65), the ceiling is much lower for multiemployer plans--for a worker with 30 years of pension credits, the maximum PBGC guarantee is $12,870. (The guarantees are adjusted each year for inflation.) That would be a huge cut for many workers with long years on the job.
To keep many of these plans solvent, the committee is considering a proposal to allow plan trustees to cut retirees' pensions now, many years in advance of any looming insolvency. The benefit cut could be no lower than 110% of the PBGC guarantee, or about $14,150 for that 30-year worker this year.
This would mean gutting the fundamental principle underlying the federal ERISA law governing private sector pensions. "The law says that once a retiree has earned a benefit, it must continue to be paid, until the day the fund is depleted," says Karen Friedman, policy director of the Washington-based Pension Rights Center.
That may sound like financial brinksmanship, but it's really a guarantee that all pension beneficiaries will be treated equally--pension trustees can't slash the benefits of the already-retired in order to preserve those for members still working.
The remedy is being crafted by Committee Chairman John Kline, R-Minn., and its ranking member, California's Rep. George Miller, D-Martinez, who is retiring. My request for comments was funneled up to committee staff, who say that "members are still discussing the details about a possible legislative solution to the multiemployer pension crisis and remain hopeful Congress will act before the end of the year."
Although some big unions favor the change, it's opposed by the boilermakers and international Assn. of Machinists, among others. "Changing ERISA to allow cuts in promised benefits is a ticket to poverty and dependence on government asisstance," IAM International President R. Thomas Buffenbarger wrote members of Congress last month.
The new proposal is an outgrowth of a study conducted last year by the National Coordinating Committee for Multiemployer Plans, which brought together union leaders, employers, and pension experts to find a way out of the crisis. The study considered numerous remedies, including merging struggling plans to improve administrative efficiencies; raising the standard retirement age from 65 to 67, as Social Security has done; and increasing premiums paid by employers to the PBGC to shore up its funding.
But the most draconian idea was to allow "early corrective actions" such as the benefit cuts.
Congressional sources say the proposals on the table would incorporate protections for the oldest and most vulnerable retirees, as well as a requirement that plan members vote to approve the benefit cuts. But Friedman says that's not very comforting: any such vote would pit existing workers, who can still accumulate pension credits on the job, against retirees, who can't return to the workforce. "That creates a real conflict of interests," she says.
What's most irksome about the Congressional maneuvering is the ginned-up atmosphere of urgency around it. For even seriously impaired pension plans, the day of reckoning may be 10 or 20 years off; a lot can happen in that time frame to improve their condition or for other solutions to bubble to the surface.
"Yes, there's a problem," Friedman says, "but it doesn't have to be solved this very second, with three days left in the session."
the measure's fate is uncertain; as word of a pending Kline-Miller deal started leaking out this week, the opposition has grown more vocal. "I'm more confident today than I was four days ago," AARP's Certner told me.
But the cloud hasn't passed. While it's true that some fix is imperative, whatever takes shape should be aired in public and weighed carefully. Pushing it through in haste, as all of Capitol Hill is rushing to get out of Washington and go home for the holidays, only raises the prospect that the most powerless members of the workforce will get screwed.