We are pleased to bring to your attention the fact that Congressman Richard Neal’s proposed legislation, H.R. 397 – Rehabilitation for Multiemployer Pensions Act – is getting support from members of both parties. In fact, there are currently 19 co-sponsors of this legislation, including 7 members from the Republican party. The legislation that will be considered seems to be getting a more favorable response this time around then those which were floated in the previous Congress (115th).
Obviously, we need to see significantly more support coming from the House, but it is a good start. We are at a point in time when further delays could be devastating to the future of many of the struggling multiemployer plans. As we’ve reported before, the universe of “Critical and Declining” (C&D) plans has already expanded from 114 to 121, and that was before the poor performance of markets during the fourth quarter.
There is no way that these C&D plans can earn their way to solvency given the significantly negative cash flow situations that these plans are in. The loan program that is once again being considered addresses the short-term liquidity needs while extending the investment horizon for the balance of the assets and future contributions to meet future liabilities, interest on the loans, and the balloon payment of the loan in year 30. They are a necessary bridge to future solvency. Please reach out to your representatives in both the House and Senate to garner their support for this critical legislation.