One more vote! That is all that remains before multiemployer plans (and their participants) finally get the pension relief that they’ve sought and needed for years. Some of you may have missed the fact that the $1.9 trillion stimulus package passed by both the House (February 27th) and the Senate (March 6th) contains multiemployer pension support in the form of H.R.423 – Emergency Pension Plan Relief Act of 2021. The Bill has been sent back to the House for a final vote, perhaps as early as this week.
This Bill is also known as the Butch Lewis Act (BLA), but it isn’t the original BLA, which provided for low-interest loans to Critical and Declining plans provided by a new department within the Treasury (Pension Rehabilitation Administration). This version will provide direct payments to plans to provide the promised benefits for the next 30-years, with no obligation to repay. There are some who say that the legislation doesn’t go far enough to ensure that history won’t repeat itself, but for many American workers who lost a portion (significant, in some cases) of their benefits through MPRA, those benefits will be restored, and forfeitures made whole, and rightly so.
This legislation comes at a time when many American workers and retirees have been crushed by the impact of Covid-19. The fact that benefit payments will be protected means that the communities in which they live will also see the benefits from the economic activity that these payments will create, and those same municipalities will see further support through income and sales tax revenue growth. There are estimated to be more than 180 multiemployer pension systems covering nearly 1.4 million American workers that would be eligible to receive these grants, but those numbers could become significantly greater in the near-future depending on how markets and our economy performs.
Although critics are claiming that little pension reform is included in this Bill, there are a few interesting wrinkles related to discount rates and implementation of the grant proceeds that we will explore in future blog posts. In the meantime, I am thrilled that we are finally going to see support for these struggling plans and their participants. I can’t imagine being promised a benefit only to have the rug pulled out from under me when it was finally time to collect. Too many Americans have struggled with the stress of such action. It just wasn’t right!