Re: Authorization of Composite Plans Will Aid Pension System

December 5, 2017

The Honorable Virginia Foxx The Honorable Bobby Scott
Chair Ranking Member
Committee on Education and the Workforce Committee on Education and the Workforce
2176 Rayburn House Office Building 2176 Rayburn House Office Building
Washington, DC 20515 Washington, DC  20515

The Honorable Kevin Brady The Honorable Richard Neal
Chair Ranking Member
Committee on Ways and Means Committee on Ways and Means
1102 Longworth House Office Building 1102 Longworth House Office Building
Washington, DC  20515 Washington, DC  20515

Re: Authorization of Composite Plans Will Aid Pension System

Chairwoman Foxx, Chairman Brady, Ranking Member Scott, & Ranking Member Neal:

Last week Construction Employers of America (CEA) watched with interest the Education and the Workforce Subcommittee on Health, Employment, Labor, and Pensions hearing, "Financial Challenges Facing the Pension Benefit Guaranty Corporation: Implications for Pension Plans, Workers, and Retirees." On behalf of the 15,000 employers and 1.4 million employees we represent, we share the Committee’s concerns with the long-term health of our country’s multiemployer pension plans, and appreciate the thoughtful and timely hearing with Pension Benefit Guaranty Corporation (PBGC) Director Reeder.

CEA urges the Committee and Congress to take swift action to modernize our country’s multiemployer pension system by immediately authorizing “composite plans”. Composite plans would offer voluntary options to companies, workers, and plans participating in the PBGC multiemployer insurance program. As you are aware, composite plans are designed to blend the best components of existing defined benefit and defined contribution pension plans, ensuring the future of lifetime employee retirement benefits while protecting contributing employers and the PBGC.

If composite plans are authorized, benefits in employee legacy plans would be protected and participants would remain entitled to the benefits in those plans. In massive numbers, single employers have moved from defined benefit plans to defined contribution plans, a system in which workers cannot save enough and too frequently outlive their benefits. CEA employers are committed to providing lifetime retirement benefits like those in composite plans. Such an approach is vital to ensuring contributing employers’ ability and willingness to remain in the multiemployer pension system, and their continued ability to ensure retirement security for the skilled American blue-collar workers they employ.  

Composite plan legislation would give multiemployer plans the ability to secure their future at no cost to the federal government or pension plan participants. As plans transition to composite plans, the PBGC is protected from the failure of more plans. Premiums continue to be paid to the PBGC for legacy plans. In addition to providing relief to the PBGC, composite plans are a vital component of a long-term solution to America’s looming pension crisis.

CEA agrees with the need to strengthen the country’s pension system and address deficiencies in the 2014 “Multiemployer Pension Reform Act.” However, requiring higher premiums to participate in the PBGC does not improve our pension system.  Unreasonably high premiums would have the unintended consequence of driving more employers out of the system, further eroding PBGC’s financial situation and putting millions of retirees’ and employees’ future at risk.  We therefore support efforts, such as the authorization of composite plans, to obviate the need for premium increases with a new plan design—especially the dramatic increases Director Reeder posited in his recent testimony.

Construction Employers of America is a joint initiative coordinating action on labor, workforce, and construction issues facing our industry. CEA works to strengthen the construction industry and provide opportunities for construction employers that provide the best value to project owners through a highly productive, highly skilled workforce that earns fair wages and benefits for themselves, their families, and their communities.

CEA’s seven employer associations include FCA International, International Council of Employers of Bricklayers and Allied Craftworkers, Mechanical Contractors Association of America, National Electrical Contractors Association, Sheet Metal & Air Conditioning Contractors National Association, Signatory Wall and Ceiling Contractors Alliance, and The Association of Union Constructors. We are available to meet with you or your staff to discuss the benefits of composite plans and the benefits of such plans. You may contact me at or at 202-637-6820 with any questions or to speak to our associations and their members.


Jack Jacobson
Construction Employers of America

CC: Members of the House Committee on Education and the Workforce
Members of the House Committee on Ways and Means