The Construction Employers of America issued the following statement in response to the Treasury Department’s decision to deny the Central States, Southeast and Southwest Areas, Health and Welfare Pension Fund Trustees’ difficult decision to voluntarily request a modification of its pension plan to continue to provide some level of benefit to pension recipients and assure the Fund’s solvency:
The Construction Employers of America is deeply concerned by the Treasury Department’s decision to reject the hard choice the Central States joint labor and management trustees made that would have ensured long-term solvency of the Central States Pension Fund. Mr. Feinberg’s decision creates greater uncertainty for the Trustees, an even more precarious situation for pension recipients, and a very real possibility that deeper cuts will be necessary.
When Congress passed and the President signed the “Multiemployer Pension Reform Act” in 2014, multiemployer pension plan joint labor and management trustees were empowered with the authority to make necessary changes to pension benefits when plans faced insolvency. Plan trustees are best situated to make informed, responsible decisions on behalf of struggling plans to ensure plans’ continued viability.
It is no secret that many of America’s defined benefit plans are floundering, with some facing real and immediate crises. Weak pension plans may create vulnerabilities that weaken the entire pension system. Today’s decision is a wakeup call to Congress, multiemployer benefit plan administrators, and beneficiaries. Given the current status of some plans, current defined benefit plans are too risky for employers and defined contribution plans do not, in reality, provide sufficient guarantees for employees.
The Construction Employers of America reiterates its call for Congress to finish the work it started when it passed the “Multiemployer Pension Reform Act” by authorizing hybrid ‘composite plans’. Composite plans would provide a voluntary option for joint labor and management plan trustees to adopt that would afford a lifetime benefit that would be far superior to a 401(k) for employees while reducing risks for employers. Composite plans were developed jointly by labor and management to meet the evolving needs of today’s workforce, and would allow labor and management trustees to make joint decisions to address market disruptions earlier without the need for draconian measures and slashes in pension benefits to ensure long-term plan solvency.
Construction Employers of America is a joint initiative to coordinate action on labor, workforce, and construction issues facing our industries. CEA will work to strengthen the construction industry and provide opportunities for top-quality construction workers to learn and maintain the skills they need to deliver highly productive, quality workmanship that provides the best value to project owners while earning high-value compensation and benefits for themselves, their families, and their communities. Information about the CEA can be found online at www.constructionemployersofamerica.com.
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