Let me start by saying that I’m very pleased to be a member of this committee and I’m hopeful that by working together on a bipartisan basis we can address the multiemployer pension crisis.
Retirement income is referred to by many as a three legged stool: Social Security, employer-sponsored retirement plans and personal savings.
Fortunately, Americans can count on their Social Security benefits. However, these days two of the other legs of the stool are pretty shaky. And the reality is with an average monthly benefit of $1,400 - and an annual benefit of less than $17,000 a year, it’s difficult to live comfortably in retirement on just Social Security.
Multiemployer pension plans are contributing to the wobbly three legged stools for many retirees because these plans are in crisis. About 10 million Americans participate in multiemployer plans and about 1.5 million of them are in plans that are quickly running out of money.
These are American workers who planned for their retirement. People who year after year chose to contribute to their pensions instead of taking a wage increase.
Then after working for 30 plus years, their planned retirements may be taken away from them. And taken away at a time when they no longer have time to prepare for retirement because they’re now in retirement.
We all know retirees who are in this devastating predicament - from truck drivers to autoworkers to ironworkers, these Americans live in all of our communities.
A retiree from my home state of Massachusetts barely escaped these devastating benefit cuts. He worked as a car hauler for almost 30 years. Then, years into his retirement, he received a notice from his pension plan telling him that his monthly benefit could be cut by more than 50 percent.
He was disabled, so his elderly wife, who herself had already worked more than 40 years, began looking for a job to cover what they had been told was a promised benefit for life.
Fortunately, the pension plan’s benefit cuts application with Treasury was denied, but the plan is still troubled and this retired Massachusetts couple’s financial security remains at risk.
It is critical that we address this crisis and help these retirees whose retirements are now at risk by no fault of their own.
As a long-time leader in the retirement space, I’ve been working with my colleague, Senator Brown, to do just that. We’ve introduced legislation that would offer troubled multiemployer plans low interest rate loans to pay retirees’ benefits. The loans would be funded through money from the private sector through the issuance of bonds.
My bill does not allow for any benefit cuts. These retirees earned these benefits through years of hard work. They deserve to receive their full benefit.
This is not a bailout. The plans would be required by law to pay back the loans. The federal government is simply backstopping the risk. And I should highlight that the House bill has a number of Republican co-sponsors.
Today 10,000 Baby Boomers retire every day. However, many Baby Boomers simply can’t afford to retire and must continue working. This will be even more the case for the next generation who generally no longer have defined benefit pensions.
The Rehabilitation for Multiemployer Pensions Act would address a big part of the problems with our retirement system - the multiemployer pension crisis. Today American workers need our help and it’s time to answer that call. I hope this committee will do just that.
