“We applaud the dedicated leadership of Senate Finance Committee Chair Chuck Grassley and Senate Health, Education, Labor and Pensions Committee Chair Lamar Alexander, for this vitally important step towards solving the vexing multi-employer pension challenge. Their leadership on this unforgiving issue is to be commended,” said ABA President and CEO Robb MacKie. “It is time for Congress to enact needed reforms to protect family baking companies and their dedicated employees from economic ruin.”
The multi-employer system is on the brink of collapse. Insolvency of several funds over the next few years will require the Pension Benefit Guaranty Corporation (PBGC) to step in to fulfill benefit plan payouts. Unfortunately, the PBGC is facing its own underfunding problem, estimated to become insolvent by 2025 and thereby putting at risk the retirement security of tens of thousands of bakery retirees.
Many factors contributed to this crisis. Years of flawed tax policy and bankruptcy laws categorized multi-employer funds as “unsecured creditors,” creating orphans-participants and forcing employers to exit without the plans paying their share of liability. Financial downturns in 2000 and 2008 and the dramatic decline in active participants have also exasperated the problem.
The escalating costs of these plans render participating employers uncompetitive, stifle investment, promote plan exits, and create the conditions that lead to further plan funding erosion – a catastrophic disaster for both the baking industry and the US Economy. It is imperative that a federal legislative solution is enacted to resolve this crisis in the 116th Congress.
“ABA urges the bi-partisan leadership in the Senate and the House to move expeditiously to build off the hard work of Sens. Grassley, Alexander, Brown, and Portman to find a long-term solution that protects plan solvency, accounts for all stakeholders, and to solve this important national crisis before Congress adjourns for the year.”