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1 1 (March 22, 2019)

handle is hein.crs/govyyz0001 and id is 1 raw text is: Cogesoa Resarc Servic March 22, 2019 H.R. 397 (116th Congress), the Rehabilitation for Multiemployer Pensions Act In the 116th Congress, H.R. 397, the Rehabilitation for Multiemployer Pensions Act, would provide financial assistance to financially troubled multiemployer defined benefit (DB) pension plans that meet specified criteria. The financial assistance would consist of loans with a 30-year repayment term and, if the loan were insufficient to restore a plan to solvency, additional financial assistance. H.R. 4444, the Rehabilitation for Multiemployer Pensions Act, and S. 2147, the Butch Lewis Act, were nearly identical bills that were introduced in the 115th Congress. S. 2147 has not been reintroduced in the 116th Congress as of March 11, 2019. The Congressional Budget Office's (CBO's) preliminary analysis of S. 2147 in the 115th Congress indicated that budgetary effects were highly uncertain because of difficulty in projecting how the loan proposal would be implemented. CBO indicated that the bill would probably increase deficits by $100 billion but that it could be substantially less if few plans qualified for loans and assistance under the bill. CBO also noted that it had been working with congressional staff on variations of the proposal (see https://www.cbo.gov/system/files/2018- 10/s2147.pdf). Senator Sherrod Brown indicated that CBO estimated that the Butch Lewis Act would cost $34 billion, https://www.brown.senate.gov/newsroom/press/release/butc h-lewis-act-costs-less-than-half-the-price-of-propping-up-. Multiemployer pension plans are sponsored by more than one employer and are maintained as part of a collective bargaining agreement. In DB plans, participants receive regular monthly benefit payments in retirement (which some refer to as a traditional pension). Although employers are required to make annual contributions to the plans in which they participate, about 10% to 15% of multiemployer DB plan participants are in plans that are projected to become insolvent within 20 years. See CRS Report R45187, Data on Multiemployer Defined Benefit (DB) Pension Plans. When a multiemployer DB pension plan becomes insolvent, the Pension Benefit Guaranty Corporation (PBGC) provides financial assistance to the plan to pay participants' benefits. However, PBGC will likely become insolvent by 2025. The federal government has no obligation to provide assistance to PBGC. In the absence of enactment of legislation to address the insolvency of multiemployer plans or the PBGC, participants in insolvent multiemployer DB plans likely face large benefit reductions, likely receiving less than $2,000 per year. Selected Details of Loan Program H.R. 397 would establish the Pension Rehabilitation Administration (PRA), an agency within the U.S. Department of the Treasury. The PRA would make loans to multiemployer plans that * were in critical and declining status, including plans with approved applications for the suspension of benefits under the Multiemployer Pension Reform Act of 2014 (MPRA; P.L. 113-235), or * became insolvent after December 16, 2014. Plans that have been approved for benefit suspensions under MPRA would be required to apply for loans. The loan program is to be established no later than April 30, 2019, although the PRA could make loans prior to this date if the loan would be necessary to avoid the suspension of participants' benefits. Loan Terms The terms of the loan would include * a 30-year loan term, with the payment of interest for the first 29 years and the loan principal in the 30th year; * a prohibition on increasing participants' benefits or reducing employer contributions throughout the loan term; and * the restoration of any benefits reduced (1) as required by plans in financial distress (called a rehabilitation plan) or (2) when an insolvent plan received PBGC financial assistance. Loan Application In its loan application, a plan would be required to demonstrate that * the loan would enable the plan to avoid insolvency for at least 30 years or, in the case of an already insolvent plan, the loan would allow the plan to emerge from insolvency; and * the plan would be reasonably expected to pay benefits to participants, pay interest on the loan, and accumulate sufficient funds to repay the principal when due. The plan would have to provide information necessary to determine the loan amount and to stipulate whether the plan is also applying for (or is already receiving) financial assistance from PBGC. https:I/crsreports.conc -- --- 0

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