Hello! I’m so happy to be here speaking to all of you. Karen Ferguson, the Center’s director, and, Joellen Leavelle, the Center’s communications and outreach director, both wanted me to say a big hello to you too! Because, like me, they love you guys!
When Bob Amsden picked me up at the airport yesterday, he said, “Karen I hope you’re hungry.” And since then, I’ve eaten everything in sight: cheese curds, Wisconsin bacon and eggs, and even ribs. Now I feel strong, powerful and I’m ready to RUMBLE. I hope you are, too.
As you all know, I’m Karen Friedman, the short and mighty executive vice president and policy director of the Pension Rights Center, a national nonprofit consumer rights organization that works to protect and promote the retirement security of workers, retirees and their families.
Since the Center was founded in 1976, we have been instrumental in the passage of six federal laws as well the implementation of numerous regulations that have expanded benefits and rights for widows, former spouses, older workers and short-service workers.
As many of you know, we celebrated the Center’s 40th anniversary last fall. We were so excited to be able to honor Bob Amsden as one of our Retirement Security Superheroes.
Bob is a superhero and so are all of you – for coming out here on this Saturday morning, for rolling up your sleeves, and for continuing to fight. I want you to know if we continue to work together we will keep winning.
We at the Pension Rights Center started working with you in 2014 to try to stop the Multiemployer Pension Reform Act from becoming law. And right after MPRA became law, we analyzed the law, wrote fact sheets on the law’s provisions, and provided you with the technical assistance you needed.
And YOU took it from there.
The amazing activism of the Wisconsin Committee to Protect Pensions – under the leadership of Bob, Bernie, Kenny and others – connected you all with committees across the country. Now’s you’ve organized under the umbrella group the National United Committee to Protect Pensions. You all have done a tremendous job of educating legislators about how bad MPRA is and the need for alternative solutions.
And working together with us and AARP, the Teamsters Union, TDU and others, you were able last year to stop the Central States Pension Fund from being able to cut your benefits.
And that’s an amazing feat.
Because of your comments to the Treasury Department, your lobbing trips to Washington, the rallies you organized, and your constant contact with key government officials, the government and members of Congress listened to you.
The Pension Rights Center submitted its own comments on Central States. And after hearing from all of us, you and other activists, Ken Feinberg, the Special Master of the Treasury Department, agreed with the arguments presented that Central States’ application did not meet the law’s criteria to cut your pensions.
Probably the most persuasive argument was that, even with the steep and unjust proposed cuts, the ability of the Central States Pension Fund to survive for the long term would have been extremely uncertain – a key factor that MPRA says must be considered before the Treasury Department can approve any application to cut retiree pension benefits.
When the Central States application was rejected, I actually cried because I so relieved on your behalf.
As you know, beating Central States was a first and temporary victory. But the war isn’t over. This victory bought us time to now work for legislation to fix Central States and other severely underfunded multiemployer plans, which I will talk about a little bit later.
I want to go back to the Treasury Department and their process just for another minute or two.
Central States is not the only plan that has applied to cut benefits. Nine plans have applied to the Treasury Department for approval to cut their benefits.
Four applications have been rejected, including Central States and Teamsters Local 469. Four applications are pending, including the application submitted by the plan covering New York State Teamsters. The Center also submitted comments on behalf of the retirees in that plan to urge the Treasury Department to reject the application for reasons very similar as those they used to reject the Central States application.
However, on December 16th the Treasury Department, for the first time APPROVED an application – for Iron Workers Local 17 in Cleveland.
Even though the Pension Rights Center submitted comments on behalf of the Local 17 retirees arguing that the plan clearly did not meet the criteria necessary to cut benefits, the Treasury Department rejected these arguments and said yes to benefit cuts.
This was a huge disappointment for us and the plan’s retirees who will face cuts of 30-50 percent.
As you know, after the Treasury Department approves an application, all of a plan’s participants are allowed to vote on whether they believe the cuts should move forward.
But, because the Local 17 chose to structure their application so only about one-fifth of the close to 2,000 workers and retirees would face substantial cuts, the vote was stacked against the retirees. This is because MPRA also allows plans to count those who don’t vote as a vote in favor of cuts.
What worries us is that now many other plans may apply to the Treasury Department using Local 17’s application as a model.
We recently heard from musicians from the American Federation of Musicians. Their plan is in red zone status, and not yet eligible to apply to make MPRA cuts, but participants recently received a notice informing them that the plan is expected to apply for benefit cuts. We are working with them to help them understand what is happening and to help them advocate.
I know that Bob Amdsen and Mike Walden, the Chairman of the National United Committee to Preserve Pensions and others, are reaching out to other retirees facing cuts so we can have a united movement to stop pension cuts, one that goes beyond the Teamsters’ retirees.
Now, the big question that I’m sure you’re all wondering: ‘Can Central states reapply?” The short answer is that they said they wouldn’t. But that was right after their application had been rejected. Having said that, yes, Central States theoretically can reapply, but as our Senior Policy Advisor Norman Stein told me, this may not be likely because the plan would have to use lower interest rate projections on how would the fund would earn on its investments which would mean even larger benefit cuts – and he thinks this would be untenable.
This brings us back to a new legislative solution and we need to work toward it.
Don’t back down on lobbying Congress and the Administration. Remember, President Trump was elected, in part, because of his strong rhetoric and commitment to addressing the problems of working-class Americans. The people of Wisconsin voted for him based on these pledges. There is no more of an American issue than saving and protecting the pensions of hard-working Americans like you.
You tell him that MPRA was a terrible law passed in the dead of the night at the end of 2014. Tell the president that you expect him and his administration to lead the way in coming up with a better alternative.
As you probably know, President Trump appointed Steven Mnuchin as his new Secretary of Treasury. In his confirmation hearings, Senator Ron Wyden mentioned the importance of the crisis facing multiemployer plans when he said the following:
There are more than a thousand multiemployer pension plans around the country, and millions of Americans rely on them for economic security in retirement…. But many of those pension plans are in dire financial straits. With the livelihoods of so many Americans on the line, it’s vital that Democrats and Republicans come together.
Mnuchin replied, “You have my commitment to work with you to find solutions to the multiemployer pension crisis.”
Ok, guys, let’s hold him to it.
We have to find the right solution and steer the new administration forward. Tell them that you are the constituency that President Trump said he would serve. Don’t let them do anything but work with you.
But remember, these are your elected officials and you should keep up the pressure on them.
President Trump was elected on making promises to protect working America. You are the heart and soul of America.
Let this Administration and all of your elected officials know that breaking pension promises to retirees today – or in the future – is antithetical to the American dream. Tell them that you will not stand for anyone to break that promise, and that elected and appointed officials must be accountable to you.
Do not back down. Do not accept NO when asking them to fix this problem.
So what are the solutions?
Before I came today, I talked to the top staffers for both Senator Bernie Sanders and Representative Marcy Kaptur about whether they may reintroduce the Keep our Pension Promises Act into the new session of Congress. It sounds like this will happen over the next few months. KOPPA provides a good start for finding a comprehensive solution.
In short, KOPPA rolls back the anti-cutback provisions of MPRA and creates a fund within the Pension Benefit Guaranty Corporation, the agency that insures pension plans, that PBGC will use to infuse plans like the Central States Pension Fund with sufficient money to make it possible for the plan to pay full benefits to everyone.
KOPPA helps take care of the orphan liabilities that are caused when employers leave a pension fund without paying enough withdrawal liability to cover the benefits of retirees and certain employees. With an infusion of the extra money created by KOPPA, the Central States Pension Fund and other plans with financial troubles would be able to survive long-term and meet its commitments.
Even the Central States Pension Fund has said that it likes KOPPA’s structure.
But they and others think that this bill may not passable in today’s political environment because of how it’s paid for. KOPPA is paid for by partially repealing tax breaks for rich art collectors and rich real estate developers, which is probably not so popular with Donald Trump. Senator Sanders and Congresswoman Kaptur may be fine-tuning these ways of paying for the bill.
Also, Senator Portman is likely to reintroduce his Pension Accountability Act. Unfortunately, this legislation isn’t a comprehensive solution, but it does address MPRA’s flawed voting process. In conversations with an aide to Senator Portman, we’ve learned that the Senator is interested in working toward a comprehensive bipartisan solution.
We supported KOPPA and the Pension Accountability Act but, in order for it to be viable, there MUST be a comprehensive bi-partisan solution that builds on the structure of KOPPA and finds a range of ways of paying for this huge problem.
As I’ve said before, there are a lot of reasons that some multiemployer plans have gotten into trouble – economic and industry problems – but none of that is because of retirees. You all met your end of the bargain.
So, do not let money stand in the way of a solution. When Congress wants to fix a problem it finds the money. You uys have to make them do it. Do this with your votes and with your actions.
Besides KOPPA, we are committed to working with Bob and Mike Walden and others by bringing together stakeholders from all sides of the issue – employers, actuaries, unions, retiree groups – to come up with a new comprehensive solution to fix the problem.
The truth is, guys, there is no perfect solution. There may be shared responsibility and some sacrifice on all ends. But we think there has to be a better way of fixing multiemployer plans than by doing it at the expense of retirees, right?
So here are a number of ways of paying for the problem and at the end of my speech I’d like to hear more from you about some of your ideas:
Employers should pay higher pension insurance premiums and maybe some of this could be offset by tax credits if employers complain too much.
Some of you, including Mike Walden, have suggested retiree self-payments. That is, having retirees whose plans are in critical and declining status pay a small annual or monthly assessment that would come directly out of your monthly pension check and is scaled based on yearly income. So, instead of getting the $1,500 a month pension cut that you would have gotten if the Treasury Department had approved the Central States application, this idea would make it so retirees in critical and declining status plans would voluntarily make small monthly payments to the PBGC to make sure the plan can pay out benefits. This way you’d be voluntarily contributing toward a solution – rather than having plan trustees impose massive benefit cuts on you.
Another idea is for there to be a type of “membership fee” in multiemployer plans, like an AARP membership fee, where all 10 million participants in multiemployer plans pay something ($25 a year) toward a solution. This concept recognizes that multiemployer plans are worth preserving. And a well-funded plan today could become underfunded tomorrow.
Other ideas include a low-interest government loan that could go to either the PBGC to help pay for liabilities or to the plans themselves. Or let’s look at a combination of these ideas to help us figure out the problem.
Finally, I wanted to share a victory that occurred in 2016 – also because of the power of activism, and lobbyists from a range of organizations here in Washington.
I’m sure many of you heard about the composite bill.
Well, this was a bill that, like MPRA, was written and promoted by the National Coordinating Committee for Multiemployer Plans. Just like they did with MPRA, NCCMP worked like heck to get the draft composite legislation attached to an end-year bill, just like it did in 2014.
But here’s what happened this time: activists were organized, and a range of groups in Washington – IBT, Western Conference, AARP, IAM and all of us at the Pension Rights Center, among others, – were ready.
The composite bill would have allowed better funded multiemployer plans to transition to inferior plans. This would have led to underfunding of the old multiemployer plan –possibly even more benefit cuts. The newly created plans wouldn’t be defined benefit plans and thus wouldn’t be insured by the PBGC.
But together we stopped it. It’s going to rear its ugly head again as early as April. This means we have to be ready. We have to say that no multiemployer legislation should pass unless it solves the whole problem.
And now I want to end by making a few points: Pensions are not a partisan issue. Pensions are as American as apple pie. If pensions are cut, you, and your children, your grandchildren and the economy will be affected.
We must make this a big issue in 2017.