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PENSION PLANS: MULTIEMPLOYER PENSION PLAN TERMINATION INSURANCE .ISSUE BRIEF NUMBER IB79052 AUTHOR: m Schmitt, R y Education and Public Welfare UiViSiOI1 THE LIBRARY OF CONGRESS CONGRESSIONAL RESEARCH SERVICE MAJOR ISSUES SYSTEM DATE ORIGINATED O5/O8/79 DATE UPDATED I2/O2/82 FOR ADDITIONAL INFORMATION CALL 287-5700 1203 CRS- 1 1379052 UPDATE-l2/02/82 ISSUE DEFINITION Congress passed the Multiemployer Pension Plan Amendments Act of l980 (MEPPAA) to protect pension benefits of participants in multiemployer pension plans. The amendments require an employer who drops out of a multiemployer plan to continue making payments for his fair share of the plan's "unfunded vested liabilities." This "withdrawal liability," which is intended to remove the financial incentive for withdrawal, can amount to up .to l00% of an employer's net worth. Many employers vigorously oppose the new law, and legislation has been introduced to modify it. Some employers maintain that their obligation to a multiemployer pension plan should be limited to making the contribution they agreed to in collective bargaining. Benefit levels are set by a plan's trustees, independently, and some empl maintain that they shoul ct required to assure workers a level of ts promised by the trust 3 m‘< :3 (D (D ' H: (0 O D It is worth noting that there are a significant number of cases now pending challenging on constitutional and other grounds various aspects of the withdrawal liability provisions of the 1980 amendments. BACKGROUND AND POLICY ANALYSIS Before enactment of the Employee Retirement Income Security Act of 1974 (ERISA), employers generally could terminate a pension plan without being held liable for any additional pension contributions. If there were insufficient assets in the pension plan to pay all pension claims, participants had no legal recourse to demand that employers use their corporate assets to continue funding the plan. This all changed with the enactment of ERISA. " PENSION BENEFIT GUARANTY CORPORATION (PBGC) One of the main purposes of ERISA is to ensure workers against the loss of their pensions should their pension plan terminate. To meet this purpose, the law set up a termination insurance program that is financed by premiums paid by covered plans. The Pension Benefit Guaranty Corporation (PBGC), also established by the law, administers this insurance program. The insurance program covers defined benefit plans, which are plans that promise a specific benefit at retirement, such as a stated monthly pension. There are two types of defined benefit plans: (l) single employer plans, and (2) multiemployer plans. MULTIEMPLOYER PENSION PLANS About 7.7 million participants are covered by about 2,000 multiemployer lans. Multiemployer plans usually cover employees working within an industry or craft in a specified geographic area. The types of industries in which multiemployer plans are found include building and construction, coal mining, transportation, and trucking. The plans are created ands maintained under collective bargaining .agreements negotiated between a union and CRS- 2 IB79052 UPDATE-l2/O2/82 employers. Over the years it has been said that multiemployer plans have offered a greater measure of retirement income security to workers in covered industries than single employer plans for two reasons. First, they provide workers with a type of pension portability; employees retain their pension credits as they move from one covered employer to another. Second, they have generally protected an employee's benefits even though his or her particular employer might leave the plan. Multiemployer plans are governed by a board of trustees, with equal representation by unions and employers. Employers pay into the plan at an agreed upon rate, usually expressed in terms of, so many cents-per-hour of covered employment. The trustees usually have no control over how much money is paid into the pension fund. That's generally determined in the collective bargaining process. Rather, the trustees normally take the agreed upon contributions and with the assistance of an actuary establish benefit levels based on assumptions about future employment levels, investment return, retirement patterns and turnover in the workforce. But factors like employment levels in an industry can and do change dramatically over time. These changes mean that the funds projected to be available to pay. benefits may not materialize. Thus, the fiscal soundness of a multiemployer plan largely depends on a stable or growing number of employees in an industry. where this is the case, it doesn't matter if a company drops out of a plan from time to time because chances are that the company will either be replaced by another employer or that other employers will expand their employment. MULTIEMPLOYER COVERAGE DELAYED Although the ERISA law required both single and multiemployer plans to pay premiums immediately, automatic insurance of benefits in multiemployer plans was first delayed until Jan. 1, 1978 (coverage was subsequently delayed four more times). The delays were caused by controversy about the appropriate design of a multiemployer plan termination insurance program. A number of experts had told Congress that because multiemployer plans do not depend on one employer for their survival, they would rarely terminate. Still others pointed out that because of the unique characteristics of multiemployer plans, it was not possible at that time to be certain about the impact of the termination insurance provisions on multiemployer plans. For these reasons, Congress decided to delay full inclusion of multiemployer plans under the insurance program. However, PBGC was given discretion in ' the l974 legislation to cover any terminations that occurred during the first 3" years of the program on a case-by-case basis. The initial 3-year period of discretionary coverage was intended to allow time for actual experience to develop before termination insurance became automatic for multiemployer plans. PBGC STUDIES PBGC found that there was a likelihood that some multiemployer plans coul indeed fail. In, recent years, technological obsolescence in certain industries, such as printing; foreign competition in the millinery industry; and changing consumer patterns in industries such as home delivery of milk; have resulted in a significant decline in the number of employers fwithdraw. , CRS- 3 IB79052 UPDATE-12/O2/82 contributing to some multiemployer pension plans. This led in some instances : a higher proportion of retirees to active workers. In turn, this placed a larger funding burden on the remaining employers. Also, those plans that gave service credits to employees for the time they worked for an employer before the employer contributed to the plan found themselves in a difficult financial position when significant numbers of such employers went out of business, leaving the plans with unfunded liabilities for their employees. In the past, when companies went out of business (l) their employees either had to suffer a cut in benefits, or (2) the remaining employers in the plan had to take on the burden of higher contributions. An increasing fear was that such plans would simply terminate as the continued burden of funding the plan became intolerable to employers and employees alike. PBGC found that in as many as one out of every ten multiemployer plans, the cost of continuing the plan might be more than the cost of termination. First, under the insurance program as originally designed, if an employer withdrew from a multiemployer plan and the plan did not terminate within 5 years of withdrawal, the employer would escape ilab_lity If the plar did terminate, the employer would have been liable fo: up :2 30% of his H3: worth. In some cases, however, 30% of net worth would be significantly less than the employer's obligation to the plan, thus providing an incentive to PBGC issued a report, Potential Multiemployer Plan Liabilities Under Title IV of ERISA, on Sept. 29, 1977. PBGC reported in l977 that about 2% of the 2,000 multiemployer plans covered by Title IV (accounting for about 5% of all multiemployer plan participants) were experiencing severe financial hardship, zdicating a high potential for termination within the next 5 years. The aggregate unfunded vested liabilities of these plans in l977 exceeded $350 million. PBGC reported further that another l0% of all multiemployer plans (accounting for 15% of all participants in such plans) were experiencing extreme financial hardship, indicating a high potential for plan termination, although not necessarily in the near future. These plans had aggregate unfunded vested liabilities of about $3.5 billion. PBGC's l977 report also indicated that the multiemployer premium rate (50 cents per participant) might have to be increased drastically to support the insurance program when mandatory guarantees for multiemployer plans became effective. Because of their relative size, even a few’ multiemployer plan terminations during a given year could have a significant impact on the termination insurance program as a whole. On July l, l978, PBGC issued its comprehensive analysis of the multiemployer plan termination insurance program. The report covered the program's potential effect on participants and contributing employers, as well as an analysis of the growth and continuance of multiemployer plans. Options for addressing the problems of multiemployer plan termination insurance were rpresented, but the report did not contain specific- recommendations for revising the program. The recommendations came later, in a report issued by PBGC to Congress on Feb. 27, l979. The PBGC recommendations formed the basis of H.R. 3904/S. l076 (later P.L. 96-364) which were introduced May 3, l979 at the request of the Administration. “ The revisions, supported by a broad coalition of both labor and management ioups, were considered necessary to assure the continuation of multiemployer plans as viable retirement income vehicles, and to assure a fiscally sound multiemployer termination insurance system. CRS- 4 1379052 UPDATE-l2/O2/82 MULTIEMPLOYER PENSION PLAN AMENDMENTS ACT OF l98O (P.L. 95-354) Under prior law, an employer could withdraw from a multiemployer plan without further obligations to the plan. This was so even if the employer's employees had earned vested benefits that had not been funded by that employer. Remaining employers were then left with the responsibility for funding those benefits as well as the benefits of their own employees. To remove incentives for employers to withdraw from multiemployer plans, the l98O amendments'impose a continuing funding obligation on an employer who withdraws from a multiemployer plan. The purpose of withdrawal liability is to protect the remaining contributing employers and the insurance program from having to assume the burden of funding the benefit obligations of viable employers who cease contributing to the plan. The withdrawal liability can exceed 100% of an employer's net worth. This liability is now imposed upon an employer at the time of withdrawal and is not dependent upon the actual termination of the plan. The Act discourages employer withdrawal by requiring a withdrawing employer to continue funding his share of the plan‘s unfunded vested liability. This "withdrawal liability" is equal to an employer‘s fair share of the plan's total unfunded vested Liability determined under the basic rule or one of the alternative rules that the plan may adopt. ‘Withdrawal liability is payable to the plan in annual installments for a period not exceeding 20 years. COI1StI‘L1C"CiOI‘l Industry There is a special definition of "withdrawal" for the construction industry. Cessation of contributions is. not by itself considered a withdrawal. withdrawal liability is incurred only if the employer is no longer obligated to contribute, but continues (or within 5 years resumes) the same type of work in the same area as was covered by the union agreement and does not contribute on that work. Entertainment Industry For entertainment industry plans -— stage, screen, radio, TV, musicians, etc. -— there is a similar rule with respect to employers who contribute to a particular plan primarily for work of a temporary or project-by—project nature: "withdrawal" occurs if the employer continues (or within 5 years resumes) the type of work covered by the plan without contributing. Trucking, Moving, and Warehousing lIf "substantially all" of a plan's coverage is in the trucking, public warehousing, or household goods moving industry, withdrawal by an employer primarily in such industry involves liability only if (a) the employer continues to do work within the jurisdiction of the plan or (bli its withdrawal does "substantial damage" to the plan's contribution base. PEG“ is to make the determination as to "substantial damage," taking account c that and other discontinuances over the ensuing 5 years. Pending that determination, the employer must post a bond or security for half the amount of its potential liability. CRS- 5 IB79052 UPDATE-l2/O2/82 Extension of the Special Rules The PBGC is authorized to extend, by regulation, rules similar to those for construction and entertainment to other industries with the same characteristics. Six-Year "Free Look" Under certain conditions an employer first entering a plan is allowed a six—year "free look" during which it could participate in the plan without incurring withdrawal liability. This "free—look" does not apply if the plan primarily covers employees in the building and construction industry or if the plan's assets were less than eight times the annual benefit payments. Also, the provision is not available to an employer who would account for 2% or more of total contributions to the plan. de Minimis Rule An employer's withdrawal liability may be reduced by $50,000 under a "de minimis rule." The de minimis amount is phased out dollar-for-dollar as an employer's withdrawal liability determined without regard to the de minimis rule exceeds $100,000. Thus, the exemption under the de minimis rule completely phases out when the calculated liability reaches $150,000. special Studies: Study on Collective Bargaining over Pension Benefits ‘The Department of Labor is required to study the feasibility of requiring collective bargaining between employers and unions over both multiemployer plan contributions and benefits. The Department is to provide the Congress with findings and recommendations on this issue by Sept. 26, l983. Study on Effect of Multiemployer Pension Plan Amendments Act The General Accounting Office is required to study the effects of the Amendments on (l) participants, beneficiaries, employers, employee organizations, and other parties affected by the Act and (2) the self-sufficiency of the fund to pay benefits under multiemployer plans that are insolvent. GAO is to report the results of its study and make recommendations no later than June 30, l985. In brief, the new law makes the following additional changes in the pension benefit insurance program for multiemployer plans: -- Changes the "insurable event" for PBGC involvement from plan termination to plan insolvency. PBGC is required to provide financial assistance to insolvent multiemployer plans (whether or not terminated) where the assistance is needed to enable the plans to pay guaranteed benefits. -- Establishes special rules for certain financially troubled plans, which are termed plans in "reorganization." For plans in reorganization, a special funding standard applies, known as the minimum contribution requirement (MCR). The minimum contribution requirement, which generally accelerates employers’ funding obligations, CRS- 5 IB79052 UPDATE-l2/O2/82 is capped to protect employers against very large ‘ increases in contributions for a plan year. In addition, if a plan is considered "overburdened" because it has a high proportion of retirees, the minimum contribution requirement is reduced by an overburden credit, giving the employers relief. —- Insures full guarantee coverage of the pension benefits of individuals who now receive pensions and those who are within 3 years of retirement. In other cases, the PBGC will guarantee lOO% of the first $5 of monthly benefits earned per year of service plus 75% of the next $15 of monthly benefits per year of service. The 75% guarantee is reduced to 65% if the plan does not meet specified funding requirements. -— Provides that the annual per-participant premium for multiemployer plans is CC ;ncrease from S 5C to $2.60 over a 9-year period to assure that the PBeC will have sufficient assets to pay benefits up to the guarantee level for those plans that do become insolvent. PBGC Regulations The Pension Benefit Guaranty Corporation issued a regulation on Mar. 24, 1982, specifying the procedures that multiemployer pension plans in industries other than construction and entertainment must follow to ga: approval of plan amendments providing special withdrawal liability rules- More lenient withdrawal liability rules, which generally limit the instances in which liability is imposed on employers that cease operations covered by a multiemployer plan, may be approved by PBGC if the industry covered is found "appropriate" for special rules and if their adoption would not pose a significant risk to the termination insurance system. The regulation requires plans applying for the special rules to certify that all employee organizations and contributing employers have been notified of the request for approval, and the industry covered must show characteristics that would indicate that withdrawals "do not typically have an wadverse effect on the plan's contributing base." CONSTITUTIONAL CHALLENGE There are a significant number of cases now pending challenging on constitutional and other grounds various aspects of the Multiemployer Amendments. To date, there have been six district court cases which have considered whether the retroactive application of the withdrawal provision is in violation of due process. The withdrawal liability is imposed also in the case of an employer who withdrew from a fund between Apr. 29, l980, and Sept. 26, l980, even though the statute was not yet enacted. The Courts have applied the standard that Congress may enact legislation which retroactively impairs contractual rights provided it is determined that the law is rational after a comparison of the problem to be remedied with t‘ nature and scope of the burden imposed to remedy the problem. Generally, tn- courts have reasoned that the retroactive application of the withdrawal liability provision (both as to post-enactment withdrawals and pre—enactment withdrawals) has facial constitutionality. Further, where the courts have had an actual factual situation to consider, the retroactive application of CRS- 7 IB79052 UPDATE-l2/O2/82 the withdrawal liability provision was held to be constitutional as to ost-enactment withdrawals, but unconstitutional as to pre—enactment withdrawals. CURRENT LEGISLATIVE PROPOSALS A bill that would eliminate all employer liability under most multiemployer pension plans upon plan termination and withdrawal was introduced in the Senate Oct. l9, 1981 (S. l748) and the House on Dec. 15, 1981 (H.R. 5223). In addition, covered multiemployer plans would not have to pay PBGC premiums and no benefit guarantees would be provided. Multiemployer pension plans that would no longer be subject to Title IV of ERISA would be those that meet the new definition for a "fixed contribution multiemployer plan." A fixed contribution multiemployer plan would be defined as a multiemployer pension plan under which the rate of employer contribution to the D an would be determined by collective baroaini the amount of f" would be set by the plan's board o instead of at~t a ' The introduction statement to S. l748 points out that the Title (IV rules which went into effect in 1980 for multiemployer pension plans as a result of the passage of MEPPAA have resulted in "numerous practical problems." The introduction states that MEPPAA -- created excessive liabilities which disrupt normal business practices by (l) effectively preventing unionized companies from going out of business or into liquidation; (2) preventing the ale of a company's assets; (3) preventing some companies from moving -acilities from one jurisdiction to another;_(4) restricting company growth because future reporting requirements could "drastically reduce the ability of the company to borrow money;" (5) damaging multiemployer plans in the long run because "the huge potential liability will discourage new employers from ‘entering the plan;" and (6) causing a loss of retirement benefits because "employers are resisting union organization more strenuously" primarily "because of the great magnitude of withdrawal liability." A number of proposals to revise t e multiemployer pension plan have been submitted by various affected partie n h s. These include proposals submitted by he Teamsters, the Associated Specialty ternational Union Retirement Fund. the American Trucking Association, Contractors, and the Graphic Arts I On Aug. l9, l982, Senators Danforth and Chafee introduced 8. 2860 which would eliminate the retroactive application of the withdrawal liability provisions for employers who withdrew before the date of enactment of the Multiemployer Amendments. On Sept. 28, l982, the Senate Finance Committee added the Danforth/Chafee bill as an amendment to H.R. 4577, a miscellaneous House-passed tax bill. The amendment eliminates retroactive liabilities imposed on employers who withdrew from plans between Apr. 29, l980, and Sept. 26, 1980, when the amendments were signed into law. Amounts paid by employers to plan sponsors as a result of the imposition of withdrawal liability would have to be refunded. ’EGISLATION 95th Congress Legislation CRS- 8 IB79052 UPDATE-l2/O2/82 P.L. 95-214, H.R. 9378 Deferred the date of mandatory plan termination insurance for multiemployer plans to July 1, 1979. Introduced Oct. 13, 1977; referred to Committee on Education and Labor. Passed by House on Nov. 1, 1977, and by Senate Nov. 3, 1977. Signed into law Dec. 19, 1977. 96th Congress Legislation P.L. 96-24, H.R. 3915 Amends Title IV of the Employee Retirement Income Security Act of 1974 to postpone for 10 months the date on which PBGC must pay benefits under terminated multiemployer plans. Introduced May- 3, 1979; referred to Committee on Education and Labor. Passed by House 1June 4, 1979, and by Senate June 6. 1979. Signed into law June 19, 1979. P.L. 96-Z39, H.R. 7140 Extends the deadline for mandatory coverage of multiemployer plans under ERISA's termination insurance program until July 1, 1980. Introduced Apr. 23, 1980; referred to Education and Labor Committee. Passed House Apr. 28; passed Senate, amended, Apr. 29. Signed into law Apr. 30, 1980. P.L. 96-293, H.R. 7685 Extends the deadline for mandatory coverage of multiemployer plans under ERISA's termination insurance program until Aug. 1, 1980. Introduced June 27, 1980; referred to Committee on Education and Labor. Passed House June 27, 1980. Passed Senate June 28, 1980. Signed into law June 30, 1980. O0 P.L. 96-364, H.R. 3904 Amends the Employee Retirement Income Security Act of 1974 and the ‘Internal Revenue Code of 1954, as amended, to improve retirement income security under private multiemployer pension plans by (1) strengthening the funding requirements for those plans, (2) authorizing plan preservation measures for financially troubled multiemployer pension plans, and (3) revising the manner in which the pension plan termination insurance provisions apply to multiemployer plans. H.R. 3904 was introduced May 3, 1979, and jointly referred to Committees on Education and Labor, and Ways and Means. S. 1076 was introduced May 3, 1979, and jointly referred by unanimous consent to Committees on Finance, and Labor and Human Resources. H.R. 3904 signed into law as P.L. 96-364 Sept. 26, 1980. For more information on both measures, see BACKGROUND. ' 97th Congress Legislation H.R. 4330 (Erlenborn)/S. 1541 (Nickles) Modifies the current funding and termination insurance provisions relati; to single—employer pension plans to increase the likelihood of protecting plan participants against the loss of nonforfeitable benefits. Modifies the termination insurance program for single—employer pension plans by changing the insurable event from the time of plan termination to the time of the CRS- 9 IB79052 UPDATE-12/O2/82 liquidation of the plan sponsor in order to place primary emphasis on plan ontinuation and contain program costs within reasonable limits. To encourage the establishment and continuation of small plans, an exemption from the premium requirement, but not coverage, is made available for plans having fewer than 35 participants. Removes present law 30% of net worth cap on an employer's liability and reduces PBGC“s claim to that of a general unsecured creditor. (Note: while the bill does not change the recently enacted provisions affecting multiemployer plans, it changes the insurance provisions affecting single employer plans by putting them on a comparable footing.) In addition, establishes a single independent agency (Employee Benefit Administration) to consolidate Federal regulation with respect to employee pension and welfare benefit plans, provides tax incentives for retirement savings, reduces ERISA paperwork and administrative obstacles, and simplifies the rules for integrating pension plans with social security- H.R. 4330 introduced July 20, 1981; referred jointly to Committees on Education and Labor, and ways and Means. S. 1541 introduced July 30, 1981; referred to Committees on Finance, and Labor and Human Resources. —-Pyvs-~ ’ ‘ bx.-." (DL‘.1'iCE.I'i,\' V T; J. 4'. 111 Exempts certain fixed contribution multi-employer pension plans from title (IV of the Employee Retirement Income Security Act of l974. Introduced Dec. 15, 1981; referred to Committee on Education and Labor. H.R. 7094 (Rangel) Amends the Internal Revenue Code of 1954 to impose a tax on failures to ‘dhere to conditions of determination letters relating to independent .anagement of the assets of multi—employer plans. Introduced Sept. 14, 1982; referred to Committee on ways and Means. (H.Rept. 97-839, Sept. 17, l982). Measure passed House on Sept. 20, 1982; referred to Senate Committee on Finance on Sept. 22, 1982. H.R. 7233 (Holland) Amends the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1954 to improve retirement income security under private multiemployer pension plans and encourage employer participation in these plans by modifying the rules respecting funding, premium rates, asset sales, and employer withdrawal liability, and for other purposes. Introduced Sept. 30, 1982; jointly referred to the Committees on Education and Labor, and Ways and Means. S. 1748 (Hatch) Exempts certain fixed contribution multiemployer pensions plans from title IV of the Employee Retirement Income Security Act of 1974. would exempt a plan where the contribution rate is fixed by the collective bargaining agreement but the pension benefits under the plan are not fixed. Introduced Oct. 19, 1981; referred to Committee on Labor and Human Resources. S. 2860 (Danforth) Eliminates the retroactive application of certain provisions of P.L. 3-364. Introduced Aug. 19, 1982; referred to Committee on Finance. HEARINGS U.S. Oversight of ERISA, CRS-10 IB79052 UPDATE-12/02/82 Committee on Education and Labor. Hearings Multiemployer Pension Plan Amendments Act of 1st session. June 5 and 7, 1979. Congress. House. held on H.R. 3904, 1979. Hearing 96th Congress, Congress. House. Committee on Ways and Means. Hearings held on H.R. 3904, Multiemployer Pension Plan Amendments Act of 1979. Hearing, 96th Congress, 2d session. Feb. 19, 1980. 218 p. "Serial no. 96-74" Individual retirement accounts and IRS plan termination survey Hearings, 95th Congress, lst session. Feb. 1 and 24, 1978 Wash=ngton U S Go : Prinz Off., 1978 395 : "Serial no 95-97" Congress. House. Committee on Ways and Means. Subcommittee on Oversight. Multiemployer Pension Plan Termination Insurance Program. Hearing, 96th Congress, 1st session. July 25, 1979. Washington, U.S. Govt. Print. Off., 1979. 162 p. "Serial no. 96-38" Pension plan termination insurance issues. Hearing, 95th Congress, 2d session. Sept. 28, 1978. Washington, U.S. Govt. Print. Off., 1978. 87 p. "Serial no. 95-116" Congress. Senate. Committee on Finance. Subcommittee on Private Pension Plans and Employee Fringe Benefits. Pension Plan termination insurance for multiemployer pension plans. Hearing, 96th Congress, 2d session. Mar. 18, 1980. Washington, U.S. Govt. Print. Off., 19 C0 0. 315 L—4 Q - Pension Benefit Guaranty Corporation amendments affecting single-employer and multiemployer defined benefit plans. Hearing, 95th Congress, 2d session on S. 2019, S. 2125, and H.Con.Res. 369. Oct. 14, 1977. Washington, U.S. Govt. Print. Off., 1978. 25 p. Congress. Senate. Committee on Human Resources. 1977. Hearings on the implementation of ERISA and on S. 2125, to authorize the Pension Benefit Guaranty Corporation to extend effective date of mandatory multiemployer plan coverage, 95th Congress, lst session. Oct. 11, 13, and 18, 1977. Washington, U.S. Govt. Print. Off., 1978. $16 p. Multiemployer Pension Plan Amendments Act of 1979 (S. 1076). Hearings, 96th Congress, 1st session. June 26-27, 1979. Washington, U.S. Govt. Print. Off., 1979. 1226 p. Multiemployer Pension Plans Stabilization Act of 1981, CRS-ll . IB79052 UPDATE-12/O2/82 S. 1748. Hearings, 97th Congress, 2d session. Mar. 11 and 17, 1982. Washington, U.S. Govt. Print. Off., 1982. 601 p. U.S. Congress. Senate. Committee on Small Business. The effects which ERISA and MPPAA have had on the competitiveness of small business. Hearing before the Subcommittee on Productivity and Competition. 97th Congress, lst session. Aug. 14, 1981. Washington, U.S. Govt. Print. Off., 1981. 384 p. REPORTS AND CONGRESSIONAL DOCUMENTS Amending Title IV of the Employee Retirement Income Security Act. of 1974, to postpone for one month the date on which the corporation must pay benefits under terminated multiemployer plans. Congressional record [daily ed.] v. 126, Apr. 28, 1980: H2995-H229E., Introduction of bill to amend Title IV of ERISA to postpone automatic termination insurance coverage for multiemployer pension plans. In Remarks of Frank Thompson, Jr. Congressional record [daily ed.] v. 125, May 3, 1979: H2671. ' Multiemployer legislative proposal explanatory statement. In Letter and Explanatory Statement of Secretary of Labor Ray Marshall. Congressional record [daily ed.] v. 125, May 3, 1979: S5321-S5330. Endorsement by Jacob Javits on 85331. Multiemployer Pension Plan Management Act. In remarks of Mr. Rostenkowski. Congressional record [daily ed.], v. 128, Sept. 20, l982: H7202-7203. Multiemployer Pension Plans. In remarks of Mr. Holland. Congressional record [dai1y~ed.] v. 128, Oct. 1, 1982: E4551-E4552. Multiemployer Pension Plan Amendments Act. In Remarks of Carl D. Perkins. Congressional record [daily ed.] v. 125, May 3, 1979: H2619. Multiemployer Pension Plan Amendments of 1979. In Remarks of Harrison A. Williams, Jr. Congressional record [daily ed.] v. 125, May 3, 1979: s53o9. Multiemployer Pension Plan Stabilization Act of 1981. In remarks of Mr. Hatch in the Senate. Congressional record [daily ed.], v. 127, Oct. 19, 1981: Sll629-11630. Pension liability is causing problems to America's trucking industry. In Remarks of John J. Duncan. Congressional record [daily ed.] V. 128, Jan. 28, 1982: E142. Problems with ERISA. In remarks of Mr. Cohen. Congressional record [daily ed.] v. 128, Sept. 30, 1982: s1291s-s12919. Termination insurance for multiemployer plans. In Remarks The Multiemployer Retirement Income Protection Act of The Retirement U.S. Committee On Ways and Means. CRS-l2 IB79052 UPDATE-l2/O2/82 of Harrison A. Williams, Jr. record [daily ed.] v. 125, and Jacob Javits. Congressional May 2, 1979: S5176-S5177. l982. Congressional record [daily ed.], E4709-4711. Holland. 1982: In remarks of Mr. V. 128, Oct. 20, Income Incentives and Administrative Simplification Act of 1981 (H.R. 4330). Remarks of Mr. Erlenborn in the House of Representatives. Congressional record [daily ed.], v. 127, July 20, 1981: H5421-5428. House. Committee on Education and Labor. the Employee Retirement Income Security Congress. Amendment to Act of 1974; report to accompany H.R. 9378. Washington, U.S. Govt. Print. Off., 1977. 10 p. (95th Congress, A 1st session. House. Report no. 95-706) Amendment to the Employee Retirement Income Sec**_ty Act of 1974; report together with dissenting views to accompany H.R. 3915. Washington, U S. Govt. Print. Off., 1979. (96th Congress, lst session. House. Report no. 96-215) Pension Benefit Guaranty Corporation Insurance Premiums; report to accompany H.Con.Res. 369, which on- Oct. 5, 1977, was referred jointly to the Committees on Ways and Means, and Education and Labor. Washington, U.S. Govt. Print. Off., 1977. 9 p. (95th Congress, 1st session. House. Part 1.) ’ Report no. 95-781, Congress. House. Committee on Education and Labor. Multiemployer Pension Plan Amendments Act of 1979; report together with separate and individual views to accompany H.R. 3904 which on May 3, 1979, was jointly referred to the Committee on Education and Labor and the Washington, U.S. Govt. Print. ff., 1980. 226 p. (96th Congress, 2d session. House. Report no. 96-869, Part 1) Congress. House. Committee on Ways and Means. Multiemployer Pension Plan Amendments Act of 1980; report together with supplemental and minority views to accompany H.R. 3904. Apr. 23, 1980. Washington, U.S. Govt. Print. Off., 1980. 19l p. (96th Congress, 2d session. House. Report no. 96-869, Part 2) Revised coverage schedule for certain benefits guaranteed by the Pension Benefit Guaranty Corporation; report to accompany H.Con.Res. 369, which on Oct. 5, 1977 was referred jointly to the Committees on Ways and Means, and Education and Labor. Washington, U.S. Govt. Print. Off., 1977. 3 p. (95th Congress, 1st session. House. Report no. 95-781, Part 2) Congress. House. Conference Report on Multiemployer Pension Plan Amendments Act of 1980; report to accompany H.R. 3904. Washington, U.S. Govt. Print. Off., 1980. (96th Congress, 2d CR8-l3 IB79052 UPDATE-l2/02/82 session. House. Report no. 96-1343) Congress. Joint Committee on Taxation. Description of legislation relating to Pension Benefit Guaranty Corporation Plan Termination Insurance for Multiemployer Pension Plans (scheduled for a hearing by the Subcommittee on Private Pension Plans and Employee Fringe Benefits of the Committee on Finance on Mar. 18, l980). Mar. 14, l980. Washington. U.S. Govt. Print. Off., 1980. 56 p. Explanation of H.R. 3904 (as reported by the Committee on Education and Labor) relating to Multiemployer Pension Plan Amendments scheduled for a markup by the Committee on Ways and Means. Mar. ll, l980. Washington. U.S. Govt. Print. Off., 1980. 68 p. Congress. Senate. Committee on Human Resources and Committee on Finance. Amending Title IV, Employee Retirement Income Security Act of l974; report together with additional xwews to accompany S. 2125. Washington, U.S. Govt. Print. Off , l977. 8 p. (95th Congress, lst session. Report no. 95-570) lsenate. General Accounting Office. Effect of the Employee Retirement Income Security Act on the termination of single employer defined benefit pension plans. Report to the Congress by the Comptroller General of the United States. [Washington] l978. (HRD-78-90, Apr. 27, l978) 66 p. ‘ ' CHRONOLOGY OF EVENTS 09/28/82 07/14/82 03/24/82 10/31/80 09/26/80 09/19/80 Senate Finance Committee tacked provision on H.R. 4577 which would eliminate withdrawal liability for employers who withdrew from a multiemployer plan before Sept. 26, 1980. Central States and Western Conference of Teamsters and the American Trucking Association submitted legislative proposal "that provides appropriate relief from the serious problems caused by withdrawal liability." ‘N 3 PBGC issued a regulation specifying the procedures that multiemployer pension plans in industries other than construction and entertainment must follow to gain approval of plan amendments providing special withdrawal liability rules. (See Federal Register, Mar. 24, l982. 29 CFR 2645) PBGC issued proposed agenda of Multiemployer Pension Plan Amendment Act Register Oct. 3l, l980. 45 FR 72213.) priority regulations under (See.Federal H.R. 3904 was signed by the President and became P.L. 96-364. The House adopted conference report on H.R. 3904 09/18/80 09/17/80 09/08/80 08/28/80 08/28/80 08/25/80 08/01/80 07/31/80 07/29/80 07/24/80 06/30/80 06/28/80 CRS-14 IB79052 UPDATE-l2/O2/82 (see Congressional Record [daily ed.] v. 126, Sept. 19, 1980: H9178—H9l8l). The Senate adopted conference report on H.R. 3904 (see Congressional Record [daily ed.] v. 126, Sept. 18, 1980: Sl2900-Sl290l). Conference report 96-1343 filed in House. Conferees agreed to conference report resolving differences between the Senate— and House-passed versions of H.R. 3904. Senate agreed to conference on H.R. 3904. House requested conference on H.R. 3904. The Senate approved the House-passed version of H.R.3904 after adding two amendments (i.e , unemployment insurance pension offset and Hawaii preemption issue) (see Congressional Record [daily ed.] v. 126. Aug. 26, 19805 s11885 - s11878). The House concurred in the Senate—passed version of H.R. 3904 deleting nongermare amendments and after making same additional changes. (See Congressional Record [daily ed.] v. 126, Aug. 28, 1980: H7863-H7912.) Objection was heard in the House of Representatives~ to a unanimous-consent request to agree, with amendments, to the Senate amendments to H.R. 3904. Subsequently, objection was heard to a unanimous consent request to consider H.R. 7881, to postpone for 1 month the date on which PBGC must pay benefits under terminated multiemployer plans. (see Congressional Record [daily ed.] v. 128, Aug. 1, 1980: H6951-6984.) Objection was heard in the House to a unanimous-consent request to agree, with amendments, to the Senate amendments to H.R. 3904. Subsequently, objection was heard to a unanimous-consent request to consider H.R. 7881, to postpone for 1 month the date on which PBGC must pay benefits under terminated multiemployer plans. (see Congressional Record [daily ed.] v. 126. July 31, 1980: H6900-6936.) , (See Congressional 1980: S10070-10201.) S. 1076 was passed by the Senate. Record [daily ed.] v. 128, July 29, The Committee on Labor and Human Resources and the Committee on Finance jointly reported out S. 1076, with an amendment. H.R. 7685 became P.L. 96-293. The law postpones mandatory coverage of multiemployer plans until Aug. 1, l980. Senate passed H.R. date on 7685 postponing for 1 month the which PBGC must pay benefits under 06/27/80 06/12/80 06/10/80 05/22/80 .04/30/80 04/29/80 04/28/80 -04/23/80 04/02/80 03/27/80 03/24/80 03/18/80 CRS-15 IB79052 UPDATE-12/O2/82 terminated multiemployer plans. House passed H.R. 7685 postponing for 1 month the date on which PBGC must pay benefits under terminated multiemployer plans. Senate Finance Committee completed markup of S. 1076, and ordered the bill reported with an amendment in the nature of a substitute. Senate Finance Committee began markup on S. 1076. H.R. 3904 was approved unanimously by the House. [for floor debate see Congressional record [daily ed.] v. 126, May 22, 1980: H4113-4172.] H.R a e P.L 96-239. The law extends the deadline for mandato:y coverage of multiemployer plans under EPISA‘s termination insurance program unti; July 1, 1980 House concurred in Senate amendments to H.R. 7140 extending date on which corporation must pay benefits under ERISA plans. Senate passed H.R. 7140 extending date on which corporation must pay benefits under terminated multiemployer plans; adopted Senator Bentsen's amendment, 8. 4302, making 2-month postponement of date on which Pension Benefit Guaranty Corp. must pay benefits. Senate Committee on Finance agreed to offer a floor amendment to H.R. 7140, deferring mandatory Pension Guaranty Corp. insurance of multiemployer plans until July 1, 1980. House passed H.R. 7140, to amend Title IV of the Employee Retirement Income Security Act of 1974 to postpone for one month the date on which the corporation must pay benefits under terminated multiemployer plans. Committee on ways and Means reported H.R. 3904 (H.Rept. 96-869, Part 2). H.R. 3904 was reported to the House (amended) by Education and Labor Committee (H.Rept. 96-869 (Part 1)). Committee on Ways and Means ordered reported, as amended, H.R. 3904. Committee on Labor and Human Resources ordered favorably reported, with amendments, S. 1076. The Senate Subcommittee on Private Pension Plans and Employee Fringe Benefit Plans held hearing on S. 1076, the Multiemployer Pension Plan Amendments Act. 03/13/80 03/12/80 02/19/80 01/30/80 12/13/79 12/11/79 m U1 $\ ~.J U) CI”, -/ 4 06/19/79 06/06/79 06/04/79 05/23/79 05/08/79 05/08/79 05/04/79 05/03/79 CRS-l6 IB79052 UPDATE-l2/02/82 The Senate Labor and Human Resources Committee marked up S. l076. The Committee on Ways and Means began markup of H.R. 3904. House Committee on ways and Means held hearings on H.R. 3904. House Committee on Education and Labor ordered H.R. 3904 reported, with amendments. H.R. 3904, as amended by the House Subcommittee on Labor—Management Relations, was approved for full committee consideration. House Subcommittee on Labor—Management Relations began markup on H.R. 3904 House Ways nd leans Oversight Committee neld rearings a on,H.R.13904. President Carter signed H.R. 3915, to defer from July l, 1979 to May 1, 1980, the effective date of automatic termination insurance coverage for multiemployer pension plans P.L. 96-24). Senate passed H.R. 3915 to amend ERISA to postpone for 10 months date on which PBGC must pay benefits under terminated multiemployer plan. House of.Representatives suspended rules and passed H.R. 39l5 amending ERISA to defer for l0 months effective date of automatic termination insurance coverage of multiemployer pension plans. 1 The House Committee on Education and Labor reported H.R. 3915 to postpone date on which PBGC must pay benefits under terminated multiemployer plan (H.Rept. 96-315). Committee on Education and Labor ordered reported H.R. 3915, to amend Title IV of the Employee Retirement Income Security Act of l974 to postpone for l0 months the date on which PBGC must pay benefits under terminated multiemployer plans. House Committee on Education and Labor marked up H.R. 3915, to postpone for l0 months the date on which PBBC must pay benefits under terminated multiemployer pension plans. GAO transmitted report on examination of PBGC FY77 financial statements. S. l076 was introduced by Senators Williams, Long, and Javits, by request. CRS-l7 “IB79052 UPDATE-l2/O2/82 -— H.R. 3904 introduced by Representatives Perkins, Ullman and Gibbons, by request, to improve retirement income security under private multiemployer pension plans by strengthening funding requirements. -- H.R. 39l5 introduced by Representatives Thompson, Ashbrook, Erlenborn, and Ullman to postpone the date on which the PBGC must pay benefits under terminated multiemployer plan. ADDITIONAL REFERENCE SOURCES Asher, Lester. Impact of recent litigation or employer liability under MEPPA._ JFurnal of pension planning and compliance, v. 8, July 1982: 269e272. Ba-i-nger, Irninc. MPPAA and the construction industry -- :ractions and frictions. Journal of pension planning and compliance, v. 8, no. l, , January l982: 31-40. Constitutionality of MPPDAA withdrawal liability provision gets workover by courts. Commerce Clearing House, Inc. Pension Plan Guide, no. 384, Aug. 6, 1982. Curtis, John E., Jr. Multiemployer plan amendments of l980: panacea or poison? Journal of pension planning and compliance, v. 6, no. 6, November 1980: 419-442. Gill, James F. and Michael F. O'Toole. Review of the Multiemployer Pension Plan Amendments Act of 1980. Pension world, August l98l: 3l-35, S8. Greene, Richard. More hidden liabilities. Forbes, Mar. 2, l98l: 66-67. N Hewitt, David L. ERISA Amendments increase obligations of employers and reduce guarantees to employees under negotiated multiemployer pension plans. Hay -- Huggins Bulletin, November l98O. ‘ ‘ Lublin, Joann S. Law to protect multi—employer pensions is causing hardship for many businesses. The wall street journal, Mar. 5, 1982: 50. ----- Union officials clash in Senate on issue of whether to revamp I980 pension law. The Wall street journal, Mar. 18, l982: 32. Multiemployer Pension Plan Amendments Act of l98O -— Law and Explanation. Commerce clearing house, inc. Pension plan guide, no. 287, Oct. l, l980. 256 p. Multiemployer plan termination: who should pay? Editorial. Pension and investment age, Sept. 28, l98l. O'dell, John. Unlikely firms find they owe millions to union CRS-l8 IB79052 UPDATE-12/O2/82 pension funds. Los angeles times, Sept. 6, 1981. The Multiemployer Pension Plan Amendments Act of 1980: Explanationy analysis, recommendations, and suggested amendments to multiemployer plans. BNA pension reporter, no. 362, Oct. 5, 1981, special supplement. U.S. Congress. Senate. Committee on Finance. Finance Committee orders favorably reported S. 1076, The Multiemployer Pension Plan Amendments Act of 1980. Press Release no. 108. [includes summary of Finance Committee action on S. 1076.] 8 p. U.S. Pension Benefit Guaranty Corporation. Analysis of single employer defined benefit plan terminations, 1977. Publication no. PBGC 507. Washington, November 1978. 23 o. (LRS78-19655) J. ----- Analysis of single employer defined benefit plan ‘ terminations, 1975 Publication no. PBGC 503 Washington, 1977 17 p. 1 l ---—- Contingent employer liability insurance: status report to the Congress. July 1, 1978. Washington, U.S. Govt. Print. Off., 1978. ---—- Explanation of the bill to revise plan termination insurance for multiemployer plans submitted to Congress by the PBGC. May 1979. Washington, U.S. Govt. Print. Off., 1979. 22 p. ----- Multiemployer study required by P.L. 95-214. July 1, 1978. Washington, U.S. Govt. Print. Off., 1978. (LRS78-17191) ---—- Potential multiemployer plan liabilities under Title IV of ERISA. Sept. 29, 1977. Washington, 1977. 12 p. ---—- Recommendations to the Congress for revising multiemployer plan termination insurance. Feb. 27, 1979. Washington, 1979. l8 p. ‘ ---—- Revising multiemployer plan termination insurance —- a guide to PBGC recommendations to the Congress. May 1979. Washington, U.S. Govt. Print. Off., 1979. 8 p. Vesely, William J., Jr.; Richard R. Boisseau; and John E. Curtis, Jr. Multiemployer pension plan liability: AMAX coal and beyond. Journal of pension planning and compliance, V. 7, no. 5, September 1981: 350-364. A iJfiRfi§P( on WAE H § N N uNsvEnrag“w' 3TJ£MMfi—Aml