Statement of Chairman Tom Harkin (D-IA) at the HELP Committee Hearing “Building a Secure Future for Multiemployer Pension Plans”
As Prepared for Delivery
Thursday, May 27, 2010Kate Cyrul / Bergen Kenny (202) 224-3254
“I want to welcome everyone to this hearing on an issue of critical importance to workers and businesses alike - the security of our multiemployer pension plans.
“There is no question that retirement security has been under siege in this country for years. We have seen a gradual erosion of the traditional defined benefit pension system as companies opt to provide their workers 401(k) plans or, worse yet, nothing at all.
“This has left U.S. workers shouldering more and more retirement risk. Workers bear the risk that they could misjudge the amount they need to save. Workers bear the risk of outliving their savings. And workers bear the risk of investment losses in a volatile economy. If the recent economic events have taught us anything, it’s that these risks are simply too great for any single individual or family to bear.
“That is why it is so important that we do everything in our power to ensure that every American has access to a safe and secure pension – a pension that rewards a lifetime of sweat with the opportunity to retire with dignity and financial independence.
“Fortunately, about ten million people still have secure pensions thanks to the multiemployer pension system. Since the 1940s, multiemployer plans have made it possible for some of the hardest working Americans – truck drivers, machinists, miners, and electrical workers – to earn a pension benefit for themselves and their families. Most of these workers would never have been able to do that otherwise.
“Multiemployer plans have also played an important role in supporting small businesses. So many small businesses want to do right by their workers. They want to provide good wages, quality benefits and reward their workers for a lifetime of service. Sharing the costs and responsibilities of retirement benefits through a multiemployer plan is often the only way for a responsible small business to provide a defined benefit pension. We need to make sure the system doesn’t discourage them from continuing to do the right thing.
“Although multiemployer plans have done a considerable amount of good for U.S. workers, many plans are struggling after years of economic hardship, and their future is looking less and less secure. Workers and businesses alike agree that something needs to be done.
“Simply allowing these plans to fail would be catastrophic for working families across America. Although pensions are insured by the Pension Benefit Guaranty Corporation, the payout for insured benefits hasn’t increased in years, so many retirees would see their benefits slashed. Plus, the collapse of any multiemployer pension plan places an incredible strain on an agency already beleaguered by fiscal woes, and the failure of a large plan could cripple the agency.
“Congress has already taken steps to provide targeted, short-term relief to ease them through these tough economic times, and funding relief will surely help some of these plans remain afloat. But for a handful of multiemployer plans, short-term funding relief simply isn’t enough.
“Those are the plans we are focusing on today – the minority of plans that are truly in dire straits. They find themselves bearing costs dumped on them by defunct employers that failed to pay their fair share while, at the same time, watching their contribution base shrink as industries and demographics change over time. Those plans need long-term help and systemic reforms.
“The challenges faced by multiemployer plans are real, and we need to face them head-on because, quite frankly, they are simply too big to ignore. We need to find solutions that will protect workers and preserve jobs while at the same time ensuring that our resources are used responsibly. This hearing is an important first step toward these important goals.
“Retirement issues have always been an area where we have been able to reach across the aisle and work together on this Committee. Senator Enzi and Senator Kennedy worked closely together on the Pension Protection Act and other recent pension legislation, and I am hopeful that we can continue that fruitful, bipartisan approach in developing solutions to address the unique problems faced by multiemployer plans.
“I commend Senator Casey for helping to open the discussion by introducing a bill that would provide a path forward for some of our most troubled multiemployer plans. While I think this is an issue that needs a lot of thought, and we should keep all options on the table, Senator Casey’s legislation is an important first step, and I look forward to hearing more about his proposal in today’s hearing.
“The obstacles facing multiemployer plans are certainly significant, but they are not insurmountable. By working together, we can find creative solutions that ensure that multiemployer plans continue to serve an essential part of our retirement system and provide safe and secure defined benefit to working Americans and their families.
“Thanks to all of you for being here today to discuss this important issue.”
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