Ohio Sen. Sherrod Brown (D) plans to introduce a bill intended to protect pension benefits for retirees in multiemployer DB plans. He made the announcement at a recent event in Youngstown, OH.
Brown intends the bill to protect the retirement benefits of participants and retirees in multiemployer plans serving union members, which comprise a significant portion of his constituents. However, the bill would affect retirees beyond the Buckeye State as well.
The senator says that the bill will call for the creation of a new office within the U.S. Treasury Department, the Pension Rehabilitation Administration (PRA). The PRA:
- would allow pension plans to borrow money in order to remain solvent and continue providing retirement benefits to current and future retirees;
- could lend the plans money for 30 years at low interest rates in order to facilitate easier repayment and to give the plans more time to make long-term investments while paying benefits.
The bill also would:
- forbid plans to borrow more than they can pay back to taxpayers;
- forbid borrowed funds from being used to make risky investments;
- require plans that borrow money to submit reports every three years to demonstrate that they are on track to getting back on solid footing;
- provide for the sale of Treasury-issued bonds to financial institutions to fund the loans and the PRA; and
- call for the Pension Benefit Guaranty Corporation to bridge the gap between money borrowed from the PRA and any additional funding needed to pay benefits owed to current retirees while the plans get back on track.
“If nothing is done to the plans they will fail and retirees will face massive cuts to the benefits they earned over decades of work. If the plans are allowed to fail, not only will they no longer be able to pay promised benefits, but taxpayers would be at risk of having to pay billions because the Pension Benefit Guarantee Corporation would be on the hook for billions of dollars it cannot pay,” said Brown in a press release.