Pension Protection Act



Below is the summary and a working copy of the just introduced "Pension Protection Act" yesterday by the House. The bill itself is 305 pages long if one chooses to read it. There is multi-employer relief in this bill, which divides multi-employer plans into health zones. The green zone is for plans which have a funding ratio of 80% or greater. A yellow zone fund is bewteen 65-80% and the red zone is anything below 65%. Details of the zoning and the increased disclosure requirements for workers can be found in the bill summary provided below:

House Republicans Introduce Pension Reform Bill to Protect Workers & Taxpayers

WASHINGTON, D.C. On June 9, 2005, House Republicans formally introduced comprehensive pension reform legislation the Pension Protection Act (H.R. 2830).

A hearing is scheduled for Wednesday, June 15, 2005 with the Full Committee @ 10:30 a.m. in room 2175 Rayburn House Office Building. Witnesses to be announced.

The Senate Finance Committee also had a recent and related pension hearing called: Preventing the Next Pension Collapse: Lessons from the United Airlines Case. There will probably be a companion bill to H.R. 2830 introduced into the Senate sometime in the near future. Chances are the companion bill will be introduced in the Senate Committee on Health Education Labor and Pensions. A multiemployer hearing was held with the HELP committee on the same day as the United hearing with Finance Committee.

This appears to be the "blueprint" and what the coalition is all about. This pension reform bill probably has a pretty good chance of becoming law sometime this year, with the United crisis used as a catalyst for action.


The red zone is for "loading and unloading" only!

All employees in pension plans in the red zone will be towed away at their own expense.

PS - Thanks for the links.


Plan to keep a watch out early next week to see if UPS or even possibly the IBT, will testify this upcoming Wednesday. If not, it wouldn't surprise me if the coalition, who is generally represented by the National Coordinating Committee for Multiemployer Plans, speaks on their behalf. The NCCMP testified in the Senate this past week about H.R. 2830.


Some more information about the coalition, which is quoted from Jeffrey Noddle's June 7, 2005 testimony before the Senate:

"Earlier this year a group within the trucking industry, including, United Parcel Service, YellowRoadway, the Motor Freight Carriers Association, the International Brotherhood of Teamsters, the National Coordinating Committee on Multiemployer Plans (NCCMP) and Central States Teamsters Pension Plan, came together and negotiated a proposal to address funding reforms. Their proposal focused on plans with funding levels below 65%. It also included a proposal for plans that are between 65% and 80% funded."

And: "The trucking industry proposal includes a stop-light system of identification for multiemployer pension plan finding, which includes Green Zone plans (above 80% funded), Yellow Zone plans (65% - 80% funded), and Red Zone plans (less than 65% funded)."


Here's the list of those scheduled to testify in tomorrow's hearing in the House:

Panel I

Ms. Lynn Franzoi
Vice President for Human Resources
Fox Entertainment Group
Beverly Hills, CA

Mr. Bart Pushaw
Milliman, Inc.
Dallas, TX

Dr. Teresa Ghilarducci
Professor of Economics
University of Notre Dame
South Bend, IN

Panel II

Mr. Timothy Lynch
President and CEO
Motor Freight Carriers Association
Washington, DC

Mr. Andy Scoggin
Vice President for Labor Relations
Albertsons, Inc.
Boise, ID

Ms. Judy Mazo
Senior Vice President/Director of Research
The Segal Company
Washington, DC

Nobody from UPS, the IBT or CSPF, although this hearing seems to be a carry-over from the Senate hearing last week. Mr. Lynch testifies again this week. Time permitting, I'll try to catch the webcast, especially if it isn't too long.


Due to a technical glitch, I have been unable to watch the streamed webcast of today's hearing. I hope to watch it once the glitch is resolved. Not sure which end has the problem. Waiting on some Tech Support advice as I write this. At any rate, below is a complete list of the coalition, which can now be found on NCCMP's website

American Benefits Council
American Trucking Associations, Inc. (ATA)
The Associated General Contractors of America
The Associated Maintenance Contractors
Bechtel Corporation
Construction Employers Association
The Finishing Contractors Association
International Council of Employers of Bricklayers and Allied Craftworkers
The Mechanical Contractors Assoc. of America
The Motor Freight Carriers Association
The National Electrical Contractors Association
National Roofing Contractors of America
NEA / The Association of Union Constructors
Printing Industries of America
The Sheet Metal and Air Conditioning Contractors' National Association
United Parcel Service (UPS)
U. S. Chamber of Commerce
Washington Group International
Yellow Roadway Corporation
Actors Equity Association
American Federation of Musicians
American Federation of Television & Radio Artists
Bakery and Confectionary Union and Industry International
Building and Construction Trades Department AFL-CIO
The International Association of Bridge, Structural, Ornamental, and Reinforcing Iron
The International Association of Heat and Frost Insulators and Asbestos Workers
The International Association of Machinists & Aerospace Workers
The International Brotherhood of Boilermakers
The International Brotherhood of Electrical Workers
The International Brotherhood of Teamsters
The International Union of Bricklayers and Allied Craftworkers
International Union of Elevator Constructors
The International Union of Operating Engineers
The International Union of Painters and Allied Trades of the US and Canada
Laborers' International Union of North America
Operative Plasterers' and Cement Masons' International Association of the United States
and Canada
Service Employees International Union
Sheet Metal Workers International Association
United Association of Journeymen and Apprentices of the Plumbing and Pipefitting
Industry of the United States and Canada
United Brotherhood of Carpenters and Joiners of America
United Food and Commercial Workers International Union
United Union of Roofers, Waterproofers and Allied Workers
National Coordinating Committee for Multiemployer Plans

One other item of note is the fact that Hoffa is on NCCMP's Board of Directors


You should be able to obtain the testimony transcripts from the Library of Congress Website.

BTW: tip of the hat to you for keeping us up to date on all this. If I ever meet ya I'll buy you a beer, coffee or whatever you prefer as a way of saying thanks.


First, the House released a press release highlighting yesterday's hearing on H.R. 2830. Additionally, the witnesses submitted their
written testimony for public consumption. All of the testimony is worth reading and the Multiemployer Pension Plan Coalition is represented by the testimony of Mr. Lynch from the Motor Freight Carriers Association and Ms. Mazo from the Segal Company. Mr. Lynch's testimony is basically an extension of his testimony in the Senate last week and Ms. Mazo picks up from where Mr. DeFrehn left off. In fact, the first few pages of Ms. Mazo's testimony virtually mirrors Mr. DeFrehn's statements. To supplement their testimony, both cite some Segal research. Links to this research are provided below:

•"Still Solid Funded Position of Multiemployer Pension Plans Reflects Additional Erosion"

•Funding Survey Supplement Footnote 3

•Multiemployer Pension Plan Withdrawal Liability: An Overview Footnote 4

If one has limited time, reading Ms. Mazo's testimony would probably be the most prudent use of it. One gets a closer look at the coalition blueprint and one notices the doctrine of Heinz, which was the Supreme Court ruling on work rule restrictions are embodied in the blueprint. Furthermore, those who participate in a "red zone" plan should take notice. It appears benefit cuts are an option and benefit accrurals may also be frozen.

Chances are H.R. 2830 will undergo some revisions before a vote is taken, although Chairman Boehner states in the press release, ..."we plan to act quickly over the next month."

If one chooses view the webcast, simply scroll down the page until you see the link for the hearing. The webcast is 3 hours and 8 minutes long. In this regard, I'm still unable to view the webcast and I'm using Microsoft Media Player 10. I believe there is a corrupted script, which launches the webcast. At least that appears to be my situation anyway.

In regards to the hearing transcript, I plan to check back every so often to see when it will be posted.

(Message edited by my2cents on June 16, 2005)


It plays fine from your link on my broadband connection my2cents.

I paused it 4 minutes into the spiel to mention this.

Thanks for the link, now if you could find me three plus hours time to listen to it all.


My union local president just told me this week not to worry about the pension because the PBGF would handle any problems.
Now THATS a relief! NOT


Thanks OK2BC. Personally, I'm still waiting on my tech support answer. Anyway, in addition for checking on the transcript of the hearing, I plan to check Thomas every so often to see when the Senate version of this bill is out. Should be in the near future.


If this bill is pasted, It means more drastic cuts for the CS plan members, as CS is omly 63% funded at this time.
One more cut and we will be oweing them money when we retire.


Actually, as it stands, if we are relegated to the PBGC (either from the plan failing on itself or being designated into this proposed "red light" level that the consortium including UPS and the Teamsters are part of we get a maximum of $1050 a month and with benefits currently costing $1220 for husband and wife a month we already have entered the negative area.

The consortium states their proposals will protect the company, the worker and the tax payer.

Perhaps I don't understand the UPS/Teamster consortium proposal, but while I understand how it will protect the company by limiting their liability and the tax payer by limiting the government's liabilities, I am not clear on how this does anything to "protect or benefit" the worker who earned the pension.


From the looks of it, this bill attempts to spread the pain to all parties concerned. If a plan is in reorganization mode, the employer is required to pay either a 5% or 10% surcharge on top of the negotiated rate in the CBA. The 5% comes in the first year after the plan goes into reorganization and the 10% rate is for the second and subsequent years until the expiration of the current CBA. Couple this with potential benefit reductions and generally speaking, this should raise the funding ratio over time to an acceptable level. Overall, H.R. 2830 looks like a strong dose of castor oil for all parties concerned in red zone plans.



It is well and good that there are groups mouthing that something has to be done and consortiums actually moving forward trying to do something, but I am interested in the cold hard end result that we (I) will be paid upon retiring after thirty plus years of working for UPS and whether any of this actually will improve the situation for us, the workers involved.

So the companies get a potential 5/10% surcharge increase for such failed plans, that could be read as giving them limited liability versus the current essentially unlimited liability.

This would be a great thing for the companies.

This possibly limits the taxpayers liabilities by that same 5/10% and that is an ok thing for the taxpayer I guess.

However, exactly what does the plan do to improve the situation for the workers involved?

I admit I haven't had the time to look over the entire proposals or listen to the three hour link you supplied, but I am wondering where any of this actually improves the situation for the affected workers in the red zone plans.

As it stands now, if our plan goes belly up we get dumped onto the PBGC where we plummet from 3000/3500 a month (top rates for those UPSers already retired) to a maximum of 1050 a month which is a loss of 2/3rds of our earned pensions, not to mention our medical benefits essentially evaporating in unaffordable premiums.

This proposal would change this positively in what way for us workers so affected?

Realize, I am not blaming you for any of this (kill the messenger), but do you know how it proposes to "help" the affected workers?


Basically, as far as I can tell, these reorganization measures, for the most part, keep a plan from going bankrupt and maintain some form of long term viability. Keeping the plan solvent beats receiving your retirement check from the PBGC.

Workers will also be better informed with the new disclosure requirements. As it stands now, most have no clue about the health of their plan. If they get a heads up on a poorly funded plan, they can take advantage of the investment advisor benefit, who will probably tell them to increase their payroll deductions into one's 401(k) account.

In regards to the health care issue, it is not addressed in this bill. I wouldn't be surprised if that subject turns into the next big hearing, especially if a company like GM veers in Chapter 11.


Obviously, if the proposed changes aid in keeping the funds afloat that would certainly be considered a benefit to the workers affected.

It appears it will be at the cost of giving someone the authority to lower the benefit level in ways that are currently illegal.

While this is an unfortunate change it still would be preferrable to a more drastic 2/3rds drop to a government dole.

Making the process of the funds more accessible through fuller disclosures is desirable, but I don't see it as much of a tool regarding increasing other investments.

I already know the fund is in trouble and have now for years, but that doesn't give me any more capability to invest additional moneys that I don't have.

This is the same basic meaningless tenet that most economists or investment "strategists" make that you should invest more money into "savings for the future".

That is all well and good for those making tons of money, but the fifty thousand dollar area that a clerk makes with a family of four supports less and less ability to pay the everyday bills with the real cost of living increases (compared to the government cost of living index where they conveniently exclude major cost increase items like oil, etc) let alone leave surplus for increasing future savings.

And many families are not even making what a UPS clerk makes.


Any benefit reductions will still follow the anti-cutback rules, although its unclear to me how this process will work. Benefit reductions appear to be in the form of freezing benefit accrurals and the restrictions on lump sum payments when a plan is under 80% funded.

Additionally, it will be an unlawful practice during the collective bargaining negotiations, to promise increases in benefits, when in reality the money to pay for the benefits, doesn't exist in an underfunded plan. This has the effect of misleading workers and digging a deeper hole for the plan to get out of.


Your observations about the company and taxpayer protections are probably pretty much on point but as for the worker and the question of what this holds for him/her is also probably pretty clear. I think it's a safe bet at the end of the day we workers will need plenty of what's at the link below. You might order now ahead of the rush!

It's meant as some humor but the sad truth in a perverse way it's probably closer to the facts.


Chances are H.R. 2830 will probably undergo some revisions before a House vote is taken. If one reads the testimony, which occured in both in the House and Senate, one will find debate on certain aspects of the bill.

Employer liability is one issue. The small business alliance is at odds with the Multiemployer Pension Plan Coalition. These small firms fret if they can't pay the additional contributions and excise penalties, they will be expelled from the plan and be stuck with the withdrawal liability, which could be greater than the value of their business. Furthermore, the grocery group has a few philosophical differences with the Multiemployer Pension Plan coalition to. I believe these differences are industry related.

There is also debate between using a yeild curve vs. a corporate bond interest rate index. Lump sum restrictions are also an issue, as well as freezing or reducing accrural rates. The latter is being criticized as possibly straining worker relations.

I believe to a limited extent, the voice of the worker in this debate is somewhat ignored because they don't bear a financial risk in funding these plans. Employers and as a last resort, the taxpayer does. One could make a case for retirees, athough the AARP testified in the Senate about cash balance plans. At any rate, I plan to follow the progress of this bill and see where the debate goes.