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About Northwest labor press. (Portland , Ore.) 1987-current | View Entire Issue (July 3, 2015)
NORTHWEST LABOR PRESS | July 3, 2015 | PAGE 3 Distressed pension plans can start cutting benefits By Don McIntosh Associate Editor The Pension Benefit Guarantee Corporation (PBGC) is getting ready to implement a new law that allows distressed union multi-employer pension plans to reduce retiree benefits—if that can halt them from sliding into insolvency. On June 17, PBGC announced “interim final” regu- lations telling pension plans how to apply for permission to cut re- tiree benefits. And the same day, the U.S. Treasury Department appointed a “special master” to be in charge of reviewing those applications. Meanwhile, U.S. Sen. Bernie Sanders (I-Vt.) and U.S. Rep. Marcy Kaptur (D-Ohio) have in- troduced a bill in Congress to re- peal the new law. The new law, known as Kline-Miller Multiemployer Pension Reform Act of 2014, was tucked into a much larger bill to continue funding of the federal government, which passed in December. Kline- Miller allows a multi-employer pension plan to reduce pension benefits for current retirees if the pension plan is projected to run out of money over the next 15 years (or over the next 19 years if the plan is less than 80 percent funded or has a greater than 2- to-1 ratio of inactive to active members). The pension plans can’t cut benefits for retirees aged 80 or over, and retirees aged 75 to 79 are subject to smaller cuts than those under 75. Plans also can’t cut benefits more than needed to restore sol- vency, or below 110 percent of the PBGC’s own guarantee for retirees of plans that become in- solvent. The proposal at the heart of Kline-Miller was developed by the National Coordinating Com- mittee for Multiemployer Plans (NCCMP), an organization that represents the interests of multi- employer benefit plans. Multi- employer plans, also sometimes called Taft-Hartley plans, are jointly sponsored by unions and groups of employers. There are about 1,500 such plans nation- ally, with about 10 million par- ticipants—active, inactive, and retired. The multi-employer plans are especially common in the construction industry. When they work well, which is most of the time, they provide an afford- able benefit at a low administra- tive cost. But when they get into financial trouble—usually a combination of financial asset losses and large numbers of “or- phaned” employees of compa- nies that have gone bankrupt— their distress runs the risk of bankrupting the surviving union employers. PBGC has projected that about 10 percent of multi- employer pension plans are heading toward insolvency. In February, the Center for Retirement Research at Boston College put together a list of 100 plans that might seek permission to cut benefits. [See the list on- line at bit.ly/1FKMUrF] The list uses data from financial reports that pension plans are required to file each year with the Depart- ment of Labor. But the list is speculative, because the reports, known as 5500s, show what shape a plan is currently in, not whether it’s headed for insol- vency. Also, even plans that are headed for insolvency might not seek to cut benefits; that would be up to trustees, and pension plan participants would get a chance to vote down the cuts. No plans based in Oregon or Washington were on the list, but at least one national plan on the list has participants who live and work in the Northwest—the Bakery & Confectionery Union & Industry International Pen- sion. That plan, which has 114,000 participants, is typical of the failing plans, in that it has Turn to Page 8 Building Trades leader Willy Myers tapped for Portland Development Commission Mayor Charlie Hales appoints Myers to succeed John Mohlis of the Oregon State Building Trades Council Willy Myers, executive secre- tary-treasurer of the Columbia Pacific Building Trades Coun- cil, has been appointed to the Portland Development Com- mission (PDC) by Mayor Char- lie Hales. He will succeed John Mohlis, head of the Oregon State BCTC, whose PDC term expired June 30. The PDC is Portland’s eco- nomic development and urban renewal agency. About 70 em- ployees there are members of AFSCME Local 3769. Hales nominated both Myers and Gustavo J. Cruz Jr. to the five-member board. Cruz, a sen- ior counsel at the law firm Ater Wynne, will succeed Charles A. Wilhoite, whose term also ex- pired at the end of June. Both nominees still must be approved by the City Council. A vote is expected later this month. Other members of the PDC are Chair Tom Kelly, president of Neil Kelly Company; Vice Chair Aneshka Dickson, chief financial officer of Colas Con- struction, Inc.; and Commis- sioner Mark Edlen, CEO of Gerding Edlen Development. Myers, 47, is in his second term heading the Columbia Pa- cific Building and Construction Trades Council. The Council is an umbrella organization of 25 unions that represent some 20,000 construction workers employed by more than 2,000 signatory contractors in Mult- nomah, Clackamas, Washing- ton, and Columbia counties. Prior to that, Myers was an or- ganizer and later an elected business agent for Sheet Metal Workers Local 16. Among his community activ- ities, Myers sits on the state’s Prevailing Wage Advisory Com- mittee and the Metropolitan Al- liance for Workforce Equity. “Portland is a model for ur- ban growth and development,” Myers said. “The opportunity to bring a different perspective to the table is what drove my inter- est in serving. As a union leader, equitable job creation is of great interest to me and I am looking forward to working with others on the board to serve our city in this endeavor.” Willy Myers Mohlis, 58, was first ap- pointed to the PDC in January 2007 by former mayor Tom Pot- ter. Prior to that, PDC had not had a representative from labor on the Commission for decades. Mohlis has served three terms, and has played a key role in PDC’s utilization of minority contracting and apprenticeship training programs. Mayor Hales, in a press re- lease, said the leadership that Myers and Cruz will bring to the PDC is much needed right now. “Portland is growing and that growth won’t end any time soon,” he said. “We are a richly diverse community with pock- ets of dire inequity. The PDC is tasked with developing our economy so that everything we love about Portland is shared by everyone in Portland.”
