Formatting necessary for an accurate reading of this text may be shown by tags (e.g., <DELETED> or <BOLD>) or may be missing from this TXT display. For complete and accurate display of this text, see the PDF.
[Extensions of Remarks]
[Page E519]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
OPPOSING THE GROW ACT'S INCLUSION IN THE HEROES ACT
______
HON. MARCY KAPTUR
of ohio
in the house of representatives
Thursday, June 4, 2020
Ms. KAPTUR. Madam Speaker, I am very pleased the House took important
action to support the pensions of millions of Americans in the HEROES
Act. Action to secure the retirement benefits of workers and retirees
in troubled multiemployer plans and the long-term solvency of the
Pension Benefit Guaranty Corporation (PBGC) remains a top priority of
mine. Despite this positive effort, I am troubled by inclusion of
provisions that impact healthy multiemployer pension plans. The
inclusion of the GROW Act, which possesses significant conflicting
support and opposition on important, must pass legislation is deeply
troubling. The GROW Act will hurt workers, retirees, employers and the
PBGC, and should not become law.
Composite plan legislation would create two plans--an existing plan
and a new ``composite'' plan--out of a single, finite pool of assets.
This places added burden on the ability to fund each adequately,
increasing the odds of failure. Existing plans could refinance their
obligations over 25 years--more than 10 years longer than current law
allows. This reduces available funds for benefits under existing plans,
making them vulnerable to funding shortfalls--and thus at risk for
draconian benefit cuts in times of market volatility. For example, if
Congress had already passed the GROW Act and it was law during the
market volatility COVID inflicted on the stock market, the benefits
composite plan participants expected to earn would be cut 70 percent,
and the vested benefits they already earned would be cut 25 percent. At
the same time, the vested benefits of participants in the existing plan
would be cut 21 percent.
In addition to using accounting gimmicks to weaken existing
multiemployer pension plans and place Americans' retirement security at
risk, composite plans would also make it easier for employers to
withdraw from existing multiemployer pension plans altogether, without
paying their fair share of obligations to participants. Under current
law, employers withdrawing from a pension plan must pay a ``withdrawal
liability'' based on their contribution to the plan. Provisions of the
GROW act would eliminate withdrawal liability for composite plans, and
it would dramatically reduce the cost of withdrawing from an existing
plan.
Moreover, composite plans would not be insured by the PBGC and would
be exempt from paying PBGC premiums. This erodes the PBGC premium base
significantly. When combined with plan failures that composite plans
would accelerate, the PBGC will face new liabilities that will drive it
to a new solvency crisis. Because of the grievous harm the GROW Act
imposes on workers, retirees, the PBGC, and the entire multiemployer
plan system, I strongly oppose its inclusion in the HEROES Act.
____________________