Dear Sisters & Brothers:
Important information about the attack on our Pensions!
National Electrical Benefit Fund (NEBF) and/or Maryland Electrical Industry Pension Fund (MEIPF).
These pensions are considered Multi-Employer Pensions. The NEBF & MEIPF are in good condition (green zone), and there are others that are not (yellow, red, critical and declining status). It is estimated there are 100 or so pensions in trouble, and 1200 that are adequately funded. The U.S. Congress and Senate put together a Joint Select Committee on Multi-Employer Pension Plans in February of 2018 to investigate how to help the troubled plans, and how to help the Pension Benefit Guarantee Corporation (PBGC). The Congressional Budget Office or similar predict the PBGC will be defunct by 2025. We questioned why/how these plans became troubled? The answer we received, “changes in the industry”, Teamsters- deregulation of the trucking industry, Coal miners- shift to clean energy, Baker & Confectionary Workers – automation & plants relocated due to sugar cost.
The early stages of the discussion centered on Democratic Senator Sherrod Brown of Ohio’s proposal of a loan program to help the troubled plans. This is similar to what was done for the auto industry and Wall Street; this would also provide relief for the PBGC. Recently a Republican proposal was put forth designed to raise $3 billion annually out of the “healthy” multiemployer funds, to support participants in “failing” plans. This would force our plans into yellow zone.
IBEW Business Mangers and trustees from around the country were in Washington D.C. on November 28th telling the legislators this is WRONG! We can give hundreds of billions of dollars to bail out corporate America. Why can’t Congress appropriate $3-6 billion to working men and women who elected to take money from their paychecks and fund their pensions in order to retire with dignity!
WHAT MUST WE DO AS MEMBERS AND RETIREES?
WE MUST ACT NOW!
The proposal from the committee is due to Congress by December 1, 2018. It is believed that the Republicans want to insert this in the “Omnibus bill” (the bill that funds the Federal Government for the year) before the Democrats take control of the house.
EVERYONE MUST CALL, EMAIL, or Both the members of the Joint Select Committee on Multi-Employer Pension Plans AND your Senator and Congress member.
“Tell them to keep their hand off your Pension. If they can give a TRILLION dollar tax break to the 1%, they can help the troubled plans.” Remind them that the PEOPLE elect them to the offices they hold not the Corporations. Ask them why they want to burden the healthy plans and force them into insolvency?
Here is a list of the Committee Members phone and web addresses along with a list of Maryland’s Senator and Congress members.
Orin Hatch Tel: (202) 224-5251 www.hatch.senate.gov
Sherrod Brown: (202) 224-2315 www.brown.house.gov
Lamar Alexander: (202) 224-4944 www.alexander.senate.gov
Joe Manchin: (202) 224-3954 https://www.manchin.senate.gov
Mike Crapo: (202) 224-6142 https://www.crapo.senate.gov
Heidi Heitkamp: (202)224-2043 https://heitkamp.senate.gov
Rob Portman: (202) 224-3353 https://portman.senate.gov
Tina Smith: (202) 224-5641 https://www.smith.senate.gov
Virginia Foxx: (202) 225-2071 https://foxx.house.gov
Richard Neal (202) 225-5601 https://neal.house.gov
Phil Roe: (202) 225-6356 https://roe.house.gov
Bobby Scott (202) 225-8351 https://bobbyscott.house.gov
Vern Buchanan: (202) 225-5015 https://buchanan.house.gov
Donald Norcross: (202) 225-6501 https://norcross.house.gov
David Schweikert: (202) 225-2190 https://schweikert.house.gov
Debbie Dingell: (202) 225-4071 https://debbiedingell.house.gov
1st Andy Harris (202) 225-5311 https://harris.house.gov
2nd Dutch Ruppersberger (202) 225-3061 https://ruppersberger.house.gov
3rd John Sarbanes (202) 225-4016 https://sarbanes.house.gov
4th Anthony Brown (202) 225-8699 https://anthonybrown.house.gov
5th Steny Hoyer (202) 225-4131 https://hoyer.house.gov
6th John Delaney (202) 225-2721 https://delaney.house.gov
7th Elijah Cummings (202) 225-4741 https://cummings.house.gov
8th Jamie Raskin (202) 225-5341 https://raskin.house.gov
Ben Cardin (202) 224-4524 https://www.cardin.senate.gov
Chris Van Hollen (202) 224-4654 https://www.vanhollen.senate.gov
The following information is from the International Office which describes how these changes will affect the NEBF; they will impact The Maryland Plan similarly!
I. New Taxes and Fees on Workers and Retirees
- The plan will create a tax on retirees’ pensions – 0% for Green Plans, 2% for Yellow Plans, 3% for Red Plans, 4% for Declining and Insolvent Plans and 6% for Plans with Liability Removal.
National Electric Benefit Fund (NEBF) beneficiaries would pay $20-$30 million annually if the fund is moved to the Yellow or Red Zone.
- The proposal creates a new $2 per active worker per month fee on unions AND employers.
This fee will cost the IBEW over $6 million annually.
- The plan changes the Pension Benefit Guaranty Corporation (PBGC)’s per participant annual premium from the current flat fee of $28 to a variable premium of $50-$150, with an average of $100 per participant.
The new variable premium could cost the NEBF upwards of $55 million a year in additional premiums.
II. New Requirements on Multiemployer Plans
- The Republican Proposal creates a prescribed discount rate capped at the corporate long bond rate + 2% for all plans. (Approximately 6.5%).
A prescribed discount rate is very concerning due to the significant changes in interest rates, thereby making long-term budgeting more difficult and could potentially put a heavy burden on the NEBF. For example, a mere 0.25% decrease in the NEBF’s discount rate from 7.5% to 7.25% would increase unfunded liabilities by $500 million. Moving it from green to yellow zone.
- The proposal would require pension funds to subtract their credit balance from plan assets in determining a plan’s zone status.
Use of credit balances are a common industry practice that help pension funds accurately conduct long-term planning. Excluding credit balance from assets would significantly impact the NEBF, most likely moving the fund from a Green to Yellow Zone plan.
- The proposal would eliminate asset smoothing, which are used to by fund actuaries to smooth out short-term fluctuations in market values.
III. Future for Currently Failing Plans
- The proposal will partition failing funds that will place orphan participants’ under the PBGC.
- The PBGC will guarantee orphaned participants maximum of $70 per month per years of service.
- The federal Treasury will transfer up to $3 billion annually into the PBGC, depending on the level of funding needed to support partitioned participants.
- The non-partitioned participants will stay in their pension fund and need to meet the requirements above.
- The partitioning program and orphan participant adoption under the PBGC will be a one-time occurrence.
Peter P. Demchuk