In the coming weeks, Congress will consider legislation that would reform pension laws in a way that could slash benefits already promised to retirees, In These Times reports.
The proposal, which hasn't been made public yet, would give trustees of multiemployer pension plans the discretion to cut guaranteed benefits, so long as those cuts were done as "early corrective actions" to financially troubled plans. While corporations in the past have been able to wiggle out of guarantees for future retirees, the promises to current retirees have generally been untouchable.
That would change under the plan Congress will soon consider. "If adopted, the proposal would strike at the core" of U.S. pension law, reporter Cole Stangler writes.
The proportion of U.S. private-sector workers who enjoy defined-benefit pension plans has eroded significantly in recent years, as corporations switch to cheaper 401(k) plans to shift risks to their employees. Despite having fewer workers paying into such plans, and despite nearly being drained by the financial crisis, a lot of once-endangered multiemployer pension plans have since returned to stability.
According to Stangler, in addition to slashing benefits for many retirees, giving trustees the leeway to cut benefits in multiemployer plans could embolden corporations to argue for the same discretion in their own, smaller plans, which are subject to different rules.
"If this legislation included proposals to allow cuts to retiree benefits it would set a very bad precedent for all pension plans, large and small, public and private sector, troubled and well-funded, single-employer as well as multi-employer," Frank Larkin, of the International Association of Machinists and Aerospace Workers, told In These Times.
The National Coordinating Committee for Multi-Employer Plans, which is made up of unions as well as employers, has already spent hundreds of thousands of dollars lobbying on the proposal.