The Pension Protection Act of 2006 (PPP) created the zone statuses of red, yellow & green. The Act helped define funding levels of multiemployer pensions among making many other substantive changes!
Multiemployer Pension Reform Act of 2014 expanded zone status to fine tune options for funds in trouble, giving them the ability to potentially cut benefits even to retirees in distressed/insolvent situations.
Understand that when the PPP was passed, our Taft-Hartley plans, aka multiemployer plans, had to acknowledge funding levels and have them certified by professionals. Most trustees had to have their respective professionals, in many cases, make their pension “GREEN”. The plan professionals had some latitude in the way funds were calculated per the PPP. Example: PPP will allow the IRS to let multiemployer plans that anticipate a funding deficit in the next 10 years to EXTEND the amortization schedule for paying off its liabilities by five years, with a further five-year extension possible. It required plans in trouble to adopt a rehabilitation plan and to use specific interest rates for plan funding calculations – a credit card of sorts. Memberships of pension funds just short of green, even after the calculations, started to put contributions from new raises, and even money off the check, into the pension to help this underfunding – action born of this allowable strategy.
Understand the word “certified” as it pertains to our pensions. An actuary has to sign off on the health of the plan within the current and future funding levels and laws pertaining to that respective plan.
Under the American Rescue Plan Act of 2021, eligibility for grants ($94 billion) has been established. With application priorities (pecking order of plans that get the grants), the $94 billion is already gone and another infusion of money for grants is needed. If more grants are appropriated, lots of $$$$ will be needed! “IF” is the operable word here – which is a major political equation.
The multiemployer/Taft-Hartley pensions (ours) stayed green with the help of several significant changes in the law along the way to enable them to be certified green. The additional money from contributions and/or check has helped. However, many pensions are putting a square peg in a round hole because the debt they have is greater than money coming in. Those plans that could not stay above water are part of the existing approximately 206 pension that are failing or have failed.
To have any chance of getting a grant if and when more money becomes available, a fund that has been using the previous rules to be certified green now has to be certified to be in trouble to get the grants! The irony here is just too great a stretch of reality. And the more in trouble (underfunded) a pension is, the higher in the pecking order for application. The worse run funds get the most money asap – WOW!
Since 2006, fund trustees and plan professionals have contorted themselves so the funds can be certified “GREEN”! Now the reality of lost market share, modularization, non/anti-union, future solid contracts, demographics, retiree ratios, and “good ole boys” sitting on their asses for decades comes into play & full circle!
Trustees use to say what are we going to do with the money – now they say where are we going to find the money?
The answer – the big bad government in lieu of anything that resembles a strategy from the trade’s senior leaders. Funds that have been living on borrowed time funding-wise have to have a come to Jesus moment. CAN THEY PAY THE RETIREES THE PROMISSED BENEFITS? Approximately 206 pensions today and rising cannot.
Many trustees soon will use the words “better safe than sorry”, code for we better get our pension under the umbrella of receiving grants “just in case”. For decades trustees have maxed out the laws to favor a green zone status. They will now have to get real with those funding rules; however, in a very tight way. Only plans eligible per the SFA (Special Financial Assistance) can apply for grants. ONLY!
In street vernacular – no more BS massaged numbers. Does the plan, given the present and future, have the money to pay benefits? Hundreds of them do not, many more into the not to distant future will not. The trustees have to hedge the plan’s future on the hopes of Congress for grants; in lieu of that, cuts will be made.
The senior offices should get off their collective asses and can change the trajectory the pensions and also market share plays out if they “man up” and lead:
- Organize and quit the BS of saying we are organizing. We are net losers. Get after the wallets of end-users, developers, CMs. Labor Rising will give you our program – make it yours and win! No charge!
- Get the Carpenters in line or totally out. The management alliances can no longer dictate that. A certain Building Trades Council in the U.S. has a solution, so it can be done.
- Become Construction Managers and do the building ourselves. We say we are businesses, so be a business.
We can fund our pensions and improve our market share, but not with the current losing cartel of senior officers and a complete lack of a strategy!!
“if you see a good fight – get in it”
Danny L Caliendo
Organizer
Labor Rising
