Multiemployer Pension Reform: Why It Matters To All Of Us

More than 174,000 workers in the electrical contracting industry—including the most-skilled electricians, linemen and technicians in the world—are covered by pension plans that are financed through contributions from them and their multiple employers, without costing taxpayers one cent. The vast majority of these plans are in what the Pension Protection Act of 2006 calls the “green zone.” That means they are solvent, at least for now.

But, there’s no denying that our plans are becoming increasingly costly and inflexible. In the long run, they may not be able to meet the needs of the workers they’re intended to benefit—unless a permanent resolution is found in the short-term.

Now, multiply that concern times 1,510. That’s the number of collectively bargained multiemployer plans in existence across the nation, covering about 10.1 million participants. The trouble is, the Pension Benefit Guaranty Corp. multiemployer insurance fund, which was established to protect pensions and ensure that benefits are paid as intended, could be completely exhausted as early as 2023 as a result of current and future multiemployer plan insolvencies, according to the Government Accountability Office.

“The recent economic downturn has exacerbated the cumulative effects of three decades of statutory and regulatory changes to multiemployer pension plans,” said the National Coordinating Committee for Multiemployer Plans. “This is further compounded by the addition of broader financial reporting requirements, tightening credit markets, and unprecedented competitive pressures on contributing employers, leading to an environment of decreased long-term viability of many plans as new employers are discouraged from participating and existing employers are encouraged to withdraw.”

This is an obvious a concern for the millions of people counting on the availability of their promised pension benefits and it also is a worry for employers who may be required to make up funding shortfalls.

Even if you aren’t covered by one of these plans or are not required to contribute to one, you should be concerned. If they fail, you, I and every other taxpayer will be forced to pick up the tab—to pay for a bailout of the system. We need better solutions.

“Solutions, Not Bailouts,” is, in fact, the title of a February report by the Partnership for Multiemployer Retirement Security, of which NECA is a founding member. This collection of private-sector recommendations for reform was completed over the course of 18 months with input from more than 40 stakeholders from both business and labor. NECA contributed its own research from its Labor Relations Task Force, which has studied the issue of electrical contractors’ defined benefit plans intensely for years.

The report, available at, includes proposals to strengthen the current system and assist deeply troubled plans. Moving forward, it recommends the development of new flexible plan designs, including (but not limited to) designs that permit adjustment of accrued benefits. Of course, the adoption of new models would be entirely voluntary and subject to the collective bargaining process.

By the way, I want to clear up one prevalent misconception. Since 1947, federal law has required all multiemployer plans to be jointly managed by a board of trustees with equal representation from both labor and management. So, it seems to me that anyone who refers to them as “union-run plans” doesn’t know about that law—or even how labor-management relations and collective bargaining work.

I also want to inform you that dramatic, permanent reform of multiemployer pension plans is NECA’s top legislative priority for the 113th Congress, and the “Solutions, Not Bailouts” report is an important tool in our efforts. We have a great opportunity to help bring about effective change this year because current multiemployer plan funding rules in the Pension Protection Act will sunset in 2014.

NECA members, chapters and staff members nationwide will play a vital role in educating members of Congress on multiemployer pension plans through our National Legislative Conference in May and other activities in the nation’s capital and at home. I urge everyone in our association to get involved.

And, if you’re not a NECA member, I encourage you to support the legislative proposals that will be forthcoming and documented in this magazine. We all have a stake in ensuring that all American workers have security in their retirement.

About the Author

Dennis F. Quebe

President, NECA
Dennis Quebe is a former president of the National Electrical Contractors Association (NECA) and contributed the President's Desk column monthly. He took office in January 2012 and served a three-year term.

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