The Associated General Contractors of America (AGC) praised the U.S. Senate for voting to reform pension laws, a move that will strengthen and preserve multi-employer pension plans for the future and help ensure the retirement security of unionized construction workers. The Pension Protection Act of 2006 (H.R. 4), passed by the U.S. House on Friday, July 29, 2006, increases the maximum deductibility limit and allows the plans’ fiscal health to move forward.
“In the construction arena, workers follow the job, and these plans provide the proverbial third leg of the retirement stool for people who would otherwise be left with only Social Security and savings,” said AGC CEO Stephen E. Sandherr. “This is an important addition to retirement security for unionized labor in the industry.”
The construction industry funds more than 40 percent of multi-employer plans nationwide, providing portability for workers as they move to different job sites and new employers. With the current maximum deductibility limit at 100 percent, it is impossible to create sufficient savings to protect plans in the event of a downturn in the market, according to the AGC. This legislation increases the deductibility limit to 140 percent of the current liability, allowing plans to save more for future retirees and avoid future funding shortfalls.
AGC supports provisions in the bill that demands that plans improve their funded status in order to ensure that they are always fully funded. For plans whose funded percentage is less than 80 percent, trustees will now be required to put together a schedule to improve their plan over a 10-year period, as well as notify plan participants. These two new requirements will ensure plan solvency by guaranteeing that all stakeholders are involved in decisions impacting the solvency of their plans.
Finally, the pension bill includes the authority for critical-status plans to protect normal retirement benefits by collecting extra contributions from employers on an emergency basis and, if necessary, modifying ancillary, non-core benefits for certain participants.
For more information, visit www.agc.org.