The Subcommittee on Select Revenue Measures of the House Ways and Means Committee holds a hearing today on Funding Rules for Multiemployer Defined Benefit Plans in H.R. 2830, the Pension Protection Act of 2005:

More than 9.8 million workers participate in multiemployer defined benefit plans, which are collectively bargained pension arrangements involving unrelated employers, usually in a common industry. The Pension Benefits Guaranty Corporation (PBGC) estimates that multiemployer pension programs are underfunded by more than $150 billion; that is, these pension programs have promised $150 billion more in benefits than they have assets to pay according to current funding levels in the plans.

To address the current underfunding in these plans, … H.R. 2830 … create[s] a structure for identifying multiemployer pension plans that may be facing funding problems and providing quantifiable benchmarks for measuring efforts to improve the plan’s funding. Plans that are between 65 and 80% funded are classified as “yellow zone” plans that are in intermediate financial problems. Trustees of yellow zone plans would be required to adopt a program that will improve the health of the plan by one-third within 10 years. Trustees would be prohibited from increasing benefits that could cause the plan to fall below the 65% funded status. Plans that are less than 65% funded and face significant funding problems would be classified as “red zone” plans. Trustees would be required to develop a plan to exit the red zone funding status within 10 years, among other requirements. Additionally, H.R. 2830 requires increased reporting and disclosure requirements for all plans.

The hearing will take place in the main Committee hearing room, 1100 Longworth House Office Building, beginning at 10:00 am.

In connection with the hearing, the Joint Committee on Taxation has issued Present Law And Background Relating To Multiemployer Defined Benefit Pension Plans And Related Provisions Of H.R. 2830, The "Pension Protection Act Of 2005" (JCX-49-05) (47 Pages):

This document, prepared by the staff of the Joint Committee on Taxation, provides background and present law on multiemployer defined benefit pension plans, describes the multiemployer plan provisions of H.R. 2830, as introduced, and discusses issues relating to the funding status of multiemployer plans.