The nation’s multiemployer pension plan system is facing a crisis. Over 100 plans and a million participants’ retirement security are in jeopardy.
Various measures have been proposed to address the severe underfunding of these plans as well as the federal agency serving as their financial backstop - the Pension Benefit Guaranty Corporation. However, one pension reform policy that should be enacted immediately is the authorization of composite plans.
A composite plan is a hybrid between a traditional defined contribution and a defined benefit plan. Composite plan legislation would be beneficial to the construction industry because:
The plan design would protect retirement savings from market downturns or other unforeseen circumstances;These plans provide lifetime income to participants and give employers certainty as to how much they must contribute to the plans; andThe plan design is tried, true, and trusted. In fact, a similar, successful model is utilized in Canada.
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