Key lawmakers are on the brink of changing regulations to let multi-employer pension plans cut benefits for current retirees in hopes of avoiding bankruptcies, reversing a 40-year-old law protecting earned benefits, Congressional officials say.
The bipartisan reform bill will likely pass Congress by the end of the week — right before lawmakers start their winter vacation — as part of a massive funding measure to keep the government operating normally.
The proposed changes would only apply to severely distressed multi-employer plans but would overturn a 1974 federal labor law that stipulates that private-sector earned benefits cannot be cut.
The federal Pension Benefit Guaranty Corp website says multi-employer plans emerge from collective bargaining agreements between a labor union and more than one company.
Lawmakers and union leaders supporting the changes argued that they would help the retirees by preventing pension funds from going under and "causing workers to lose everything," according to a bipartisan statement from the office of Rep. George Miller, D-Calif.
“This is the last chance that labor unions and their members have to gain some control over the future of their pensions, and this reform would give them the tools they need to rescue themselves,” read an emailed statement from Rep. Miller.
Many unions have supported the bill — including the United Food and Commercial Workers International Union (UFCW), which represents 1.3 million workers.
The changes could affect about 1.5 million retirees over the next 20 years, according to Nancy Hwa, spokeswoman at the Pension Right Center, an advocacy organization that seeks to protect the retirement savings of workers. She said some people would see their pensions cut by up to 60 percent, she added.
Many of the pensioners, Hwa said, have spent years in heavy labor occupations such as construction.
Tommy Burke, a 69-year-old retiree from Fayetteville, North Carolina, who drove a United Parcel Service truck for 38 years, said that his retiree plan would be affected by the deal and that the cuts would be “devastating.”
“Taking people’s pensions is just not the way to go,” he said.
The proposal includes protection for retirees who are disabled or age 75 and older, and would require a vote of approval by workers and retirees, according to a fact sheet provided by Rep. Miller's office.
But Hwa said she fears additional cuts if this bill passes Congress.
“The provision to allow these cuts sets a terrible precedent. We’re afraid lawmakers are going to allow for cuts under other circumstances,” she said.
Al Jazeera with wires. Lisa De Bode contributed reporting.