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 and 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; and
- The plan design is tried, true, and trusted. In fact, a similar, successful model is utilized in Canada.
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