Transcripts For CSPAN3 Pension Benefit Guaranty Corporation 20171130

House subcommittee. On challenges facing his agency. Mr. Reeder says he expects the Multiemployer Program to become insolve vent by 2025. Absent changes in the law. A federal agency that ensures pensions of workers and retirees in the private sector defined Pension Plans. This is a 90 minute portion of the hearing due to technical difficulty. Present the subcommittee on Health Employment lay br and pension will come it order. Good morning, welcome. To todays subcommittee hearing on the financial challenges facing the Pension Benefit Guaranty Corporation. And more importantly the impact to workers and retirees. George miller was a proud liberal lion of the commit toe. While we very often disagreed, in the years i served with him on the committee. I admire his commitment to ensuring americans have the ability to retire with dignity. And in 2014, he worked with john clin. Then our chairman to try to solve a real problem. Retirement system on the brink of collapse. They put politics aside. Worked with employers and labor unions and goerkted a set of reform the in order to preserve benefits for millions of workers. President obama signed this approach into law. In 2014. The law was based on the premise that the Plan Trustees who have a legal and moral obligation to pensioners and workers. Would have the ability to take early action in order to avoid disaster. While the 2014 statute was an important step, regulations written by President Obama Treasury Department implementing the law made it difficult if not impossible for trustees to use the tools the law contains. So the problem continues. We know they persist because the Pension Benefit Guaranty Corporation the backstop for private defined benefit plans reloosed the annual report two weeks ago. According to to pbgs more than 100 multiemployer plans are expected to fail. In addition, to the 72 that already have. This kind of widespread collapse will directly exact the millions of workers, retirees and their families who spent their careers planning their retirement with these promised pension benefits in mind. Who promised these benefits . Unions and employers who established and administered the plans. The federal government and nonunion workers had no role in negotiating the contracts. That made the promises that will be broken. Mr. Miller when he chaired the committee recognized this. Thats why this committee under his leadership in 2009 refused to advance legislation propose to put taxpayers on the hook for the promises. Implementation of the 2014 law has been ineffective, and the workers and retirees in the plans are worse off because of it. When their plans fail, their benefits will be cut. And many cases significantly. When these Retirement Systems fail, the pbgs will collapse as well. The agency Multiemployer Insurance Program currently has about 2 billion in assets. Receives less than 300 million in premium revenue annually. And long term deficit of 65 billion. Again thats 65 billion. When the money runs out, likely sometime in 2025, pensioners will receive pennies on the dollar of what they were promised. Employers will close their doors. And previously healthy plans may go bankrupt. Congress took by partisan action just three years ago to prevent this looming disaster. We believe the Trump Administration will work hard to ensure the laws tools are yut lidsed more appropriately. But if congress is to consider further reform, its critical that the committee fully understand the scope of the financial challenges facing pbgc no matter how doire they are. Todays witness tom reeder is a director. He administers mot just the Multiemployer Insurance Program, but also the agencies very large Insurance Program nor single employer plans. The finances of that program are trending upwards, it is still under funded by nearly 11 billion. The program insures more than 27 million americans in more than 22,000 Pension Plans. We look forward to examining that program in todays hearing as well. There are no easy answers to these problems. We owe it to workers, retirees and employers and to put politics aside as in the past. And work towards finding a fiscally responsible solution. Millions of americans are counting on us. Before i yield to rak Ranking Member, i want to yoeld to chairwoman fox for a brief comment. Thank you, mr. Chairman. I want to take a moment to recognize a member of our staff. Who is leaving the committee to pursue a new opportunity across the capitol. As labor policy director for the Senate Committee on health, education and labor and pension. Andy has been a valued member of the team since 2011. Most recently as the Committee Work force policy counsel. Hes been at the forefront of the efforts to help americas workers save for retirement. Modernize the multiPension System. Preserve access and expand access to affordable healthcare for all. He worked diligently in support of the Committee Work force policy agenda and helped under the circumstances to advance important legislation initiative in including most notably as chairman talked about, the by partisan multiemployer pension reform act of 2014. I know all the current and former colleagues would agree. Andy is always provided us with wise counsel. And important technical expertise. Many of our successors would not have been possible without his commitment accide commitment, hard work and positive demeanor. On behalf of myself and the committee thauk for the time and devotion you put in to doing the peoples work. Of course we know well have an opportunity to stay in touch. And we wish you all the best as you embark on the new chapter in your congressional career. God bless you. Will the general lady yield . Yes, i will. Thank you. I want to join in the best wishes to andy. The chairman is indicated that staff worked well together. Even in issues where theres disagreement. Thats important in geting good legislation passed. Andy has been a constructive staffer and will be missed and we again want to join in the congratulations of the chairwoman and wish you well. I yield back. Andy, i too want to echo the same sentiments. I know youre taking a lateral transfer. We know that you will give great benefit to that other body. With truth and clarity that maybe they have been lock lacking for quite sometime. I want to add additional point that while you have done this with all good humor and support and optimism. Positive and moving forward and giving good counsel. You have been good at telling me no. And sometimes the best thing you can hear from good counsel is no. So you have a chance then to understand what is actual truth. And what we can and cant do. And how with e need to move forward. I would say thank you for your service. It has been invaluable. We are blessed in the committee there will be other staff that will follow you and do kpent work. It happens with this subcommittee. So were not worried about that. But theyll have to prove themselves. You did. God bless you as you move forward. I yield to Ranking Member good friend and colleague. Thank you. Mr. Chairman. And good morning everyone. Let me start by recognizing and thanking mr. Andy. Who is departing the Majority Committee staff this week. Andy has served for six and a half years. And played a leadership role on several important Retirement Security issues. On behalf of your friends on the democratic members sp staff, friends all to youment i want to thank you. And wish you well. As you transition to the senate. Just dont forget to recognize house members when youre a senate staff. I want to express my thanks to chairman wall burg. Since i became Ranking Member we have sought Common Ground on ways to help americans retire. With financial security. Last month, we introduced legislation that updates a two decade old standard for automatic ir roll over. There was a fair amount of consensus on practical requirement security solutions. The conclusion of that hearing i noted how the multiemployer Pension System and looming insolve si of the Pension Benefit Corporation demands our immediate attention. I appreciate chairman wall berg willingness for the hearing. Welcome director reeder. I enjoyed meeting with you yesterday. I look forward to your testimony. Id like to recognize some of the members of the who also some of you came to my office yesterday. Mr. Chairman, it is clear the Multiemployer Pension Program remains in significant financial distress. As the 2007 annual report notes the Multiemployer Pension Program has 2 billion in assets to cover 67 billion in liability. Thats a deficit of 65 billion. Up from 59 billion last year. All time high. Also estimated that had unless Congress Acts the Multiemployer Pension Program is likely to run out of money by 2025. Thats the presente estimate. We have to focus on the biggest cost of the cry si. The looming failure of large plans. If Congress Works together to help the failing plans we can go a long way to improving the financial out look. Several of my subcommittees colleagues and i recently cosponsored congressman neils legislation that poses a solution to prevent plans from failing. While safeguarding retirees hard earned pensions. I will be interested to hear director reeders thoughts on the bill. The bottom line is that Congress Must address the multiemployer pension crisis. We must alkt soon. As we proceed, i believe we should be guided by the simple principle its not the fault the workers or retirees the pension plan is on the brink of insolven si. The americans work a lifetime and earned their pension. American workers dont want a bail out. They want the pension promised that was made to them to be upheld. We must keep in mind that the cost and consequence of the inaction are enormous and the consequences will be devastating. Impacted retirees could see catastrophic reduction to the pension benefit. As high as 90 . Governments will see reduced tax revenue for impacted pensioners. There will likely be significantly increased social safety nets ending. Employers throughout the system will be impacted. Some may have to file bankruptcy. All this may have a worse financial out look due to having a short additional pension liability. Economic a fall out will touch most of all of the congressional districts. Todays hearing should provide subcommittee members an understanding of the scope and magnitude of the multiemployer pension crisis. More importantly mr. Chairman, todays hearing should under score the urgency for congress to take responsible action to prevent the fore seeshl collapse of the Multiemployer Pension Program. I hope that we can do that sooner rather than wait until the last minute. Im hopeful we will do that. With that, i want to thank you for again convening the hearing. And i yield back. I thank the gentleman. Pursuant to Committee Rule all members will be permitted to submit written statements to be included in the hearing record. Without objection, the hearing record will remain open for 14 days to allow statements and other material referenced during the hearing to be submitted for the record. Its now my pleasure to introduce our witness. Mr. Tom reeder. Confirmed as the director in 2015. Prior to joining pbgc he practiced employee wen fits law at private firms. Following private prakty he joined the Treasury Department and rose to the position of benefits tax counsel in 2005. In 2009 he started serving on the staff of. And then joined the irs in 2013. Ill ask the witness to raise your right hand. Do you solemnly swear or affirm that the testimony you are about to give will be the truth, the whole truth and nothing but the truth . Thank you. Let the record reflect mr. Reeder answered in the affirmative. Before i recognize the director to provide system, let me broefly explain the system. You know the lighting system. So i wont go through the script. It is a system that we generally follow on the road green go, yellow start to stop and red stop. We want to hear your full testimony though we have your full testimony written form. And then after that have the opportunity for our committee to ask questions. We welcome you. Thank you for your testimony. Thank you chairman. And Ranking Members. I very much appreciate the opportunity to appear before you today. To discuss the key challenges that we face. As you mention my full testimony is has been submitted so ill focus on the most pressing issue facing us today. Congress established a in 1974 as part of the to provide basic protection for participants benefits. In defined benefit if he thinks plans. Ensures plans without regard to the financial situation. Today pbgc ensures benefits for 30 Million People in the Single Employer Program. And about 10 Million People in the Multiemployer Program. While each program protects pension benefits when plans fail, the guarantees the premiums and other features differ significantly. By law the assets of one program cant be used to pay benefits under the other. Both programs have been in deficit for about 15 years. And however the Financial Condition of the Single Employer Program has the chairman noted has been steadily improving but the Multiemployer Program is in dire straits and getting worse. As of september 30, the sing the Employer Program had 117 billion in assets. And liability of 117 billion. And asset of 106 billion. So theres still 11 billion deficit. Proxs show that will improve. But its not a certainly. By contrast as chairman noted, we have 67 billion in liability in the multisystem. And only 2 billion in assets. Thats a 65 billion deficit and its likely to become worse and we project that the program will be insolve vent by 2025. Its due to many factors financial, economic, and demographic. And the recession of 2008 and 2009 amplified the effects of the factors. As a result the funded status of the Multiemployer Program fell below 50 . After the 2008 crisis. Many plans have recovered. But about 10 of them didnt. And probably will not recover. So today the Multiemployer Program faces an unprecedented level of planned failures. Over 100 multiemployer plans with more than a million participants have already reported to the participants that they expect to fail within the next two decades. Pbgc Financial Statement with some of the plans already on our Balance Sheet reflect the serious under funding of the critical and declining plans. Our projections report shows this under funding is likely to increase our deficit as the years come. And as i mention were likely to be insolve ent by 2025. By fund exhausted, when and if they get exhausted. The only money available to pay plans or ben if i wants under plans will be the annual premium revenue that we collect. Which is now a little over 200 million a year. And projected to get grow to 400 million a year. So were paying billions of dollars in obligations with millions of dollars of income. Multiemployer guarantees are already very low. Compared to the Single Employer Program. And so a failure of the Multiemployer Program will result in those low guarantees becoming even lower. Much lower. Right now if you have 30 years of service, youre guaranty level is 13,000. That compares to the Single Employer Program when youre guarantee regardless of service is more like 64,000. So one of them is livable the other one is not quite livable. Cuts of this size are cat strask to participants. We will continue to work with the administration with congress, and the multiemployer plan community. That includes participants and the plans themselves to address this problem and i look forward to addressing your specific issues. In the coming few moments. Mr. Reed radio, i appreciate you saying your testimony the legislation needs to address the looming insolvency. Of the program. I agree. As you may be aware congressman neil recently introduced legislation hr 4444. That would provide low interest loans to failing plans and other Financial Assistance. Through the pbgc. Most of the democratic members of the subcommittee are cosponsors of the bill. Which most importantly does not cut retiree pension. One has the had an opportunity to review mr. Neils bill . And if so what are your thoughts on it . If not, when will you finalize your review and analysis. And will you share it with it us when its complete . We have not had a chance to review it fully. Were looking at it closely. It is very difficult to evaluate exactly the effect in the cost of the program because each plan is plan specific. We dont have data from plans that we need to see how that would effect each plan. And other loan proposals have gone to plans and sought out their advice. On whether or not the loan proposal will cure the problem. Cure their problem. But we cant its difficult to predict when the analysis will be done. We can share it when ever we have it. Thank you. I will go to my next question. Has the pbgc reviewed the other proposal put forward by ups 1 and the National Coordinating committee for multiemployer plans and if so, again, what are your thoughts on those proposals . If not, when will you finalize your review and analysis of the proposal. And will you share it with us when its complete. Again we can share our analysis with you. Its as i said about the other proposal, it is very difficult to evaluate the loan proposal on a plan by plan basis. We need to do that. Because we need to look at whether or not it resolves the problem for the big plans that are facing imminent insolvency. We have to go through the plans to get access. So far we have been unsuccessful. We think the loan proposals all would clearly have an effect. But exactly what the effect is we dont know. Whether or not its going to resolve the problem and again were talking about a problem up here. Where promise benefits not a problem just for pbgc. Whether or not is resolves the problem we cant say. Were a little bit skeptical. Because we think that maybe the assumptions that are being used by the people who are proposing the other proposals maybe a little rosy. All right. Thank you. Committee chair very strict on time. Let me try and get to the next question. I believe that one of the most attractive feature of the mr. Neils bill is that it does not include cuts to the pension ri tier ree pension. So we should do our best to protect what was promised to the hard working americans and lets be clear the pension benefit that lulls in multiemployer plans receive is often quite modest. For instance i understand the average pension paid by the mine workers plan is 530 a month. So could you please talk about the pension benefit on multiemployer plans and we only have 48 seconds. The benefits vary greatly. Plans have modest benefits. And as you point out the coal miner plan has more modest benefits and the teamsters have a higher much higher level of benefit. So a reduction to the guarantee level would effect the teamsters much more than the coal miners. They will have an effect on both groups. All right. Im going to yield back my time. I may submit other questions. Yes. Thank you. Thank you. Doctor row, you are recognized for five ins. I want to thank andy. Who sat by me for six years. Thaurng for your friendship and your hard work on behalf of the committee. First of all, mr. Director. I appreciate you coming by the office and speaking with me. I can see myself sitting out in that audience concerned. My father was a union member. Lost his job at 50. It was offshored. And here he was a post world war ii no job. And no pension plan. I can see myself sitting there and locks to me we have two very conflicting issues here. One the current funding cant meet its obligation. And two, some of the multiemployer Pension Plans cant meet their obligation. And i guess the question i have is if you dont have enough money to pay the obligation, there are things we have to look at. One are we paying premiums enough. You have talked about that. Has an improving economy which is improved tremendously in the last year, helped . Make the plans more solvent. And extended that time. Reduc reduced benefits. Thats another option. And can you fund i have always thought this. You should be able to fund a pension plan above what you allow in the good times. We should have up funded those plans in instead of not funding them. And our lastly i want to ask have there been any government decisions. Any decisions that government policy that have contributed to the failure of the plan . And Going Forward to we need a new type of pension plan . Im sorry, i didnt take notes at the beginning. There was a lot of but i do think theres errors as i mention in the prior question. In the governments behavior in limiting the amount that can be contributed to a plan. And i do believe that those rules are have been loosened and people can contribute more in bert times. But your point is will they. And if we i think with a variable rate premium we might encourage them to do so in better times. I do think that a different sort of plan is something that should be examined. I am heartened by the various proposals that have been gien about having a different plan. I have to emphasize that we from my per spigotive it is important that we not effect the funding level we dont adverse ri effect the funding level of the existing promises that have been made. Im very fearful of new plans having that effect. But i think if theres going to be anything that looks like a defined benefit plan in the future, for our grandchildren, i think its going to have to look different than today. The Administration Proposed changing charging under funded multiemployer Pension Plans and additional premium based on risk. How would the ensure that this new premium wouldnt accelerate the insolvency of the under funded plans . The proposal the Administration Proposal has a provision that allows for the pbgc to waive up to 20 of the premium in total. For plans that it would adverse ri effect. We dont want to accelerate the problem. We would exercise that authority to avoid charging plans that are already close to insolvency or critical in declining avoid charnling them a higher premium. Thats money it goes ento our pocket and back out. We have defined the problem pretty well. We dont have enough money to pay the obligations. What solutions have the pbgc have you wrought forward or think we could do to solidify the plans . Theres an array of solutions. And we have been looking at lots of different proposals that have been made. That range from government funding to benefit cuts. To earlier benefit cuts. For a plan thats headed towards insolvency. Almost certainly the earlier they make the cuts the less drastic the cuts have to be. If youre going to cut. And premium increases and but all of those are very politically uncomfortable resolutions. Thank you. I yield back. Thank you. I recognize gentleman from new jersey. Thank you, chairman. Certainly appreciate you along with the Ranking Member putting together this incredibly important meeting and as you suggested we up here might not have a stake in the game or skin in the game. I am a multiemployer pensioner. I understand this i have been a part of it for 37 years. Thats why i understand how important this is. Director thank you for bringing to us. This isnt a red issue or blue issue. Not a republican or democrat issue. Its an american Retirement Security issue. Those men and women who literately deferred part of the compensation to have a security retirement was a vow they made and kept their promise. So we need make sure that we keep our promises and make sure they get their full benefit. I just remember a reminded members here. We promised a lot in social security. Yet we have made changes for years. So when we hear some of the statistics that youre talking about. 72 plans failed. Whats going to happen. The cost of inaction. The changes do you want to leave the defined benefit and go to a contribution . With shifts the liability. All the issues come in to play. But the cost of inaction. If we do nothing, so let me walk through this. You say by 2025 estimated youll be bankrupt. Upside down. No longer can pay premiums. Today, for pensioner that makes or gets a 70,000 pension. Which is above the normal. What is the maximum benefit that he or she can receive if that plan goes under . Today. That amount is a little under 13,000. For if they sl have 30 year of service. More if they have more service. Its a comp collated formula. 12,008 lun today if you have 100,000 pension or 50,000 pension. The most you can get if that plan gez under is 12,000 8 hundred. So if we do nothing and plans crash, the maximum anybody can get is 12870 . In 2025. They will get less than 2,000. So the cost of inaction here is the issue that were dealing with. Couple of issues. You said youre expecting the premiums to increase from 200 million to 400 million. How is that possible. Is that by your anticipating the increase that is indexed already . Thats keeping every plan healthy . If the plan goes bankrupt. That would pull weight from thats including a consideration of some plans dropping out. So you factored that in. Did you factor in the increases ob how that might accelerate healthy plans from becoming unhealthy going into yellow or red zone . The premiums the under the current rate i dont believe we factored in an effect of the premiums. The more you charnl premiums the less held thai have to increase what theyre paying or lessen the accumulate td benefit, correct . Thats correct. But i think the inflation increase is not going to have the same effect as a legislative increase. I agree a legislative increase would have an effect. The risk based premium shifting here is that based on individual plans or companies or risk based for the entire multiemployer . The rate would be based on the under funding of the entire plan. Across the board to healthy plans and unhealthy plans . You would use the healthy plans to pay for the unhealthy . If plan was full by funded it wouldnt pay the variable rate premium. Only 100 . Would 90 pay the premium. Yes. The details are not specified in the proposal. The details is where the devil resides. I want to thank everybody on the both sides of the aisle. The cost of doing nothing is unacceptable. Thank you. I thank the gentleman and recognize my colleague and friend from michigan. Mr. Mitchell. You reference earlier in a conversation that you begun to lock at the loan concept. But in looking at that you need to look at individual plans. And you have been unsuccessful in being able to do that. Can you share with me why . We need more data on the accrued benefits for participant. To determine what it takes to make the plan viable in the long run. Why have you not been able to get that . St not something that we collect. Its not we have a pretty complex 5,500 that they form they file every year. And adding to that would cost. We have added to that in the past. But we dont have it right now. These are plans in dire straights. Would they not be wise to simply supply it so you can have more detailed information. Looking for a way to avoid insolvency . With respect to the program. It would be. They havent been we havent gotten it. We asked for it. They declined to provide it . We didnt ask for in a judicial or legal way. We didnt subpoena it. We said we would like information on how the program would keep the plans solvent. And we havent received it. I ask we get a list of the plans a list of those you asked and havent responded. We asked the propents. I would ask you ask for specific plans. Since it has a Significant Impact on your deliberation. You made a reference in your testimony about the fact that the individual plan teeth have far more successful and we dont have effective teeth in the pult employer plans. Have you got specific recommendations you can share . The big teeth in the single world is the excise tax. And to charge an excise tax its a excise tax and its something people want to avoid. And in order to do that in the multiemployer world in the way the reason its been so difficult is its not clear who you charged that tax to. If its the plan, then you could make the matters worse. If its the employer, its difficult to get that legislation. If its the participant its difficult to get the legislation. Its similar to raising premium. It seems to me by doing that the ones that effectively go bankrupt earlier are better off. Youre imposing the penalty on those left standing. Thats right. You talk about the promise made. The current guarantee. Which is very low. Have you done analysis of the reality is your plans here have been stigss made for a variety of reasons some poor decisions. Economic impacts. Have you done analysis of alternative levels of guaranty that is fiscally manageable . Have you looked at in in terms o of alternate guarantee . The statute requires us to provide a report to congress when we determine that we are going to go insl vent. And i think the time is coming up fur that. We need to figure out exactly how were going to ramp down the guaranty level. As we approach insolvency. We dont have a concrete plan in that regard yet. Um, is pbcs prepared to administer a loan program thats been discussed in order to help basically push off some of the ka tastfys at this point . Not currently. Loan programs that exist in the government already are generally administered by the Treasury Department or other departments. I dont want to be cheeky in saying that the assistance that we give to insolvent plans already is technically a loan. We dont collect those very well. One comment which is probably more cheeky. I think we need to be careful when we talk about fully funding or using taxpayer funds for fully funding plans that decisions were made on increasi increasing benefits. Because the taxpayers didnt participate in the decisions. We dont want anybody to end up without a pension, we need to be careful of the balance. Otherwise we create incredible incentive to be irresponsible. Your recommendation would be appreciated. We need to look at the loan programs and ask questions and see a response. Thank you i yield back. Before i recognize our next questioner, i notice my Ranking Members tie reminded me of a Beautiful University of michigan blue. But i was also in the stands at the big house this past saturday. And enjoyed the first half very much. But i would be a remiss if i didnt congratulate my colleague from ohio. Thank you. The buck eyes. For your for another win. That continues on. But theres always next year. So i recognize my friend kp colleague from ohio. The buck eye state. The victor state this past saturday. Thank you. Since it is my alma mater. I wasnt going to say anything. Since you did. Maybe next year. I think you channelled me. Thaurnk you. I thank you director for being here today. Just couple really quick questions for you. Should you become or should the agency become insolvent is there any mechanism by which the government steps in absent congressional action . No. So you need us to act. Okay. Number one. Number two, i dont like to talk in abstract. Any colleague asked you about the maximum benefit that could be received. Should the worst happen. What is the floor . You said the max maybe 2,000. Whats the floor . It would be the promise the benefit promised under the plan. In many plans dont promise baen fit thats that high. So tell me what do you think would happen if some of the people sitting here were to only get 1,000 or 2,000 on our economy. Should they not be able to buy medication, and maintain their homes, or not send children to school. Tell me what the economic benefit would be if we reduce benefits to a level that people cant even live on . I dont have hard numbers. I do know that many of the multiemployer plans have participants that are concentrated in geographic areas where the effect of a catastrophic decline in the income would have a similar effect on the entire community. Could this happen before 2025 . Yes, it could. We really know that there is some urgency. It may not be 2025. I agree with our chairman that we havent done this in 30 years. It is time to do it. Its great to look back on mistakes that were made. The people who will be punished today had nothing to do with the mistakes. If we make people a promise, we should keep our word. So i understand that there were problems. We need to find a way to solve it. My next question is if there were any one thing you would suggest we do, to try to make this a better situation. What would that thing be . I have to say increase the premiums to keep pbgc afloat long enough to make the promises that we have made. You limit me to one. Because thats i think maintaining the government promise is the most important promise of all. And if you can achieve that then you ought to think about trying to figure out a way to have the plans maintain their promise. Okay. Lastly. I would say to you how many people do you think would be affected by an insolvency. Immediately. How many people . At loeast a million. Close to a million and a half. That is catastrophic. I thank you. I yield back. I recognize now a friend from georgia. One whose had concerns about employees and their future. And benefits. Mr. Allen. Thank you. I wont talk about college football. Although the iron bowl i am happy about that. Auburn alabama game. We are here for a serious conversation this morning. And sounds very serious. Im trying to find out exactly it seems like were kind of going around the issue here. Its obvious that people paid into a program. Paid premiums. And that the labor organizations and the employers adjusted benefits at will . Disregarding the premium that were being paid in. How in the world were they able to do that . How could they just decide they were going to give greater benefits without any regard to the future solvency of the program . I dont believe that anyone would say that trustees made a decision on benefits without regard to funding level of the plan. I do believe they all sun serely believed when they made a promise that the assets would be available to pay that promise. Based on actual evaluation they were doing at the time. However, some plans, probably a major it of the plans, made the promise in a way that it could be adjusted in the future. And they made those adjusts when the Economic Conditions required it. And they increased contributions from the employer when the Economic Conditions required increase contribution. So were talking about as congresswoman meng mentioned yeerl were talking about 1 Million People. Theres 8 Million People out there. That are not going to have any problems. And the Multiemployer Program is doing well for them. I think congressman mentioned that there are plans that are doing just fine. And its difficult to extract a higher premium from them. Why are some programs doing well and we have one group that is upside down and like you say it will be an exponential cost to somebody. Potentially taxpayers. We already have a nation thats 20 trillion in debt. Its not taxpayers funding any kind of assistance here. It will be i dont know, four, five. Six generations from now. Were not funding anything. Basically right now. Because the deficit. Its all being passed down several generations. So what is the difference in the premiums in the programs that are successful or Single Employer Programs and the programs that are in financial trouble . Whats the difference in the premium . Theyre incredible. Difference. The singles that the multis pay 28 a hit. Flat. Singles pay 74 ahead flat. Yur talking about three times as much. Plus 38 per thousand in under funding. Thats capped at 523 per participant. So a single employer plan can have a benefit of premium of up to nearly 600 per participant. If theyre poorly funded. Somebody was misled here. You paying this amount youll get this benefit. Youre not going to get it. Is that correct . Based on your concern presently. Yeah i do think that 9 until 2012 per participant was too little. To provide the insurance that we were providing. Who is responsible for that . The Congress Sets the premium rate. Its set by congress. So as i mentioned earlier that theres been a lot of proposals to allow the pbgc to set the rate. Congress sets the premium rate. You maybe talking about the contribution rate. And the contribution rate is collectively bargained. Thats the amount that employers pay out of Employee Salary to pay the benefit. So congress has been unwilling to raise the premium because of what reason . I have a difficult time answering that question. Premiums i think are largely regarded by plans. And in the single world by employers as a tax. And we dont like to raise taxes. And its technically not a tax. But it feels like a tax. Especially if youre well funded. And so its not easy to raise premiums. Im asking the questions. This is my second term. I have learned a lot here. The time has been expired. I yield back. Youll have more opportunity to hear this. And thats why were doing it today. I recognize the general lady from delaware. I dont recognize her. I recognize the gentleman from new york. Thank you, chairman. Mr. Reeder, i had the pleasure of going to one of the ups grarges in the morning when they have the role call. I was impressed with the number of young people both men and women that work for the company. The kind of Safety Measures they take into consideration. On a daily basis to ensure everybody is safe, the professionalism that they had there including also the starting salary. These are young people making about 74,000 a year. They have a good health plan. And what should be a good pension plan. So this is an example of a Union Company that i think is for the nation. What our nation is, what it should be. In the future. But yet they have this looming pension issue. And of course you have said that you support not only a potential reduction in the benefits, but also increase in the premium. And some infusion of cash loans to the pension plan. Regards to the money, the infusion of dollars. What level do you think this should occur. Whats the game plan. Whats the length the period the calendar period for this to be paid back . And this is critical. Lots of companies go under because theyre able to with the pension issues. And of course they cant cover their employees and Companies Like ups get saddled with this responsibility. What is in terms of the infusion of cash and terms of the reduction of benefits, what can you live with . I want to make sure i dont get misinterpreted in sorting benefit cuts. I did mention that as a proposal that has been made in i think the ultimate solution maybe difficult to get. Without some kind of a benefit cut. I do believe the ups proposal has a benefit cut in it. But we dont have a specific recommendation as to infusion level. The administration is not supporting i wont say theyre not supporting. They havent proposed they havent voiced an opinion on infusion of cash into the multiemployer system. The only thing on the table in our world is a premium increase. You said that if we do nothing its doomsday down the road. In fact the company is a good company like Union Company like ups may find itself in real deep trouble. Further this pension general pension problem across the country. So what are you suggesting . If you dont want to itemize the pension the benefits that you be willing to or we will be living with the cut. We dont have an idea of the level of like i said, i am focused and im laser focused on the guarantee we provide. We think that premium increases that get us 16 billion over the next 10 years that continue after that 10 years will keep us afloat for at least two decades. Again im focused on the level of our guarantee and most of your question focuses on the benefits. You are talking about the premium increases that you yourself said that companies consider this to be a tax. This very same week. Thats what we are talking about socalled tax cuts. The environment coming from the white house and the majority is not that lends itself to the survival of this Great American company, u. P. S. Mr. Chairman, i yield the remaining part of my time to the congressman. A real quick question. You keep talking about the premium increase. You told me it would not save the pension plan. Lets say that extends support for a short period of time. Number one issue in causing the deficit and the position. Wouldnt you agree . Number one. Thats very high, yes. With all the calculations by far, that is obviously the downturn. We want to make sure this was caused by other companies out of business. They remain take on the liability. Those take investments and have liability and its inschedule when we compare to the unfunded liability of those who went bank rucht. I yield back. Thank the gentlemen. I recognize the gentlemen from pennsylvania, mr. Smucker. Thank you, mr. Chairman. Thank you for being here. I want to followup because im newer than he is. My first term. Getting to grasp the magnitude of the problem and i certainly believe those who worked hard all their lives and saved responsibly and counted on that pension that they were promised deserve to receive that pension. Its certainly not the beneficiarys fault that the fund was poorly structured. On the other hand as was just mentioned, the businesses who are left shouldering this may not have been party to making what turned out boob bad decisions as well and concern with any impact this would have on taxpayers who dont benefit from the plans at all. It is a tough problem and im only beginning to understand how it works. I specifically want to go back and you may have mentioned this before and i apologize if you did, but me more about the difference between the single employer plans and the multiemployer plans. One single fund is doing much more than a multiemployer. Is that primarily because of the premium level you just described where single employer plans are you said i think are paying 74 and multiemployer pengssions ar paying 28 . Thats a if i rank the reasons, that would be very high. One or two or three. Always the fact that in the multiemployer world, a single employer bargains for a package with the union. Once they come to an agreement on how much the employer will have to pay towards the pension plan, they make that contribution to the plan and then the trustees of the pension plan determine what the benefit is. You have two different entities making how much you contribute decision and what the benefits are its the employer who decides to provide this benefit and they are on the hook for the entire benefit. Is it a lack of accountability on the multiemployer side . Couldabiliaccountability is word and there is a disconnect. They are deciding on how much to contribute to the plan. For sounds like a structural you dont like to use the word accountability, but the decisions made with regard to the benefit do not align with the benefit to pay for it. The bargainers are aware of the benefit levels and the deficit levels of the plan. They bargained accordingly. I wouldnt accuse anybody of shirking their duties. I dont intend. Thats not what im implying. I want to understand premiums paid by the employers entirely . Yes. If there are many good multiemployer plans that are solvent. You are asking about the single world. They are paid by the employers. Multiworld they are paid by the plan. Ultimate who is paying for that . I think the economists would say the participants are saying. It comes out of the package of compensation that the employer pays, part of which goes to the plan. Thats an increase in obligation of the plan. So multiplans, some are solvent and some arent . When premiums are raised, is that on all plans or only those that are insolvent some. That wouldnt pay any premiums at all. They are already receiving assistance from the benefits and it would be counterproductive to collect money and give the money back. As i said, if there were a variable rate premium, they are paid by all plans that are not terminated. And i have a lot more questions, but i see im out of time, so thank you. I recognize the gentle lady from oregon. Thank you very much, mr. Chairman and thank you for holing this hearing and thank you for testifying. This is a critical issue protecting retirement securities and im here for the retirees in northwest oregon and my grandfather was a miner who counted on the benefits they had earned. You said if the pb d. C. Program is insolvent, the result would be catastrophic for current and former workers and retirees and beneficiaries and their families. In your testimony you state that in the pension benefit guarantee corporations, 67. 3 billion in liabilities in the Multiemployer Program, 62. 7 billion of that is for 47 plans that are ongoing and if not terminated. You add that these are plans they expect will exhaust a plan and assets in need Financial Assistance in 10 years and that was indicated in your report, the ongoing decline of several large multiemployer plans are expected to run out of money in the next decade. They are unlikely to be able to provide that Financial Assistance and as you noted, the result would be catastrophic. It is important they do not publicly name the 47 plans for the same reason the fdic would not name the banks they think might fail. Will you discuss the demographics and the types of workers and employers and employees participating and where they are located in the united states. I think the short answer is they are everywhere. There are plans that have been before you and so i dont think there is too much and they are represented by members sitting behind me. I dont think there is too much secrecy in two of the large plans. I think thats under representative of where the people live in those 47 plans. There is more than 47 plans and we have small plans. Its to say they are all over the united states. Is it reasonable to assume that people in the district of every member of congress or at least most of them will be affected by the economic fallout if the plans bail . I believe so. Nearly every district. Its hard to imagine a district that wouldnt be affected. So i quoted your statement from your testimony about whats at stake. Can you talk from your perspective how this might affect our communities and economies and families . Yes. I think there are plans that are concentrated that have retirees and active workers in more concentrated areas and there are some plans that are spread out. But a lot of these plans are in the industrial world and a lot of these plans have communities where they are dependent upon the incomes that the people get from the pension plan. When the pension plan dries up and goes down to that level or below if we become insolvent, it will be devastating on the community because the Grocery Store and the Hardware Store and the guys who mow the lawns depend on incomes from those people. Thank you. Its pretty clear that Congress Must act and as soon as possible, they use the word urgent and there is an urgent need to direct this and making changes to improve the program, the more e greejuous the problem becomes for plans and employers and the pbgc. We need that action on the part of congress and im proud to be one of the 39 original cosponsors of the rehabilitation for the pensions act introduced by the ways and means Ranking Member, mr. Neal. This bill will provide an innovative way to help financially troubled plans through the proceeds of Treasury Bonds and i ushrge my colleague to work to reach a meaningful solution across the country. I yield back the balance of my time. Thank you very much. That indicates you are very much committed to solutions. Thank you. I represent the proud representative from georgia. I would be remissed in i didnt comment on my colleague from georgias comments. We are coming you this weekend in the game this weekend. Go dogs. Your time is being used. I understand, but its an important comment. I gotcha. Thank you very much for coming today and i want to agree with your statement that this is an urgent issue and i want to express my support for weighing in on the policy decisions. What our options may be. I think getting ready of this is going to be very important. Its only fair to make sure the men and women have a comfortable retirement and keep the promises that were made. How we get there, i think its important to recognize folks were trying intentionally to find a good solution. How many multiemployer plans have failed already . During the low 70s, i believe 72. How many participants in those plans have had their benefits cut before passage of the npra . I dont know how many of them are cut, but the number of participants in the plans is 63,000. Not all of those were cut. If the benefit level was below the guarantee, you were not cut. How many Pension Plans for executives have failed or are failing . I cant thats fine. So another question i have and i want to go back to something my colleague from michigan touched on and thats the reporting data. Im just curious, does the pbgc have the ability to go into these plans and get very detailed data as a condition of ensuring the plans . And i guess in my mind what im looking at is how the fdic would look at going into a bank and getting information and data. Do you have the same access . We dont. I think its pretty important that congress have that data. If we are going to get involved in this conversation and be part of the solution, i think its really important that we consider getting that data. How would you suggest that that is accomplished . Is that something that needs legislative authority to do . Is that something you do administratively . Whats the right pathway there . I apologize for being too brief in saying we dont. Nothing is that simple. We do collect a lot of data. We could use more data. But Additional Data not only costs to produce and report, but it costs to analyze. To use it appropriately. We are pushing the limit on what we can collect legally. Not having access to that data and not understanding the problem is about to cost us all a lot. It may be wise money spent to understand exactly whats going on in these plans to be as transparent as possible. Every one of us whether its republican or democrat before we go and make a sizable commitment to be able to keep the promises, we need to understand the plans in the most transparent way possible. I would say not having access to the data and not analyzing it is way more costly than what you just described. Anyway, thank you so much for being here and thank you for future conversations. I yield back. I recognize the gentlemen from connecticut. Mr. Courtney. Mr. Chairman, thank you for your thoughtful and helpful testimony here today. I wanted to see if we can focus in terms of what the scope of the problem is in terms of families and individuals at risk. Your testimony said that multiemployer plans basically benefit about 10 million individuals. Those are the awardees and recipients of pension payments as opposed to the size of their families . Yes. Thats the participants, but they are not all in pay status. I see. Some of them are active employees. In terms of the population, given the fact that these are breadwinners or the Retirement Benefits put food on the table for other family members is really bigger than 10 Million People. Right. Without putting you on the spot in terms of an exact number. In the exposure in terms of what you indicated that the math shows right now is about 65 billion is the shortfall that is looming. For us, yes. So again, just to try to put this into perspective, i was around here in 2008 when this institution moved at mock speed to bail out the banks to the tune of about 800 billion and there was not much asked in return in terms of the banks taking a haircut. The premiums they had to pay to get tarp payments. The bill my colleague from oregon mentioned which is not even a payment out, its really a loan that would require to be paid back overtime based on investments. That would be supervised. I think putting that perspective compared to what this institution did in 2008, its actually a fairly modest proposal in comparison. The benefit obviously would be to help 10 million plus americans who basically paid into their retirements, assuming there was going to be a promise kept at the end of the process. I think also its important to put it into perspective. A couple weeks ago, the house voted to cut the estate tax and eliminate the estate tax which affects about. 02 of americans. That is a smaller fraction of people who are at risk in terms of what we are talking about here this morning. Obviously eliminating an estate tax with 5. 5 million for an individual and 11 million for families, that is going to cost the treasury of this country 200 billion according to congressional budget office. What we are talking about, we just saw this institution pass and i voted no, but a benefit for. 02 of the country of 200 billion, we are looking at a solution for this flab really doesnt even involve it involves a loan that would be paid back to the treasury. I just think that this is not that hard to fix. Particularly if you look at the 469 of what this institution has done in other cases as recently as a couple of weeks ago. These numbers are not as daunting as i think some of the gloom and doom that surrounds this discussion. I have been on this committee now ad nauseam with these hearings and its time to just again, put it into perspective and really come up with what i think would be a manageable fiscally responsible solution that would profekt peoples benefits. I yield back. I thank the gentlemen. Now i recognize the gentlemen from wisconsin. The badgers will hopefully take care of ohio state this coming weekend. I dont want to sound like im looking for retribution, but i am. Thank you. Hopefully it will come through for you. I was over in another hearing on government oversight so maybe this has been asked before. I represent a lot of people in the Central States plan. As you know its a plan in a lot of trouble. A lot of people are scared out there. A lot of people have expectations raised. All of a sudden they are fearful they will get nowhere near what they thought. Im aware that today most people probably are out there on their own 401 k . A lot of people 10 years ago thought they were set and then they wake up a couple months later and they are down 30 or 40 from what they thought they had. Particularly because of government involvement, its important to step up to the plate on these multiemployer plans, particularly Central States. Could you comment on it at all as far as your vision, first of all, of when we are going to get finality here and not going to wait until the last minute. Maybe we will, but if you think we will have a solution before the final minute and secondly, give us options as to what you think is reasonable as far as helping these folks out . Yes. I cant give you a recommendation because the answer is political. The answer is going to have to political is probably not the right word. The answer is going to require some sort of pain either from the government, from the. tis pants or the plans themselves. The allocation of that pain is something this body does and its not easy. But the answer from the perspective of making sure that the guarantee of the pbgc is good can come from increased premiums better than anything else. Increased premiums is not the answer for making good the promise that the Central States and other plans have made for their participants. That has to come from either some sort of government funding or participant benefit cuts or a combination of those two. I cant hazard a recommendation on either of those things. They throw them out there. You could call it low interest loans or premium increases. Did you not feel it was inappropria inappropriate . Let me reiterate that i believe it is not the solution for making the promise whole. The premium increases make it solvent for when the plan goes under. When they are coming in, it has to be something other than the premium increases. When do you think the Central States will have the fund of money . They told participants it will be about the same time we go insolvent in 2025. Right now if nothing is done, you are getting nothing . One mopping you are getting a check and one month almost nothing. Percentagewise . A tiny percent. Less than 5 . Thats assuming they and we go under. The premium increase is inevitable . I think there is a growing consistency for a level increase, yes. For how long. Per year . Per year. And we are not going to do it. If you had to cover the whole twhing a premium increase, how big would that be . In our report last year to congress, we said it would have to be less than five times that. If you feel you got that much, the plans would be solvent . That only protects our guarantee. The plan solvency will come from increased contributions to employers and benefit cuts or money from the government. Thanks much. Mr. Chairman . I thank the gentlemen. Now i turn to my Ranking Member for closing comments you might have. Thank you very much, mr. Chairman. I want to make a personal thank you also to you. You have gone out of your way to explain this huge complicated problem and make it presented in a way that i can understand. As much as i can. Thank you. I want to also thank you again for being here today and for providing us and Community Members a picture of the looming insolvency. I believe if the program is allowed to become insolvent, the result will be catastrophic for many people with current and former workers. Retirees and beneficiaries and their families. Working families and employers are coming to this prisz and do so soon. Mr. Chairman, i would like to ask and starting for the record in november 8th letter to the speaker. This is a letter signed by 170. They are representing a Cross Section of employers and retiree groups and other stakeholders. Its a first step over that call. Finding a solution to this problem. As we proceed towards a solution, democrats and i believe we must do our best. The pension that these workers earn should be there for them when they retire. Thats not a bail out. Thats keeping a promise. Mr. Chairman, i yield back, thank you. I thank the gentlemen. I would like to thank him for being here. Sadly you didnt have the benefit. They come up with an absolute solution that would be the fact that you provided testimony here today that had great clarity and the facts, but also the clarity of your taugz relative to solutions. This has been a hearing on pbgc and for that purpose, all of the other issues are fair game here. I think we have to get to those discussions as well. This is a challenge that we have and the size of the problem and difficulty of solutions. This showed us the impact of decisions that were made and promises that were made. So thank you. We have the expression around here, dont let the perfect be the enemy of the good. We dont even have to worry about that. Its an expression that we talk about. There needs to be a solution. They are on both sides of the aisle. As well as mr. Reader. They are really in the throws of this issue as retirees. As employees. As businesses that i see out here as well. They have a very personal involvement with this problem. Not perfection, but work towards a solution and to continue hearings to find that agreement. Having done that and having had this hearing and seeing no other questions or come to be given, you and i being here today it finish this off, i declared this hearing concluded and adjourned. Par cspans washington journal live with policy issues that impact you. Coming up thursday morning, we get your reaction on two top issues making headlines. The gop tax bill and sexual harassment. Join the conversation all morning with your phone call, emails, Facebook Comments and tweets. Be sure to wash cspans washington journal live at 7 00 a. M. Eastern thursday morning. Thursday the Household Committee had global terror threats against the u. S. They include secretary elaine duke. Fbi director Christopher Wray and director nicholas rasz mussen. You can see it live on cspan 3. Thursday a hearing on the effectiveness of sanctions against countries like iran and north korea. They will have live coverage on the Monetary Policy and subcommittee at 2 00 eastern here on cspan 3. Live on indepth, professors will be our guests. We go back 13 years. We revel in each others humanity and share the fundamental commitment to the life and the mind and the world of inside. We had a chance to teach and lecture around the country. When i see him, i dont see him first and foremost as a conservative thinker. One of the major figures of our day. I see him as my brother and friend and someone who has a right to be wrong. If you are going to Work Together in conversation and debate to get at the truth, the people involved in the conversation first have to recognize that they are fallible and frail and fallen human beings. They have to recognize that they could be wrong. Even about my most cherished beliefs. One will have a virtue that is indispensable. Among the books, race matters and brother west. Mr. Georges books include making men moral and conscious and its enemies. During the live threehour conversation, we will take your calls and tweets and facebook questions. Watch indepth with cornell west from noon to 3 00 p. M. Eastern on book on cspan 2. Next a hearing on the federal response to the opioid crisis. Tuesday the House Oversight and Reform Committee held a field hearing at Johns Hopkins hospital in baltimore. This included testimony by a new jersey governor and the chair of the president s commission on combatting drug addiction and the opioid crisis. They livered opening remarks