Worthy Addition to Next Stimulus
For all the alterations to day-to-day life brought on by the COVID-19 pandemic, one thing that hasn’t changed is the SIU’s constant effort to promote and protect the U.S. Merchant Marine. As reported elsewhere in this edition and on our website, American maritime remains fully engaged in standing up for the Jones Act (which turns 100 this month), the Maritime Security Program, cargo-preference laws – and, most importantly to me, for the dedicated mariners who continue to deliver during this time of crisis.
There is another important topic, however, that is flying at least a little bit under the radar as Congress weighs the potential contents of its next stimulus package. That subject is retirement security, and no matter what happens this summer, it’s certainly an issue we are bound to hear discussed during election season.
We are fortunate in the SIU. Again as reported elsewhere in this issue, the Seafarers Pension Plan is fully funded and in great shape. (Members have additional avenues toward retirement security, including the Seafarers Money Purchase Pension Plan, and the Seafarers 401K Plan.) But that doesn’t mean the future is guaranteed, or that many millions of our fellow Americans aren’t concerned about having enough money for retirement. Age doesn’t matter. True, a 25-year-old may not be looking at retirement income the same way a 55-year-old would, but planning a secure future is something that affects everyone.
Thanks to the struggles of union members following World War II, blue-collar workers gave up part of their contracted pay raises to invest in pensions for retirement. Dr. Martin Luther King Jr. recognized this when he said, “The Labor Movement was the principal force that transformed misery and despair into hope and progress. Out of its bold struggles, economic and social reform gave birth to unemployment insurance, old-age pensions, government relief for the destitute, and above all, new wage levels that meant not mere survival but a tolerable life.” For many union members, multiemployer pension plans were created. These programs typically covered highly mobile workers who moved from one employer to another, often for short periods of time. Some of the industries included transportation, building and construction, entertainment, retail and others. In these industries, the workers would belong to one union but have different employers throughout their careers. The average plan would have between 500 to 2,000 participants, with between 20 to 40 contributing employers.
Pensions supplemented by Social Security and savings were considered a mainstay of the middle-class.
However, the financial downturns at the beginning of this century hit companies and workers hard. Industry deregulation and other factors led to companies merging or going out of business. Changes in the law allowed creative usage of bankruptcy by firms to discard their pension obligations. Therefore, fewer companies with downsized workforces were paying less into these plans.
While many of the nearly 1,400 multiemployer plans weathered these storms, just over 100 have not been as fortunate.
With that in mind, the AFL-CIO has endorsed passage of the Rehabilitation of Multiemployer Pensions Act, also known as the Butch Lewis Act. The bill addresses the multiemployer pension crisis facing more than one million Americans, serving as an important backstop to ensure that retirees do not lose the pensions they earned through decades of hard work.
The Butch Lewis Act would address the pension crisis by creating a new office within the Treasury Department called the Pension Rehabilitation Administration (PRA). The PRA would allow pension plans to borrow money needed to remain solvent and continue providing security for retirees and workers for decades to come. In order to do this, the PRA would sell Treasury- issued bonds to large investors in the open market, such as financial firms. The PRA would then lend the money from the sale of bonds to the financially troubled pension plans with long-term, low-interest loans, buying time for the pension plans to continue providing benefits while refocusing their investments for long-term health.
The Butch Lewis Act was awaiting action by the U.S. Senate after being approved in the House of Representatives last summer. It’s now a candidate for addition to the next stimulus package, and that’s a move that makes sense for our country.