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National

Pension Deal In Spending Bill Will Cut Benefits Before Safety Net Fails

STEVE INSKEEP, HOST:

Now, on Capitol Hill today, the House votes on a spending bill that is designed to fend off another government shutdown. One controversial part of that bill would allow some pension plans to reduce benefits for current retirees. That's a provision attached to this bill. This comes at a time when the federal government is warning that some large plans could become insolvent. NPR's Jim Zarroli reports.

JIM ZARROLI, BYLINE: Some 10 million Americans are in what are called multiemployer pension plans. These are large plans that bring together employees from a lot of different companies and labor unions. U.S. officials say a number of factors, including the financial crisis, poor management and an aging workforce has left many of these plans in dire financial shape. And more than a million workers are in plans that could go under in a decade. And they say that could overwhelm the federal safety net that guarantees pension benefits. Randy DeFrehn is executive director of the National Coordinating Committee for Multiemployer Plans.

RANDY DEFREHN: None of us want to see any benefits reduced, but there's just no way for an industry to support some of these plans. They're just going to have to have some other tools at their disposal.

ZARROLI: On Tuesday, a bipartisan group of House lawmakers unveiled what they say is a solution to the problem. It would allow troubled plans to undergo a process that would reduce benefits for their members, even for some current retirees under the age of 80. The cuts would have to be approved by the plan's trustees, which typically include representatives of both companies and labor unions. Democratic Congressman George Miller of California helped draft the bill.

REPRESENTATIVE GEORGE MILLER: There's nothing here mandated. They would have to make a decision that they wanted to come together and try to design the best rescue plan they can so that their pension plan can survive for a longer period of time, and with a level of benefits that can be sustained.

ZARROLI: The sponsors of the bill concede that the cuts would erode the retirement income of some workers, but they say it will be much worse if the problems are ignored and plans go under. Still the opposition to the plan was fierce yesterday. While some labor unions have supported the bill, others, such as the Teamsters, rushed to denounce it. The AARP called the agreement a secret, last-minute deal between a group of companies, unions and Washington politicians to cut benefits that have been promised to workers. Karen Friedman of the Pension Rights Center echoed those views.

KAREN FRIEDMAN: This bill was written in the dead of night, behind closed doors, without public discourse, without public hearings to a must-pass, end-year bill.

ZARROLI: Friedman warned that the deal would undermine one of the fundamental tenants of federal pension law.

FRIEDMAN: What Congress is attempting to do would reverse protections for retirees that have been in place for 40 years, and that is pretty outrageous.

ZARROLI: Friedman says that the financial plight of some large pension plans is being exaggerated, and she says there's time to come up with a better solution for even the weakest plans. But Congress has attached the legislation to the omnibus spending bill that's about to be voted on. And that means opponents don't have much time to try to defeat it. Jim Zarroli, NPR News. Transcript provided by NPR, Copyright NPR.