Sponsored by Congressmen Phil Roe (R-Tenn.) and Donald Norcross (D-N.J.), House Resolution 4997 is "designed to modernize and strengthen the multiemployer pension system for the future," they said. "The bipartisan GROW Act will safeguard the multiemployer pension plan system by authorizing the creation of a new type of retirement option that combines the key features of defined benefit and defined contribution plans." Leaders in the building trades and those among union contractors and their associations are on board with the legislation.

The measure is intended to ease the financial strain on the nation's multiemployer benefit programs, of which building trades unions are a large component. (Although, most failing "red zone" pension plans are in the transportation, services and manufacturing industries).

According to Benefits Pro, more than 1,400 multiemployer pension plans insured by the PBGC have aggregate funding of about 50 percent - an abysmal level. All told, the multiemployer plans have a $553 billion hole of unfunded liabilities. And the PBGC's fund for backstopping failed pension plans is woefully inadequate, it's facing a $65 billion shortfall and is likely to go insolvent by 2023.

If the legislation is adopted into law, participation in such a composite plan would be voluntary and up to individual union pension plan trustees. According to Pensions and Investments, under the legislation:

*Participants in existing multiemployer pension funds could join the new plans as part of their usual collective bargaining process, which would also require them to contribute to legacy plans that would be closed to further accruals.

*Fund assets would be professionally managed, and the composite component of plans would have to be 120 percent funded to protect against market volatility.

*Employers would negotiate a fixed contribution amount and be responsible only for their share, as opposed to unfunded liabilities that many multiemployer plans face.

"Said Congressman Norcross. “I’m an electrician by trade (Folsom, N.J., IBEW Local 351) who participated in the multiemployer pension system for 37 years, as both a rank-and-file worker and a negotiator. The GROW Act offers another tool in the toolbox for workers to grow their retirement savings and employers to grow their businesses.”

In 2014, Congress had given multiemployer funds tools to try to defuse pension time bombs, including the ability to cut benefits to retirees. The GROW Act would work beside those tools, and according to the legislation, workers would still receive lifetime income, and the benefits that workers earned under a traditional multiemployer plan would be protected even after they are shifted into a “composite” plan. 

North America's Building Trades Unions, the umbrella group for international union crafts, applauded the plan, and urged its passage. "This bipartisan bill is designed to ensure both the retirement security of American workers and the financial health of the job creating employers of America by strengthening and modernizing the multiemployer pension plan system," NABTU said. "The GROW Act allows plans that are healthy today to make structural changes, so they can continue to provide retirement security for American workers and their families in the years to come.”

The Association of Union Constructors, a national trade association for more than 2,000 member companies and contractor associations, is also on board with the plan. "The GROW

Act is the right legislation at the right time," said TAUC CEO Steve Lindauer. "Composite plans are strong yet flexible, and provide local labor-management trustees a tool to ensure their plans can confront today's financial realities. These plans provide reliable, lifetime retirement security for plan participants through an annuitized life-time benefit, much like defined benefit pension plans. At the same time, they provide employers with the cost certainty typically associated with defined contribution plans."

The TAUC also said the GROW Act would also eliminate withdrawal liability for employers going forward. Such liability is a huge financial concern for construction contractors, as it amounts to a penalty that's imposed on contractors that stay in business but end their relationship with the multiemployer plan. That uncertainty is seen as a disincentive for new contractors to join multiemployer plans.

"This new Congressional proposal provides attractive new options for many firms that are looking to offer good retirement benefits without incurring the liability that comes with traditional defined benefit plans," said Associated General Contractors CEO Stephen Sandherr. "Congressmen Roe and Norcross appreciate that without substantial reforms like the kinds outlined in their proposal, new firms will remain very reluctant to participate in multi-employer retirement plans, putting a retirement model that currently benefits millions of workers at substantial long-term risk."

The Trump administration has not taken a position on the plan, but it may have legs in a Republican Congress that has little use for labor unions. The plan is revenue neutral for the federal government and does not ask for a taxpayer bailout, and few lawmakers have an appetite for letting pension plans fail, with the resulting benefit cuts making millions of retirees destitute.

John Tesija, a funds attorney for nearly a dozen multiemployer pension plans in Michigan, said the GROW plan is based on a Canadian model and some private sector plans. He said existing pension plans are based on a 1960s model of lower life expectancy and higher interest rates. But life expectancies have lengthened, and interest rates are lower, and combined with lengthy market downturns and stretches of reduced man-hours feeding pension plans, they have all teamed up to weigh down the bottom lines of pension funds.

The GROW plan model for multiemployer pensions, Tesija said, attempts to assure the stability of existing plans while offering a more sustainable rate of return on new composite plans, going forward. The existing model is based on returns of 6-7 percent and places a high burden on employers, while the new composite plan might seek a more sustainable rate that's perhaps half that percentage, while shifting some of the plan risk to workers. "The key is not to place these plans on autopilot forever," Tesija said. "The idea is to supplement the current setup with a plan that offers everybody more flexibility and less risk."