The American Rescue Plan Act of 2021 (COVID Relief)

On March 6 the U.S. Senate approved multiemployer pension plan relief as part of the American Rescue Plan Act of 2021 (ARPA 2021). U.S. House is set to vote on the legislation on March 10, and it will likely be signed into law by President Biden shortly thereafter.

The bill contains multiemployer pension plan provisions of interest to union construction contractors.

  1. For failing plans, the legislation includes significant multiemployer pension relief through a Special Financial Assistance Program by providing a one-time lump sum payment to eligible plans to pay all benefits through 2051 (30 years) with no expectation of repayment.
    • This Special Financial Assistance Program concept differs greatly from previously debated relief programs like an expansion of partitioning or loan programs.
      • This new approach by Congress is meant to clear procedural rules to avoid a filibuster and improves the likelihood the relief is enacted into law.
    • Under the Special Financial Assistance Program plans using 2020 assumptions that are “Critical and Declining” plans, and some “critical” plans and a few “endangered” plans would receive a onetime lump sum payment that is equal to the amount needed to pay benefits through 2051 (30 years). There is no concept of repayment for this assistance.
    • The package would also include provisions similar to those in response to the 2008 stock market event:
      • 2-year zone freezes;
      • 5-year extension of funding improvement and rehabilitation plans;
      • investment loss smoothing; and,
      • man hour smoothing.
    • It is estimated there are about 100 “critical and declining” plans, some “critical” plans and a few “endangered” plans in the construction industry that could be eligible for some relief.
      • Teamsters Central States Pension Fund (among many other Critical and Declining Plans) is expected to among the multiemployer plans that will receive relief. 
  2. Starting in 2031 PBGC premiums would be increased to $52/year and indexed for inflation every year after for all plans and participants.
    • Premiums are currently scheduled to be about $43 in 2031 because of indexing.
  3. None of the harmful public policy changes, that have been proposed in various bills over the last several years, are included the ARPA 2021. For example – the following are NOT included in the ARPA 2021:
    • massive PBGC premium increases,
    • employer assessments,
    • participant benefit reductions,
    • increased withdrawal liability and
    • mandating lower assumption rates.
    • However, at the same time a long AGC advocated policy change, authorization of Composite Plan design, which incorporates the best features of DB and DC plans by offering voluntary options to share risks, funding stability, lifetime income to participants, and limiting employer obligations to negotiated contributions only, without cost to the taxpayer was not included.
      • AGC will make authorization of new plan design a priority and will ensure the implementation of the American Rescue Plan Act considers the impact on construction employers.
  4. Some other policy changes of note in the American Rescue Plan Act:
    • New, 100% temporary subsidy of COBRA health benefits for unemployed workers through September 30, 2021.
    • Voluntary tax credits under FFCRA for paid sick time and paid family leave credits through September 30, 2021. (there is no federal paid leave mandate)
    • Extends the Employee Retention Tax Credit (ERTC) through December 31, 2021. Previously it was available through June 31, 2021.
    • Extends federal pandemic unemployment benefits at $300 per week through September 6, 2021 along with tax treatment advantages. (a late change)
    • Unfortunately, none of the $350 billion for state and local governments are dedicated to capital construction investment projects.

The actual legislative text for the pension language can be found beginning on page 477, COBRA on page 315 and the voluntary paid leave tax credits on page 407.

The situation has been very fluid over the last several weeks and AGC will be providing more information and resources soon.

More details on the pension provisions can be found in this Fact Sheet.

AGC Multiemployer Pension Fund Update

Source: James Young, senior director, Congressional Relations, HR, Labor and Safety, Associated General Contractors of America

As you may have seen, Congress is working on the next round of Covid relief and it includes a new round of multiemployer pension relief. The bill would create a Special Financial Assistance Program for struggling multiemployer pension plans. This concept differs greatly from previously debated relief programs like an expansion of partitioning or loan programs. This new approach by Congress is meant to clear procedural rules to avoid a filibuster and improves the likelihood the relief is enacted into law. Under the Special Financial Assistance Program plans using 2020 assumptions that are Critical and Declining plans, some critical plans and a few endangered plans would receive a onetime lump sum payment that is equal to the amount needed to pay benefits through 2051 (30 years). There is no concept of repayment for this assistance. The package would also include provisions similar to those in response to the 2008 market event: 2-year zone freezes; 5-year extension of funding improvement and rehabilitation plans; investment loss smoothing; and, man hour smoothing.

Starting in 2031 PBGC premiums would be increased to $52/year and indexed for all plans and participants. Premiums are currently scheduled to be about $43 in 2031 because of indexing.

More details on the pension provisions can be found on a Fact Sheet.

Unfortunately, the budgetary rules being used to advance the legislation means that there will be no authorization of Composite Plans or additional plan design tools. AGC will continue to look for opportunities to advance other reforms and the Composite Plan design.

For health plans, the legislation will provide 85% COBRA subsidies for 6 months. This is similar to 2008 response when subsidies were 65%.

Also, there is no paid leave mandate but the voluntary tax credits under FFCRA for paid sick time and paid family leave credits are extended from March 31, 2021 through September 30, 2021. And a provision extends the Employee Retention Tax Credit (ERTC) through December 31, 2021. Previously it was available through June 31, 2021.

At this time, it is possible much of these provisions will become law by the end of March. Of course, that can change rapidly and it’s a very fluid situation. We will continue to update the committee on developments and our strategy to enact additional reforms and new plan design in the future.

Multiemployer Pension Update

Source: James Young, Senior Director, Congressional Relations, HR, Labor and Safety, AGC of America

Among the flurry of week one Biden Administration executive actions and legislative maneuvering, House Democrats have released legislation to shore up the multiemployer pension system. The Emergency Pension Plan Relief Act of 2021 includes previously considered multiemployer pension reform elements that includes the concept of a special partition program for eligible “critical and declining” plans. While the proposal avoids draconian funding rule changes or premium increases that have been debated in recent years, the bill DOES NOT include authorization of Composite Plans.

The legislation, in its current form, is highly unlikely to become law unless the US Senate makes significant changes to their filibuster rules due to its estimated $52 billion cost to the US Treasury. However, elements of the funding relief could be considered alongside a future COVID relief package without Republican support. To further confuse everybody, two versions of the Emergency Pension Plan Relief Act of 2021 were introduced with the only difference being how long plans would be eligible for partition relief:

Emergency Pension Plan Relief Act of 2021, HR 423Emergency Pension Plan Relief Act of 2021, HR 409
Press ReleasePress Release
Fact SheetSummary
Section-by-SectionText
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AGC is pleased to see one of the first legislative proposals introduced in the new Congress addresses the multiemployer pension funding crisis and will continue to work with our labor partners and advocate for adoption of the Composite Plan design.

Drug Testing in the Time of COVID-19

A member posed the following question today, and it’s been echoed by several others, so we thought we’d share the guidance here.

QUESTION

Our testing site for drug testing in Indianapolis is currently closed until April 6, and we have new hires that need to be drug tested. What does ICI recommend we do? Being tested in a general clinic or urgent care facility doesn’t seem feasible with the number of patients they are seeing for the COVID-19 virus.

ANSWER

There are 2 options:

  1. Schedule a van to stop by your jobsite or office on or close to Day 1 for pre-employment urine testing. Call 765-482-2976 x 8103; or
  2. Use oral swabs.

Oral swabs offer an alternative to urine testing in a clinic. We provide 10-panel drug testing swabs in boxes/cartons of 20 or 25 swab kits at no charge to employers contributing to the ICISAT program through one or more of the Indiana Heavy and Highway agreements. We just need to know where and to whom to ship them. There are directions provided with each box of swabs, and George Sheraw (317) 634-7547 can run through the process with you, if it would be helpful.

The swabs can be used on-site and in about 10 minutes will tell the employer if the individual is negative or “non-negative.” “Non-negative” is a carefully chosen word that means while the swab appears to be positive, the final determination must be done with a 10-panel urine test at a clinic.

If one or more of your people get a “non-negative” result on their swab, then they must go to the local clinic to be urine tested to determine whether they are positive or not. The swabs pick up prescription medications, so it’s not uncommon for the swabs to look positive but in actuality end up being negative after a SAMHSA certified lab tests their urine.

One of the drawbacks to the swabs is they won’t change a employee’s card status, because they aren’t a urine test.

Craft Training Schedules

Our union partners are releasing their 2019-2020 training schedules, and we’ll update this post as we receive them.

Carpenters Newburg & Paducah 2020 Enhancement Schedule

Carpenters Merrillville 2020 Upgrade Schedule

Carpenters Lafayette 2020 Upgrade Schedule

Indiana Laborers 2019-2020 Winter Training Schedule

Operators 103 2019-2020 Apprenticeship Training Schedule

Operators 150 2019-2020 Training Catalog

Operators 181 2019-2020 Training Schedule

Operators 841 2019-2020 Training Schedule

Multiemployer Projections Show Need for Program Changes

Absent changes in law, the financial condition of PBGC’s Multiemployer Insurance Program will continue to worsen over the next 10 years. About 125 multiemployer plans covering 1.4 million people are expected to run out of money over the next 20 years. More and larger claims on the Multiemployer Program over the next few years will deplete program assets and lead to the program’s insolvency by the end of FY 2025.

Projections for FY 2028 show a wide range of potential outcomes, with an average projected negative net position of about $90 billion in future dollars ($66 billion in today’s dollars).

If the Multiemployer Program were to run out of money, current law would require PBGC to decrease guarantees to the amount that can be paid from Multiemployer Program premium income. This would result in reducing guarantees to a fraction of current values. PBGC’s guarantee is the amount of retirement benefits that PBGC insures for each participant, which is capped by law.

The President’s FY 2020 Budget contains a proposal to shore up PBGC’s Multiemployer Program. The budget proposes to create a new variable rate premium and an exit premium for the Multiemployer Program. It would raise an additional $18 billion in premium revenue over the 10-year budget window. The proposal includes a provision allowing for a waiver of the additional premium if needed to avoid increasing the insolvency risk of the most troubled plans.

AGC of America is working to make Congress aware of this problem and proposing solutions.

Contact ICI’s Director of Labor Relations George Sheraw (317) 634-7547 with questions about PBGC’s Multiemployer Program.