Opposing the Grow Act's Inclusion in the Heroes Act

Floor Speech

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Ms. KAPTUR. Madam Speaker, I am very pleased the House took important action to support the pensions of millions of Americans in the HEROES Act. Action to secure the retirement benefits of workers and retirees in troubled multiemployer plans and the long-term solvency of the Pension Benefit Guaranty Corporation (PBGC) remains a top priority of mine. Despite this positive effort, I am troubled by inclusion of provisions that impact healthy multiemployer pension plans. The inclusion of the GROW Act, which possesses significant conflicting support and opposition on important, must pass legislation is deeply troubling. The GROW Act will hurt workers, retirees, employers and the PBGC, and should not become law.

Composite plan legislation would create two plans--an existing plan and a new ``composite'' plan--out of a single, finite pool of assets. This places added burden on the ability to fund each adequately, increasing the odds of failure. Existing plans could refinance their obligations over 25 years--more than 10 years longer than current law allows. This reduces available funds for benefits under existing plans, making them vulnerable to funding shortfalls--and thus at risk for draconian benefit cuts in times of market volatility. For example, if Congress had already passed the GROW Act and it was law during the market volatility COVID inflicted on the stock market, the benefits composite plan participants expected to earn would be cut 70 percent, and the vested benefits they already earned would be cut 25 percent. At the same time, the vested benefits of participants in the existing plan would be cut 21 percent.

In addition to using accounting gimmicks to weaken existing multiemployer pension plans and place Americans' retirement security at risk, composite plans would also make it easier for employers to withdraw from existing multiemployer pension plans altogether, without paying their fair share of obligations to participants. Under current law, employers withdrawing from a pension plan must pay a ``withdrawal liability'' based on their contribution to the plan. Provisions of the GROW act would eliminate withdrawal liability for composite plans, and it would dramatically reduce the cost of withdrawing from an existing plan.

Moreover, composite plans would not be insured by the PBGC and would be exempt from paying PBGC premiums. This erodes the PBGC premium base significantly. When combined with plan failures that composite plans would accelerate, the PBGC will face new liabilities that will drive it to a new solvency crisis. Because of the grievous harm the GROW Act imposes on workers, retirees, the PBGC, and the entire multiemployer plan system, I strongly oppose its inclusion in the HEROES Act.

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