“The long-overdue fundamental solution to multiemployer defined benefit pension plan problems is finally at hand,” Mechanical Contractors Association of America (MCAA) President William J. “Mac” Lynch declares, on assessing the multiemployer pension plan legislative reform proposals released by the Partnership for Multiemployer Retirement Security (PMRS), in “Solutions not Bailouts: A Comprehensive Plan from Business and Labor to Safeguard Multiemployer Retirement Security, Protect Taxpayers and Spur Economic Growth." This is a new report developed by the National Coordinating Committee for Multiemployer Plans’ Retirement Security Review Commission (RSRC).

Lynch is President and CEO of William F. Lynch Company, Worcester, MA, a mechanical and plumbing contractor with operations throughout New England, and a contributing employer to several multiemployer plans in the region.

According to the Quality Construction Alliance Coalition (QCA) — comprised of MCAA, SMACNA, ICE, FCA, and TAUC —the reform proposals were crafted by national experts from the business and labor groups that collectively sponsor this country’s more than 1,500 multiemployer plans that provide stable and reliable pension benefits to more than 10 million workers and their families. The proposals would allow plans to rebalance the disproportionate funding risks currently faced by contributing employers, and do so in ways that will make these plans more sustainable in the long term for the benefit of plan participants, sponsoring employers, and the tax-paying public.


“Over the years, a variety of policy assumptions, regulatory missteps and narrow court decisions have all combined to create a lopsided set of risks for employers that sponsor multiemployer pension plans in the construction industry,” MCAA’s Lynch says, adding “that long accretion of problems has finally come to a head with unprecedented stock market volatility, construction hour declines, and nagging workforce demographic negative trends over the recent years.”

Lynch says, “Finally, the RSRC marshaled the business and labor expertise required to create a proposal that will restore a sustainable balance for sponsoring employers in a way that will secure retirement benefits for workers and at the same time relieve the Pension Benefit Guaranty Corporation (PBGC) – and the taxpayers – of significant risks posed by cascading plan insolvency.”

“These proposals represent a balanced approach to one of the most critical issues facing my company, which contributes to several multiemployer plans on a multi-craft basis. The unbalanced and uncontrollable risks associated with pension funding under the current rules threaten business operations and deter long-term planning,” comments John McKenney, President and CEO of McKenney’s Inc., a mechanical contractor based in Atlanta, GA, and operating throughout the Southeast.

“There is no other aspect of our company operations that presents the same magnitude of vulnerability to unmanageable risk,” McKenney said.

There are three basic components to the PMRS proposals.
1. It would allow plans in severely distressed conditions – only a small minority of plans, but still ones that present big risks to the system overall – to take remedial measures that distribute the self-help remedies among contributing employers, active participants, and retirees and beneficiaries. This involves serious remedies, to be sure, but allows the plans the chance to recover and keep the PBGC insurance fund viable well into the future.
2. For plans that are facing less severe problems, the proposal allows the option for plans to anticipate funding problems earlier than current law allows and restore balance before more drastic options would be exercised.
3. And finally, for plans going forward, bargaining parties and trustees could chose more innovative approaches that would avoid the risks of extreme funding volatility with conservative plan designs that would be safer for participants and more sustainable for contributing employers.

“The options for plans to address funding problems and plan innovations allowed under the PMRS proposal would no doubt prove very effective for local area plans and bargaining parties to better address market challenges in the future,” says James J. Murphy Jr., a principal in Murphy Company, a mechanical contractor based in St. Louis MO, with operations in several cities nationwide. Mr. Murphy also chairs MCAA’s pension reform advisory task force. Murphy Company participates in dozens of local and national multiemployer funds nationwide.

“This new proposal will give trustees the tools and options they need to explore ways to place these valuable benefit systems on solid footing for the long term,” Murphy says, adding that, “the sustainability and security of these benefit systems are essential to our businesses, as well as the beneficiaries who rely on them, and the economies of the communities where the participants live.”

“The work product of the RSRC is the result of over a year-long deliberation of business, labor and plan technical experts who marshaled virtually hundreds of years of experience among them to weigh all the various options and ways to put these plans back onto solid ground for the indefinite future,” MCAA CEO John R. Gentille adds, stressing that “the RSRC is to be commended for their skill, acumen, perseverance and professionalism. It’s now up to our associations and local affiliates across the country to make sure our lawmakers, the business community and press give these reform proposal the fair hearing and balanced assessment they richly deserve to enact these sound proposals in due but rapid course,” Gentille says.

The Mechanical Contractors Association of America, Inc. (MCAA) serves the unique needs of approximately 2,500 firms involved in heating, air conditioning, refrigeration, plumbing, piping, and mechanical service.