1980 Multiemployer Pension Amendments:

Overview of Effects and Issues

HRD-86-4: Published: Feb 13, 1986. Publicly Released: Feb 13, 1986.

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In response to a congressional request, GAO reported on: (1) changes in the Pension Plan Insurance Program's financial condition since the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA) was enacted; (2) the act's initial effects on the program, plan participants, and contributing employers; and (3) possible effects of the act over the long term.

GAO found that, at the time MPPAA was enacted in 1980, the insurance program had an $8.5 million deficit, but 4 years later, it had a $17.2 million surplus. During the same period, the program's cash reserve increased from three times annual disbursements to seven times. Both improvements came about because the increased premium rate generated more than enough revenue to pay program liabilities, while average disbursements remained relatively constant before and after the act went into effect. GAO found that MPPAA provisions provided protection to the program without significantly increasing costs to most employers, because: (1) plan funding provisions, for most plans, required higher employer contributions than before; (2) withdrawal liability provisions, as of mid-fiscal-year 1983, resulted in about $260 million being potentially collectable from employers who withdrew from the 149 plans; and (3) a special provision eliminated withdrawal liability for about 68 percent of the 3,853 employers withdrawing from sample plans with unfunded benefits and reduced liability for another 12 percent. GAO believes that: (1) the program remains exposed to billions of dollars in potential losses from unfunded plan benefits; (2) MPPAA provisions may be inadequate to protect the program because collections of withdrawal liabilities from bankrupt employers may be limited; (3) the act's withdrawal liability provisions may cause new employers not to join the plans; and (4) participants' benefits may be significantly affected by employers acting to slow or stop benefits improvements.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: Section 413 of P.L. 96-364, the Multiemployer Pension Plan Amendments Act of 1980, states that, subsequent to June 30, 1985, hearings shall be held on such GAO recommendations by the authorizing committees. As of June 21, 1988, no action had been taken on this recommendation and no hearings have been scheduled.

    Matter: Congress should consider requiring the collection and analysis of data needed to assess issues affecting the multiemployer pension plan system. Congress could use such data in formulating and implementing policy changes.


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