In a formal request, the National Electrical Contractors Association (NECA), Bethesda, Md., recently urged members of Congress to address specific changes included in the proposed economic stimulus package that would prevent multi-employer pension funds from being categorized as “at risk” or “severely underfunded.” According to NECA, such changes in a fund’s zone status – a plan’s rating based on its funding level – dramatically increase its administrative costs, while simultaneously driving down the pension’s employee benefits.

“Multi-employer pension funds are some of the most highly regulated in our country,” says Lake Coulson, NECA executive director, government affairs. “While many plans acted early to reach the mandatory funding levels, the unprecedented losses across all sectors of the economy means that some plans simply can’t get there fast enough.”

NECA supports emergency adjustments to the Pension Protection Act (PPA) for multi-employer pension plans, including:

  • A three year optional freeze on zone status that would avoid the triggering of contribution increases;
  • The requirement that actuarial valuation of assets be used for zone projection; and
  • A provision that would allow for the extension of correction periods from the current statutory limit of 10 years to 15 years.

Currently, one in four private sector employees with a pension fall under the multi-employer category, in industries ranging from construction and trucking to health care and retail services – a total of 10 million participants in all 50 states. The National Coordinating Committee for Multiemployer Plans, Washington, D.C., estimates that up to 30% of the 1,600 plans currently in operation are facing a funding deficiency by the end of the decade.

“Most plans have tapped into the resources currently available, but simply need more time and additional tools to prevent going into the ‘at risk’ zone,” Coulson says. “Requiring the use of actuarial values would temper the impact of market fluctuations, in times of growth or decline, which would prevent abrupt changes in zone status. And an extension of the correction period from 10 to 15 years would allow business owners to structure contributions and to provide benefits to their employees at a more accurate level in the long-term.”