Proposed Multiemployer Composite Plans: Background and Analysis
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Topoleski, John J.
[Excerpt] On September 9, 2016, Representative John Kline, chairman of the House Committee on Education and the Workforce in the 114th Congress, issued a discussion draft of a bill that would authorize a new multiemployer pension plan called a composite plan. A compositeplan would contain features of two types of existing pension plans: (1) defined benefit (DB), in which participants receive regular monthly benefit payments in retirement (which some refer to as a “traditional” pension), and (2) defined contribution (DC) plans (of which the 401(k) plan is the most common), in which participants have individual accounts that are the basis of income in retirement. Since composite plans would be neither DB nor DC plans, authorizing legislation is necessary to implement the proposal. This report provides background on multiemployer pension plans; summarizes the discussion draft authorizing composite plans and explains the main features of these proposed plans; and explores various policy discussions surrounding composite plans, including their potential benefits and drawbacks for employers and employees, their possible implications for the Pension Benefit Guaranty Corporation (PBGC), and their potential effects on the broader retirement system.
multiemployer pension plans; defined benefit plans; defined contribution plans