Multiemployer Plan Funding

Certain multiemployer plans have been particularly hard hit as the current financial crisis exacerbates long-term funding problems resulting from shifting demographic trends and financial problems in certain industries. Because of the nature of multiemployer plans, when one employer goes bankrupt, the remaining employers in the plan become responsible for paying the accrued benefits of all the workers—this is often referred to as “the last man standing.” As the number of employer participants dwindles, employers remaining in the plan see their liabilities increase exponentially—forcing them to cover retirees that never worked for them. This system results in untenable contribution levels for the remaining employers, which can force them into insolvency as well. Without such reform, many employers—including a number of small, family-owned businesses—are in danger of bankruptcy.

The Financial Accounting Standards Board (FASB) issued two proposals that could substantially impact the business activity of employers that participate in multiemployer plans. The Chamber views the proposed disclosures as generally overly burdensome and potentially misleading. Therefore, we are concerned that they could have the unintended consequences of misleading investors and overly burdening employers and the plans. Therefore, the Chamber opposes both of these proposals and has urged FASB to reconsider these proposals as the negative impact on employers will substantially outweigh the minimal benefit gained from providing the additional information.

The Chamber will also do the following:

• Urge Congress to enact long-term funding reform for multiemployer plans.
• Monitor and engage with FASB as it evaluates and proposes changes to the accounting standards for measuring pension and other benefit costs, obligations, and assets.