September 9, 2016
On September 9, 2016, Representative John Kline, Chairman of the House Committee on Education and the Workforce, released a Discussion Draft of legislation creating a new type of multiemployer plan called a “Composite Plan.”
The Composite Plan is neither a defined benefit (DB) plan nor a defined contribution (DC) plan. Instead, it combines attributes of both DB and DC plans by providing the benefit structure of a DB plan but a funding structure similar to a DC plan. If enacted into law, this draft legislation would give the multiemployer community a new kind of retirement plan that is designed to provide participants with an annuity benefit but does not saddle contributing employers with the financial uncertainties of traditional multiemployer DB plans. For more information on the Composite Plan design, see our previous publication.
The basic features of this innovative plan design were first proposed in the Report of the NCCMP 2013 Retirement Security Review Commission called “Solutions not Bailouts.” Many of that Report’s recommendations were adopted in the Multiemployer Pension Reform Act of 2014 (MPRA), but its recommendations for the new plan design were not included. To remedy that omission, Chairman Kline developed this draft legislative language with input from NCCMP and employer and employee groups. He has put out this Discussion Draft to obtain a wider range of comments on, and generate support for, the design before introducing the actual legislation.
Segal will be issuing a publication with additional details soon.
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