HR-397-116
Read the second time. Placed on Senate Legislative Calendar under General Orders. Calendar No. 390.
Sponsored by Richard Neal (D-MA)
What it does
This bill would create a new federal agency — the Pension Rehabilitation Administration — inside the Treasury Department, along with a dedicated trust fund, to make loans to financially troubled multiemployer defined benefit pension plans. Plans that are in "critical and declining" status, severely underfunded, or already insolvent would be eligible to borrow. If a plan would still face insolvency within 30 years even after receiving a loan, it could also apply to the Pension Benefit Guaranty Corporation (PBGC) for an outright financial assistance grant. The bill would fund the program by transferring money from the federal general fund, including proceeds from government-issued bonds.
Who benefits
Current and retired workers — primarily in industries such as trucking, construction, mining, and retail — who participate in multiemployer defined benefit pension plans that are at risk of insolvency or benefit cuts. Retirees who have already had benefits suspended under prior law would potentially see those benefits restored. The PBGC itself would benefit from reduced pressure on its own multiemployer insurance program, which is separately at risk of insolvency. Employers who participate in these plans would benefit from reduced liability exposure.
Who is hurt
Federal taxpayers broadly, as the program would be funded through the general fund and bond issuance, adding to federal debt obligations. Employers and workers in financially healthy pension plans who do not receive assistance may view the program as an unequal subsidy to competitors. Bondholders and investors could face indirect effects if large-scale federal borrowing affects interest rates. Future generations of taxpayers would bear the cost of repaying bonds issued to fund the program if loans are not repaid.
Supporters argue
Supporters argue that millions of workers and retirees earned these pension benefits over decades of labor and made financial decisions — including accepting lower wages — based on the promise that those benefits would be paid. They contend that allowing these plans to collapse would devastate retirees who have no other means of recovery, overwhelm the PBGC's already-strained multiemployer insurance fund, and ultimately cost taxpayers more when the PBGC itself requires a federal bailout. Proponents also argue that the loan structure — rather than outright grants — means the federal government would be repaid over time, limiting the long-term fiscal impact. They further note that the economic ripple effects of mass pension failures, including reduced consumer spending in affected communities, justify federal intervention as a matter of economic stability.
Opponents argue
Opponents argue that using general fund revenues and federal bond proceeds to rescue privately negotiated pension plans sets a dangerous precedent by shifting the cost of failed private agreements onto all taxpayers, including those with no connection to these plans. They contend that plan sponsors — the employers and unions that negotiated these arrangements — bear primary responsibility for underfunding, and that a federal rescue removes the financial accountability that should discourage future mismanagement. Critics also raise concerns that the loan terms may be too favorable to constitute genuine repayment, making the program a de facto grant. They further argue that the creation of a new federal agency with authority to deploy funds without further congressional appropriation raises separation-of-powers concerns and bypasses normal legislative oversight of federal spending.
Constitutional context
The bill's primary constitutional footing is the Commerce Clause (Art. I, §8, cl. 3), as multiemployer pension plans operate across state lines and are already regulated under federal law (ERISA). The Necessary and Proper Clause (Art. I, §8, cl. 18) supports Congress's authority to create the Pension Rehabilitation Administration and its trust fund. The bill's provision allowing the new agency to spend funds "without further appropriation" raises potential Appropriations Clause (Art. I, §9, cl. 7) questions about congressional control over the public fisc. Post-Loper Bright (2024), courts would independently review the new agency's interpretations of its own authorizing statute rather than deferring to the agency. The major questions doctrine (West Virginia v. EPA, 2022) could be invoked if the agency's loan or assistance decisions are seen as having vast economic significance beyond what Congress clearly authorized.
Checks and balances
The bill would shift spending authority toward the Executive Branch by creating a new agency — the Pension Rehabilitation Administration — with the power to deploy federal funds without a subsequent appropriation vote by Congress. This reduces Congress's typical annual appropriations leverage over the program. The PBGC, an existing executive-branch entity, would also receive expanded authority and mandatory appropriations. Congress retains authority through the bill's initial statutory framework, but ongoing program decisions would rest with Treasury and the new Administration.
Historical precedent
The Pension Protection Act of 2006 established the "critical and declining" status framework for troubled multiemployer plans. The Multiemployer Pension Reform Act of 2014 (MPRA) allowed benefit suspensions for the most distressed plans. The PBGC's existing multiemployer insurance program, created under ERISA (1974), is the closest structural precedent for federal backstopping of private pension obligations.