“Every pay period, hard-working Americans choose to defer their hard-earned wages in order to earn pension benefits for their retirement. That pension gives them a piece of mind that their future, and their family’s future, will be funded, taken care of, and without worry,” Senator Manchin said. “However, companies that file for bankruptcy are frequently relieved of their obligation to give pensions back to their workers and are able to use the money that should have funded those workers’ hard-earned retirement benefits for other bankruptcy costs. Retired employees are left high and dry with no other way to pay for their bills through no fault of their own. This is not just or right and it’s not the American way. I am proud to introduce this legislation that will make sure companies that file for bankruptcy keep their promises to their workers first.”
When employer sponsors of pension plans fail to make required contributions to these pensions and go bankrupt, current law provides a priority claim for unpaid pension contributions. However, these priority claims are only necessary for contributions due within 180 days before a bankruptcy filing, and up to $10,000 per worker. These claims must also compete with other priority claims for payment in the event of an employer bankruptcy.
A large portion of American workers feel the impact of cut pension benefits. According to the Pension Benefit Guarantee Corporation’s 2016 Annual Report and 2015 Multiemployer Guarantee Study, over 146,000 workers experienced cuts in their pension benefits as a result of employer bankruptcies in 2016 alone.
“By introducing POWA, we are ensuring workers, the backbone of our nation’s economy, that they will receive their hard earned pensions,” Senator Manchin said. “Companies enter bankruptcy for a number of reasons, but the decisions that lead to this unfortunate outcome are made by management, not workers. Yet, far too often, workers bear the brunt of the bankruptcy pain by sacrificing their hard-earned pension benefits. This bill remedies the problem, and gives assurance to our laborers that they won’t be left to suffer in the event of a bankruptcy.”
“American bankruptcy laws are a travesty for working families, who are left with nothing when a company goes bankrupt while the big banks and corporate executives walk away with millions. It is long past time for Congress to take action to reform bankruptcy laws. Senator Manchin's bill takes a huge step toward leveling the playing field for workers, and we support it wholeheartedly,” said Cecil Roberts, International President of the United Mine Workers of America.
The POWA would change bankruptcy practices to benefit workers who paid toward a pension at a company filing for bankruptcy. This is accomplished by:
Its companion was introduced in the House of Representatives by Reps. Tim Ryan (D-OH) and Donald Norcross (D-NJ).
