Bill Overview
Title: SLAP Act
Description: This bill revises certain bankruptcy requirements, including by providing additional protections for employee pay and pensions in the event of a bankruptcy. Specifically, the bill revises the bankruptcy priority requirements of claims for wages and contributions to employee benefit plans, including by increasing the cap of these payments and by eliminating the time period limitation for which unpaid wages and contributions may be claimed; increases the bankruptcy priority of minimum funding contributions towards employee pension benefit plans and withdrawal liability and requires companies to continue making these payments during bankruptcy; expands restrictions on executive pay; places restrictions on the sale of property in bankruptcy proceedings, including by requiring reasonable payment; and extends look back periods regarding fraudulent transfers from two years to six years.
Sponsors: Sen. Manchin, Joe, III [D-WV]
Target Audience
Population: People participating in employment-based pension plans
Estimated Size: 142000000
- The bill affects individuals whose employers may go bankrupt and who are participants in employee pension benefit plans.
- Rules and protections apply to employee wages and benefit claims, which could include a significant number of workers.
- The legislation impacts executive pay, which suggests it also affects corporate governance and may indirectly affect investors.
Reasoning
- The SLAP Act aims to protect employee pensions and wages in case of bankruptcy, directly impacting workers in industries where corporate stability might be uncertain.
- Given the budget and scale, it may not cover all 142 million pension participants entirely but is likely focused on sectors with higher bankruptcy risk, like retail, manufacturing, or transportation.
- Executives and high-ranking officers are also affected by restrictions on their compensation, which could influence corporate decision-making towards more fiscally responsible policies.
- Interviews should include both people directly involved in pension plans at risk of instability and individuals who are indirectly impacted by changes in corporate governance and policies.
Simulated Interviews
Auto Factory Worker (Detroit, MI)
Age: 45 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 14/20
Statement of Opinion:
- I am concerned about what happens to my pension if my company faces financial difficulty.
- The SLAP Act seems to add some protection for what I've earned, which gives me a bit more security.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 4 |
| Year 10 | 6 | 3 |
| Year 20 | 5 | 3 |
Retired Nurse (Orlando, FL)
Age: 62 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 20.0 years
Commonness: 10/20
Statement of Opinion:
- I've always been worried about my pension being safe after I retire.
- Knowing that there are new protections in place makes me feel more secure.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 7 |
| Year 2 | 9 | 7 |
| Year 3 | 9 | 7 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 5 |
| Year 20 | 7 | 4 |
Junior Executive (Houston, TX)
Age: 39 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- Our company is stable, but if issues arise, protecting our pensions is critical.
- I'm also interested in how executive pay restrictions might encourage better financial practices.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 4 |
| Year 10 | 5 | 4 |
| Year 20 | 4 | 3 |
Software Engineer (San Francisco, CA)
Age: 55 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- Start-ups are risky. Knowing my compensation and pension are more secure against bankruptcy is a relief.
- I see the policy as a necessary safeguard.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 4 |
Restaurant Manager (Raleigh, NC)
Age: 30 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 15.0 years
Commonness: 5/20
Statement of Opinion:
- I'm concerned about our small-scale pension's stability.
- SLAP Act could help ensure the money I contribute isn't lost if things turn bad.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 4 |
| Year 10 | 6 | 4 |
| Year 20 | 5 | 3 |
Retail Worker (Charlotte, NC)
Age: 28 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 10.0 years
Commonness: 11/20
Statement of Opinion:
- The company's future feels uncertain sometimes.
- Knowing my wages and benefits have a backup plan is calming.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 5 | 4 |
| Year 3 | 5 | 4 |
| Year 5 | 5 | 3 |
| Year 10 | 4 | 3 |
| Year 20 | 3 | 2 |
University Professor (Pittsburgh, PA)
Age: 47 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 5.0 years
Commonness: 12/20
Statement of Opinion:
- I feel fairly secure in my pension as a university employee, but I recognize the importance of broader security measures.
- The policy's focus on restricting executive compensation during bankruptcy seems like a good move.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 7 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 5 |
Financial Analyst (Chicago, IL)
Age: 52 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 15.0 years
Commonness: 6/20
Statement of Opinion:
- We manage significant pension funds, and ensuring they're protected during bankruptcy is crucial.
- The extended look-back for fraudulent transfers is a wise decision to safeguard assets.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 4 |
| Year 20 | 6 | 3 |
School Administrator (Phoenix, AZ)
Age: 60 | Gender: female
Wellbeing Before Policy: 9
Duration of Impact: 5.0 years
Commonness: 13/20
Statement of Opinion:
- I feel very secure with my retirement benefits thanks to my employment sector, but I think these protections are necessary for others who aren't as lucky.
- It's always good to have more security.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 9 |
| Year 2 | 9 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 6 |
Small Business Owner (Denver, CO)
Age: 50 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 8.0 years
Commonness: 9/20
Statement of Opinion:
- Running a business is challenging, and the added pension protection helps both me and my employees feel more secure.
- It's a balancing act to maintain and protect our financial health.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 5 | 4 |
| Year 10 | 5 | 3 |
| Year 20 | 4 | 3 |
Cost Estimates
Year 1: $2500000000 (Low: $2000000000, High: $3000000000)
Year 2: $2600000000 (Low: $2100000000, High: $3100000000)
Year 3: $2700000000 (Low: $2200000000, High: $3200000000)
Year 5: $2900000000 (Low: $2400000000, High: $3400000000)
Year 10: $3200000000 (Low: $2600000000, High: $3700000000)
Year 100: $4000000000 (Low: $3200000000, High: $4800000000)
Key Considerations
- With approximately 142 million Americans participating in pension plans, protective changes have broad coverage.
- The shift in financial priorities during bankruptcy could incentivize more responsible financial planning by companies.
- Long-term pension stability might result in reduced future bankruptcy-related social costs.