House and Senate Democrats launched an ambitious idea Thursday to help struggling multiemployer pension funds, with legislation creating a federal loan program that would avoid the need for deep benefit cuts.

The bill would create a new office within the Treasury Department called the Pension Rehabilitation Administration to oversee the loan program, to be funded by the sale of Treasury-issued bonds to financial institutions. President Donald Trump would appoint the head of the new office.

The pension funds could borrow for 30 years at low interest rates. One restriction for borrowers is they could not make risky investments.

The bill would also fund a program at the Pension Benefit Guaranty Corp. to finance any remaining needs of pension plans borrowing from the new program. "Any money needed for the PBGC would be a tiny fraction of what it would otherwise be on the hook for if Congress fails to act," said an analysis by the office of Sen. Sherrod Brown, D-Ohio.

Co-sponsored by Mr. Brown and Rep. Richard Neal, D-Mass., the legislation is one of several ideas circulating on Capitol Hill to rescue struggling multiemployer plans, including a similar loan program proposal being developed by the United Parcel Service Inc. Chris Langan, vice president of finance for UPS, called the Brown-Neal legislation "the first step in working toward a solution that ultimately protects the solvency of the plans that provide pensions for millions of Americans."

Another bipartisan proposal introduced Oct. 3 by the House and Senate calls for creating an emergency loan program for the United Mine Workers of America 1974 Pension Plan, Washington, which as of June 30, 2016, had $4.1 billion in assets and $6.17 billion in liabilities, and more than 10 times as many retirees as active participants.

One of the most pressing issues is the projected insolvency of the $15.3 billion Teamsters Central States, Southeast & Southwest Areas Pension Fund, Rosemont, Ill., in less than 10 years, which would also hasten the projected insolvency of the PBGC's multiemployer program. Central States' application to reduce benefits to avoid insolvency through the Kline-Miller Multiemployer Pension Reform Act of 2014 was rejected by the Treasury Department in May 2016.

In a Nov. 13 letter to Mssrs. Brown and Neal, Central States Executive Director Thomas Nyhan said an actuarial analysis of the proposed loan program legislation would not be sufficient to keep the plan from insolvency, but the loan in combination with PBGC assistance would, if the legislation is passed and the funds are available by July 2018.

Several Democratic leaders in the House and Senate joined the co-sponsors and scores of retirees to announce the proposal, which they estimated could help as many as 200 pension funds. House Democratic Leader Nancy Pelosi, D-Calif., said her two-word instruction to Mr. Neal for preparing the bill was, "no cuts." Ms. Pelosi said Demcrats believe there are enough Republicans in Congress to get the bill passed.