The plan was projected to run out of money at some point this year, but the special financial assistance from PBGC should prevent this outcome.
Tag: multiemployer pension plans
For several decades, U.S. workers have been much less active in terms of union participation, and this has had a dramatic impact on not only wages and benefits within unions, but also on what is happening in the private sector.
With so many other challenges and debates dominating the halls of the Capitol, it is hard to imagine the union pension funding crisis will be addressed during this Congress.
A law passed in 2014 allows stressed union pensions to reduce benefits in order to prevent insolvency, subject to approval by the U.S. Treasury. One leading actuarial firms says the agency is preparing to wrongfully reject an application made by one of its clients.
He says that without several much-needed reforms, the Pension Benefit Guaranty Corporation could become insolvent in less than five years.
On its face, the multiemployer pension relief included in House Democrats’ fourth relief proposal resembles a plan floated last year by two influential Republican senators—though the devil is always in the political details.
The American Federation of Musicians and Employers' Pension Fund is just the latest union multiemployer pension to appeal to the Treasury Department for permission to cut benefits.
Unlike the approach favored by Democrats in the House of Representatives, which would establish a government-backed loan programs to assist troubled union pension, this approach would permit the partition of such plans and would require accounting reforms.
Democrats on the House Ways and Means Committee were adamant the bill is a positive first step that can and should be built upon in a bipartisan manner.
Representative Richard Neal has introduced a bill with bipartisan backers that would take several steps towards solving the union multiemployer pension funding crisis.
“The multiemployer insurance program deficit has narrowed, but it clearly won’t keep the program from running out of money,” says PBGC Director Tom Reeder.
Senate Democrats are highlighting the publication of the Congressional Budget Office’s scoring of proposed legislation known as the Butch Lewis Act, which seeks to “put union pension plans back on solid footing” via the launch of an emergency government loan program.
The plaintiffs intend to show that the government’s actions approving benefit cut reductions reflect a constitutional violation for several reasons.
Speaking to the Joint Select Committee on the Solvency of Multiemployer Pension Plans, one retired Teamster, whose wife is dying from pancreatic cancer, said he could easily end up losing his home and going bankrupt if his pension is cut by the 55% his plan’s trustees are seeking.
The case arose from Manhattan Ford’s withdrawal from the UAW Local 259 Pension Fund, and an arbitrator’s calculation of about $2.55 million in withdrawal liability for the employer.