On May 17, 2018, the Joint Select Committee on Solvency of Multi Employer Pension Plans conducted a hearing entitled,”The Structure and Financial Outlook of the Pension Benefit Guaranty Corporation”. At this Hearing, Co-Chaired by Senator Orrin Hatch (R-UT) and Senator Sherrod Brown (D-OH), the Director of the Pension Benefit Guaranty Corporation Thomas Reeder gave testimony related to the status of the PBGC and the condition of this insurance program, particularly the Multi Employer side. The testimony was alarming to those that were in attendance, but for some, it was information already known and for those members of the Committee that knew, they looked towards Director Reeder for his insight for solutions to be brought forth during his presentation.
Director Reeder commented on the number of Multi Employer Funds that were critical and declining, where an approximate number of 128 collectively bargained pensions shall be insolvent within the next two decades. During the hearing, Director Reeder stated, “Nothing will help them (Multi Employer Pension Funds that are critical and declining) but for an infusion of cash”.
During the hearing, it was mentioned about two Multi Employer Pension Funds that will have a direct negative impact on the PBGC, which is the Multi Employer insurance program is projected to run out of reserve assets by 2025. The two Pension Funds to become insolvent in the near future are the United Mine Workers of America at 107,000 participants in 2022 and Central States Pension Fund at 400,000 participants in 2025.
The Pension Crisis is not new news to Pensioners that have been associated with Multi Employer Pension Plans that are in critical and declining status. In 2010, the Casey-Pomeroy Bill was structured to bring a form of stability to the PBGC and Multi Employer Pension Plans, but that was never to gain traction for the long haul as the progress failed to gather support for even a compromise concept by those in control of the House, Senate and the White House .
Here we are today, with the Butch Lewis Act of 2017, developed by many including, under the Leadership of International Brotherhood of Teamsters James P. Hoffa and his Staff, then provided to Senator Sherrod Brown (D-OH) was created to have new Treasury Securities that would be sold to the institutional investors. The proceeds would be placed forward as low interest 30 year loans to the critical and declining plans. This Bill was vetted by the actuaries hired by Central States Pension Fund and was found to be a Bill that worked and was viable to create the path to solvency for Central States Pension Fund without creating a hardship through any reduction to one participant of the Plan. The Butch Lewis Act of 2017 never made it to the dance off in Washington DC, although it got a spin on the floor with limited bipartisan support. The creation of the Joint Select Committee on Solvency of Multi Employer Pension Plans was created as the next dance step on the floor, and now, the waltz is on.
Donald Trump has a plan, a plan that goes along with his administrations Anti Worker and Anti Union Agenda. A proposal placed out there during a think tank session is raising 16 Billion dollars in new premium revenue for PBGC by using a variable rate premium. This proposal only resolves the PBGC short fall for about two decades, placing an almost 6 times increase on premium obligations. It would appear, by such a proposal, that Plans in the critical and declining status would accelerate their path to insolvency due to the additional burden of the new premium obligation.
The Joint Select Committee on Solvency of Multi Employer Pension Plans has a lot of work to do in a very short period from now until December 2018. This bipartisan committee is tasked with a solution to bring forth in November of 2018 for consideration and a vote in December 2018. One method for the Joint Select Committee to understand your personal story on how the insolvency of your Multi Employer Pension Fund will affect you, your family, your community, is to share your story through an email at JSCSMPP@finance.senate.gov today.