January 10, 2019
Multi-employer Pensions Handout
On November 30, 2018, the Joint Select Committee on the Solvency of Multi-employer plans adjourned without issuing any recommendations. The bicameral and bipartisan committee mission was to improve the solvency of multi-employer pension plans.
Multi-employer pension plans are collectively bargained plans maintained by more than one employer, usually within the same or related industries – such as construction, retail, manufacturing, transportation, mining – and a labor union.
Several multi-employer pension plans are on the brink of insolvency, primarily Central States, a Teamster plan. If the plan is declared insolvent, the plan will be taken over by the Pension Benefit Guaranty Corporation (PBGC), and approximately one million pensioners will lose 50% to 75% of their benefits.
If Central States and other at-risk plans fail, the PBGC’s own multi-employer pension trust fund will collapse and put the pensions of over 10 million families at risk.
Addressing the Problem
The Butch-Lewis Act, sponsored by Senator Sherrod Brown (D-OH), would provide low interest. 30-year loans to troubled plans in critical and declining status. The Congressional Budget Office estimates the loan program would cost $32 billion over 10 years, far less than the $101 billion it would cost retirees and taxpayers if the PBGC were to fail. Providing assistance or a loan guarantee to troubled entities is not unprecedented. Congress has taken action and provided many industries with financial support in the past. For example, as a result of the housing crisis in 2008, Congress provided $280 billion for Citigroup, $180 billion for AIG, $142 billion for Bank of America and $293 billion for the Savings and Loan industry in 1989.
The Alliance for Retired Americans urges Congress to enact the Butch Lewis Act or some other loan guarantee legislation that protects retirees’ hard-earned benefits and ensures the solvency of the PBGC’s multi-employer pension trust fund.