All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.
– Adam Smith, The Wealth of Nations
Our decision on the Central States application means that approximately 270,000 Central States participants will not face reductions to their pension benefits this July. While we expect that this will come as a relief to these participants, our decision does not resolve the issues threatening their pension benefits. The Central States plan, like a number of other multiemployer plans, remains severely underfunded and is projected to become insolvent within the next 10 years. Moreover, absent congressional action, by the time the Central States plan becomes insolvent, the Pension Benefit Guaranty Corporation (PBGC) multiemployer insurance fund- which insures part of those benefits- may itself already be insolvent.
Importantly, Central States may choose to reapply and propose even larger cuts in order to meet the requirements of Kline-Miller.
We urge Congress to consider carefully the issues that have emerged, even as we continue to carry out our assigned responsibilities to implement Kline-Miller. Finding a balanced solution will require painful choices, but we must work together to preserve the promise of retirement security that these workers have bargained for and earned. We stand ready to work together and look forward to engaging further on this important issue.
If the idea is to protect the benefits of participants in multemployer plans then the obvious solution is to raise the limit on the amount of benefits that PBGC covers and have the Central States Pension Fund (CSPF) taken over by the PBGC. This would “preserve the promise of retirement security that these workers have bargained for and earned” but leave nothing for others, specifically:
- PBGC (and other pension sponsors paying premiums and eventually taxpayers that would have to prop it up),
- those currently running (and being paid out of) the CSPF, and
- Congress which will need to start paying for past promises rather than future favors.