Trumping PBGC

A couple of Senators sent a letter to President Donald Trump demanding an explanation of his sudden decision to replace Tom Reeder as Director of the Pension Benefit Guaranty Corporation (PBGC) that eschewed any introductory pleasantries.

They go on to claim that….

  1. Under Mr. Reeder’s leadership, the single-employer program has seen its deficit halved, from a $20.6 billion deficit at the end of fiscal year 2016 to $10.9 billion at the end of fiscal year 2017.  Mr. Reeder has indicated that continued improvement is projected and the program could be out of a deficit position by 2022.
  2. While the multiemployer program faces a $65 billion deficit and insolvency within the next decade, Mr. Reeder has repeatedly called on Congress to adopt bipartisan reforms and to raise the program’s premiums to delay insolvency.

What the senators may not be aware of:

  1. Skyrocketing premiums for single-employer plans may have caused a revenue rise but, based on my experience, those PBGC-covered plans paying draconian premiums are looking for ways out and they are finding them.
  2. The multiemployer system is crashing and premium hikes (along with Janus v. AFSCME) will only lock in bailouts as the only recourse.

The PBGC has indeed gotten into a crisis that may see it go the way of Fannie Mae and Freddie Mac even with, in theory, pension experts in charge. Can a Trump nepotism-hire do any worse?

3 responses to this post.

  1. Posted by Tough Love on May 29, 2018 at 11:50 am

    Hopefully there will be no taxpayer-funded “bailout” (including “loans” that will NEVER be paid back) of Multi-employer Plans where the pensions were SOLELY between the Unions and the employers.

    Taxpayers had ZERO to do with these deals and should NOT be bailing them out.

    Reply

    • Posted by PS Drone on May 29, 2018 at 1:03 pm

      Got to love government. In their infinite wisdom they decree that sponsors of private sector DB plans get to pay onerous insurance “premiums” to PBGC to prevent future Studebaker debacles. Heaven forbid that the added cost (and associated onerous reporting and funding requirements) sped the demise of many non-public DB pensions in favor of DC plans. Just like National Flood insurance. One more broke program that never should have been created in the first place.

      Reply

  2. Posted by Stanley on May 30, 2018 at 11:10 am

    How could Elaine Chao’s brother in law be worse than Reeder? This so-called employee benefits specialist did nothing to promote use of the Kline-Miller 2014 as a way to mitigate over promised pension payments and make do with very limited resources. Boo hoo if some retiree can’t afford diesel fuel for his motor home or if he has to cut back on green fees.

    Reply

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