Struggling multiemployer plans see help ahead at expense of healthy funds

That is the headline the people at Pensions & Investments decided upon after reviewing a draft proposal that came out of the Joint Select Committee on Solvency of Multiemployer Pension Plans (Bailout Committee). There would no federal loan program. Instead there would be:

  1. an increase in the PBGC minimum guarantee level to $70 per month per year of service, and at least $3,000 per year;
  2. benefit cuts already authorized by the Treasury Department under the MPRA undone;
  3. plans within five years of insolvency cut to the minimum benefit level and then be terminated;
  4. a 30-year promise of $3 billion in federal funding per year to allow the PBGC to do more partitioning;
  5. a new variable rate premium for plan sponsors;
  6. a new “stakeholder” premium to be paid by retirees in struggling plans;
  7. a new exit premium for employers; and
  8. healthy plans being required to use a more conservative discount rate when measuring liabilities.

The article continues with some scare numbers:

But the agency continues to brace for what PBGC Director W. Thomas Reeder Jr. said will be “a wave of insolvencies” beginning in 2020.

According to actuarial firm Cheiron Inc., the number of multiemployer pension plans declaring themselves likely to be insolvent within 20 years is now 121, with a collective $48.9 billion in underfunding, up from 114 plans in 2017. Cheiron found that three plans account for 65% of the total unfunded liability: the $16.1 billion Teamsters Central States, Southeast and Southwest Areas Pension Plan, Rosemont, Ill., with $22.9 billion in unfunded liabilities; the $4.4 billion Bakery and Confectionery Union and Industry International Pension Fund, Kensington, Md., with $3.85 billion in unfunded liabilities; and the $2.9 billion New England Teamsters and Trucking Industry Pension Fund, Burlington, Mass., with $5.1 billion in underfunding.

And why no direct bailout…

While many multiemployer pension advocates held out hope that a federal loan program would be part of the equation, concerns over the chances of helping enough troubled plans and not doing enough to shore up the PBGC, mixed with perceptions of it as a government bailout, had dimmed its prospects.

 

28 responses to this post.

  1. Posted by Tough Love on November 24, 2018 at 12:35 am

    Quoting …………….

    “And why no direct bailout…… While many multiemployer pension advocates held out hope that a federal loan program would be part of the equation, concerns over the chances of helping enough troubled plans and not doing enough to shore up the PBGC, mixed with perceptions of it as a government bailout, had dimmed its prospects.”

    Oh …………. so that “LOAN” program wasn’t really a “BAILOUT”, it was just that they concerned that the Public’s PERCEPTION of it would be such ????

    Perhaps their REAL concern is that the PUBLIC isn’t so STUPID ………. to not realize that is was indeed a BAILOUT (disguised as a LOAN).

    Reply

    • Posted by Stanley on November 24, 2018 at 8:28 am

      Oh yeah, it’s just a small loan to tide them over until they can get back on their feet. That’s a good one! Just like the one that they worked for less money so they could fund their future pension benefits. Or, that the economy is dependent on their spending and will tip over if it isn’t sustained. Jesse James did a lot of good spreading the wealth and keeping aggregate spending up.

      Next Friday is the big day. I can’t see the Republicans on the joint committee approving of anything extravagant and it will be interesting to see if the democrats can agree to something very modest such as support for the MEP PBGC.

      Reply

      • Posted by Tough Love on November 24, 2018 at 10:23 am

        As long as CURRENT MEP PBGC rules aren’t made more generous than they are right now (especially the age-based maximum payouts), I can live with such Gov’t support.

        Reply

        • Posted by Anonymous on November 24, 2018 at 7:22 pm

          Same here. Bailing out the MEP PBGC is extremely generous IMO. I believe that I just read 26% of retirees 65 or over are living in families dependent on social security or largely dependent on social security for their income.

          Reply

        • Posted by Anonymous on November 25, 2018 at 7:29 am

          https://www.mauldineconomics.com/frontlinethoughts/archive

          Double Debt Problem by John Mauldin

          “If we learned anything from 2008, it is this: Congress will open the national wallet in a crisis, even if it means creating new guarantees out of thin air. They did it with TARP, the Troubled Asset Relief Program. No such program was anywhere on the radar until the big banks wobbled. If, say, some large state pension plans can’t meet their obligations, will Congress face similar pressure to fund the gap? You bet it will, and I have little doubt what will happen.”

          Mauldin is probably correct, but the big dollar pensioners shouldn’t think that they are home free. Who knows when the final straw tips over the fiat money cart?

          Reply

          • “If, say, some large state pension plans can’t meet their obligations, will Congress face similar pressure to fund the gap? You bet it will, and I have little doubt what will happen.”
            That will NEVER happen, ever. Why would any healthy, fiscally sound, intelligently run state BAIL OUT the goofy, wacky idiot states? And why would the President sign such a bill, IF (a HUGE if) such a bill ever made out out of both houses (not happening)???

          • Posted by stanley on November 26, 2018 at 5:30 am

            “Why would any healthy, fiscally sound, intelligently run state BAIL OUT the goofy, wacky idiot states? And why would the President sign such a bill, IF (a HUGE if) such a bill ever made out out of both houses (not happening)???”

            I would like to agree with that, but there are very few fiscally sound, intelligently run states although there are some that are comparatively better. Being better than IL doesn’t make a state good. And, when the walls are tumbling down it’s hard to predict what can be put over on corrupt congressmen. Look at the state of federal finances. They have been locked on the road to ruin for generations and when push comes to shove they haven’t met a bailout program that they could resist. How could anyone argue that a return to sanity and reason is within the possible? I wouldn’t want the federal government to bail out any pension plans but I would be more surprised than not if they let them fail.

          • Posted by Tough Love on November 26, 2018 at 10:04 am

            Quoting Stanley …………..

            “I wouldn’t want the federal government to bail out any pension plans but I would be more surprised than not if they let them fail.”

            THAT is what scares me.

    • Posted by COMMONSENSE on November 27, 2018 at 10:17 am

      If pensions are cut, the social safety net will be accessed via foodstamps, subsidized senior housing, Medicare premiums would not apply, as Medicaid would now insure retirees. How are yhese programs funded… You now get the picture…!

      Reply

      • Posted by Tough Love on November 28, 2018 at 1:37 am

        THAT is exactly the way financial hardship SHOULD be addressed ……… NOT via a “special” deal crafted JUST for MEP Plan participants.

        Reply

  2. Where does one start??? These two should be DOA from the get go:

    an increase in the PBGC minimum guarantee level to $70 per month per year of service, and at least $3,000 per year;

    a 30-year promise of $3 billion in federal funding per year to allow the PBGC to do more partitioning

    “Bailout Nation” … Good book>> read it!

    Reply

  3. Do your Home Work, you cease to realize that the Experts that helped CREATE the Loan Program, know a hell of a lot more than you do. Russ Kamp of Kamp Consulting Solutions and Ron Ryan of Ryan ALM….look them up, read those TEN POST, then tell me what is the problem you see. ITEM BY ITEM… They were part of a rather extensive team of Experts that produced this over an extended span of time…Just trying to help you understand there is a difference between Multi & Public Pension Plans. I’m stupid for wasting my time here, I have lots of work to do with the members that are at risk. But I refer other to this post to show your opinions and the fact that we have not been allowed by the powers that be to create a National Understanding and to become the “Dinner Table Issue” that is needed for Folks to understand that the voices that claim BAIL OUT, won’t address the issues and facts but just repeat that “NOTION OF BAIL”, it covers their true agenda to destroy all things UNION. which many were there for only one reason for the wages, health benefits , and deferring of our wages ALONE… for a Pension. Plans exist for one reason only “To Provide the Funds to Finance Retired Lives”. Under the released DRAFT, IF accepted, which is unlikely, I would go from a $3,000 Monthly down to $2100 Monthly, a loss of $900… and my demise, the humble amount won’t cover my life expenses since my Wife and Myself are disabled. I’ve been in this fight as a pensioner with CSPF for the last three years, or more. So the latest LOAN PROGRAM Costs are $48.9B which would be paid back, which the Treasury PRA would make them prove. The loan amounts would cover all “121” plans currently in Critical & Declining Status. This reported above IS A BAIL OUT $3B a Year from Gov’t with no pay back for “30” years= $90B. So you do the Math. The loans , IF you read the TOP TEN RUSS KAMP POSTS speak of Treasury making a small profit off the sale of BONDS to defease, those pensioner liabilities. Then on fresh day one, they have no assets at risk, except what they invest, which is another part of the BLA that Ron Ryan is the expert of, they would be required to change there investment CASINO mentality, 7-7 1/2% ROA is an imaginary number, based on a guess. But you guys go on IF you want ever to hear more of this Pensioner side View Point just ask. good luck with your coming Public Pension Problems just ahead..

    Reply

    • Posted by Tough Love on November 27, 2018 at 1:11 pm

      Oh come on……….. those “Experts” were hand-pick to be inclined to SUPPORT this outrageous BAILOUT.

      And you ………… a MEP Participant and likely beneficiary of any bailout …. …. hardly and UNBIASED observer, and certainly “conflicted” and supporting a bailout.

      A “loan” is BS………. and you know it.

      Disagree ? Then how about all the MEP participants who benefit from it LEGALLY and FORMALLY (via signed documents) putting up THEIR OWN ASSETS (including any equity in their homes) as collateral if the loan don’t get repaid (interest & principle) on schedule and in full.

      Reply

      • I see your not reading but running your mouth, these two gentlemen helped create the BLA solution, you have no idea except your own weak personal opinions, Read these TEN, or take them one at a time. You can’t even read my comment above where I tell you that I am a CSPF participant retiree. I’ll ask for your Tax money specifically, when forced into poverty. Over 80% of us are living check to Monthly Benefit check, 8% could survive 20% reductions, ONLY 4% are Financially secure enough to weather any and all loses of benefits. How much do you get …Brother

        Reply

        • WE are talking around 200,000 in CSPF and 1.3 M total in C&D Status plans numbers “121” funds and growing as nothing is being done to fix the Pension Crisis. What happens when Public Pensions fail on a mass scale. Are you part of the problem or the solution. Not all are gaming the system as some in Public plans with $100 to $300,000 extravagant funds, try to live as I do and see how comfortable that is..

          Reply

        • Posted by Tough Love on November 27, 2018 at 11:12 pm

          Even if you are financially “hurting” as you say (or would-be) if your Plan fails, WHY is YOUR financial “problem” an obligation of Americas Taxpayers …….. beyond whatever you are entitled to under Social Services ….. like those NOT in MEP Plan must do in similar circumstances?

          WHAT makes YOUR group (MEP Plan participants) “special” and deserving of special treatment?

          And don’t get me started with the PUBLIC Sector Plans MOOCHERS.

          Reply

  4. You just don’t get it do you ?? #1 its a LOAN PROGRAM, #2. I paid big money in lieu of wages 30 yrs for it… We are not asking for a hand out but a hand up. Since I am engaged in other serious efforts you’ll have to figure it out based on the facts or remain satisfied with your lack of understanding. BTW, the Blog Post is a great info tool, I thank John Bury for it, but he needs to seriously consider the comments made by some folks. Come to my page for further enlightenment on Teamster Pension Crisis..

    Reply

    • Posted by Tough Love on November 27, 2018 at 11:59 pm

      Quoting ………………..

      “You just don’t get it do you ?? #1 its a LOAN PROGRAM, ”

      So, we cycle BACK to the SAME BULLSHIT ?

      No it’s a BAILOUT (with a VERY VERY VERY small probability of repayment) being “marketed” as a LOAN.
      —————————

      Quoting ………….

      “I paid big money in lieu of wages 30 yrs for it”

      Cry me a river ……….. that’s YOUR problem, NOT the Taxpayers’ problem.

      ————————-

      Quoting …………..

      “We are not asking for a hand out but a hand up.”

      Then put YOUR money where your mouth is ………. and back that “lan” with collateral ……….. all of your assets (including any home equity) if at any point the terms of the “loan” are not met.

      Deal ?

      Reply

  5. Posted by Tough Love on November 28, 2018 at 4:22 am

    John C Anderson,

    The link BELOW is to a FAR more unbaised review of potential MEP plan options. The author is a credentialed/practicing actuary (although not practicing in the Pension area). She has MUCH more REAL “expertise” than MOST (if not ALL) of the members on your “Comittees”.

    http://stump.marypat.org/article/1104/multiemployer-pensions-waiting-for-the-bailout-report

    Reply

    • Mary Pat Campbell: Actuary, Catholic, cranky conservative, crocheter,
      (and, of course, unbaised.)

      No, I’m not disagreeing with her . Yes, she says things some people don’t want to hear.

      >People will be paying more taxes (and not just “The Rich ™” – there’s not enough of them, and don’t have enough wealth)
      >Retirees will have benefits cut some
      >Bondholders will get a haircut, some drastically
      >The only bailout will be welfare programs for the poorest
      >Everyone will have to deal with having less.

      “Mind you, what is being proposed is a partial bailout, and plan participants in failing plans need to realize that the alternative to a partial bailout is not a full bailout but getting a hell of a lot less than that partial bailout.”

      It is a complicated subject, and Mary Pat covered it very well… without once abusing or abasing anyone. Something we could all learn.

      Reply

  6. Thank You for this added resource, WE try to use them all to give our Folks a thorough education. BTW, I’ll spillit’ here the “JOINT SELECT COMMITTEE” will declare NO CONSENSUS… Joint Select Committee
    November 30th. Deadline

    Gideon from Senator Browns office notified us that the Joint Select Committee was unable to come to a agreement.

    Message from Gideon…

    “Letting you all know that the Joint Select Committee will NOT report legislation by the November 30th deadline. There is no agreement between Senator Brown and the Republicans. We got close, but an equitable solution that both sides can agree to remains out of reach. We do not anticipate that situation changing in any significant way. Please check-in if you hear otherwise”.

    Reply

  7. […] reported by commenter John C. Anderson on this blog here is the news we can expect this week out of the Joint Select Committee on Solvency of […]

    Reply

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