PBGC fund could be tapped for multiemployer bailout

Per P&I:

Congress could tap the PBGC’s single-employer insurance program as a “quick fix” should the agency’s multiemployer program become insolvent, said Michael Kreps, Washington-based principal at Groom Law Group LLP during a keynote address Tuesday at Pensions & Investments West Coast Defined Contribution conference in San Diego.

In a subsequent interview Mr. Kreps elaborates:

The only way to solve this is for Congress to do something. Tapping the single-employer program, from a policy perspective, would be “horrible” potentially turning to the premiums paid by corporate sponsors to bail out the multiemployer program. That, in turn, could further accelerate the move of corporate plan sponsors to get out of the business of offering a defined benefit plan. When it comes to writing a big check [bailing out the multiemployer program, Congress] will be looking for pots of money.

It could happen since Congress does not honestly consider consequences when legislating these days and PBGC did recently announce a surplus of a sort:

Net Financial Position, PBGC Single-Employer Program
(Figures in Millions of Dollars)

Fiscal Year Assets Liabilities Net Position Net Position, Previous Year to Current Year
2015 85,735 109,800 -24,065 -4,727
2016 97,342 117,922 -20,580 +3,485
2017 106,196 117,110 -10,914 +9,666
2018 109,941 107,502 +2,439 +13,353

Premiums

The PBGC reports that the news in FY 2018 was not as good for the PBGC regarding premiums and payments as it was in the previous two years. Premium revenue had been consistently growing, but slipped in 2018; meanwhile, benefits payments the PBGC continued to rise.

Premium levels in the single-employer program are likely to continue to slip as the large companies backstopping the program restructure benefit plans to avoid paying punitive premiums as most employers still prefer giving money to their employees instead of the government if at all possible. Raiding the single-employer ‘surplus’ will only speed the exodus from Defined Benefit plans leaving the PBGC with mounting liabilities and nobody voluntarily stepping up to pay them off.

 

3 responses to this post.

  1. Posted by Tough Love on November 6, 2019 at 9:51 pm

    Off Topic……….

    Great opinion piece on how NJ became the mess it’s now in.

    https://nj1015.com/new-jersey-elections-explained-simply-opinion/

    Reply

  2. Posted by Rex the Wonder Dog! 🐶🐶🐶🦴🦴🦴 on November 6, 2019 at 10:22 pm

    If they raid the single employer fund to cover the much larger multi employer fund, the end of the PBGC is HERE! Or at least much closer to us than previously thought.

    Reply

  3. Posted by geo8rge on November 7, 2019 at 9:17 am

    An internet search on butch lewis kind of indicates it is dead, but a new idea is for ‘organized’ labor to back NAFTA in exchange for some sort of pension assistance.

    Top Democrat proposes adding pension fix to new NAFTA vote
    https://www.duluthnewstribune.com/news/nation/4738782-Top-Democrat-proposes-adding-pension-fix-to-new-NAFTA-vote

    Teamster’s Union corruption flick, The Irishmen, has arrived just in time to set the tone for the multi-employer bailout. I have not seen the film, but I don’t think ‘Wall Street’ or any other establishment figures are implicated in the movie. I wonder if they use the word pension in the movie.

    From Counter Punch Magazine with Brandt ,the author, of Sheeran’s kiss and tell, possibly made up, biography, I Heard You Paint Houses.

    Sheeran, possibly made up, on pensions:

    “For example, as Sheeran later confessed to Brandt, he liked to grant “waivers” to newly organized trucking companies so they could avoid making pension fund payments normally required under a first contract. This enabled a friendly employer “to put his savings on the table [so] you both share it under the table—and everybody’s taken care of that way.”

    https://www.counterpunch.org/2019/10/17/the-irishman-cometh-teamster-history-hits-the-big-screen-again/

    Sheeran seems to have written

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: