Pension Relief Plan in COVID-19 Stimulus Bill

An ai-cio.com article summarized relief for union plans thusly:

Under the bill, multiemployer pension plans in danger of insolvency are eligible to receive a single lump sum to make benefit payments for the next 30 years, or through 2051.

How much of a single lump sum? Would this be a forgiven loan? Would it be a reward for the worst funders? Could NFL players share in the bailout if they rejigger some assumptions?

Only clues I could find were form the Congressional Research Service (with my emphasis):

Section 9704 would establish a fund within the PBGC and appropriate amounts as necessary to provide special financial assistance to certain multiemployer DB plans. The special financial assistance would not have to be repaid.

A plan could apply for special financial assistance through December 31, 2025. A plan would be eligible if it meets at least one of the following conditions:

  • was in critical and declining status in any plan year from 2020 through 2022
  • had an application to suspend benefits under MPRA approved prior to the enactment of this bill
  • was in critical status in any year from 2020 through 2022 and had a modified funded percentage of less than 40% and the percentage of active to inactive participants in the plan was less than 40%
  • became insolvent after December 14, 2014 and was not terminated by the date of enactment

Under the bill, PBGC would be authorized to issue regulations specifying that for two years following enactment only plans meeting certain conditions would be able to apply for special financial assistance. The plans would be those likely to become insolvent within five years of enactment, those for which PBGC would be obligated to provide more than $1 billion in financial assistance in the absence of any special financial assistance, those that have reduced benefits under MPRA, or those meeting other conditions as determined by PBGC.

The amount of special financial assistance would be the amount needed to pay participants’ full plan benefits through the 2051 plan year. To determine the present value of benefits, the plan would use the interest rate used in its most recent zone certification before January 1, 2021, subject to a maximum limit. The limit would be the interest rate used by single-employer DB pension plans to discount their benefits to be paid 20 years or more in the future (referred to as the third segment rate in Title 26, Section 430(h)(2)(C)(iii), of the U.S. Code) prior to adjustment for the smoothing corridor in the month (or preceding three months) of the application,increased by two percentage points. In January 2021, the third segment rate was 3.65%, so the limit would have been 3.65% + 2.0% = 5.65%. In 2017 (the most recent year for which the data is available), the median interest rate multiemployer plans used to value benefit obligations was 7.0%. Using different interest rates would result in differing amounts of financial assistance. The special financial assistance would be paid to the plan as a lump sum, would be kept separate from other plan assets, and could be invested only in investment grade bonds or other securities as determined by PBGC.

Participants’ benefits are not subject to the PBGC maximum guarantee.

41 responses to this post.

  1. Posted by PS Drone on March 1, 2021 at 1:48 pm

    With MMT, this will be no problem at all. Just add it to the tab for Covid relief (including all of the Dem boondoggles included in the bill), reparations, Medicare for all, free college, and forgiveness of student loans. Thank heaven the Fed has a printing press. Otherwise, we might run out of money.

    Reply

  2. Posted by Rex the Wonder Dog!🐶🐶🐶🐾🐾🐾 on March 1, 2021 at 1:51 pm

    Under the bill, multiemployer pension plans in danger of insolvency are eligible to receive a single lump sum to make benefit payments for the next 30 years, or through 2051.
    Yep, time to lube up and bend over for a multi-trillion $$ “bail out”, and the States are right behind Butch Lewis and Co.

    How much of a single lump sum? Would this be a forgiven loan? Would it be a reward for the worst funders?
    1) How much? as much as is needed to fund them for 30 years, or for everyone in them. That’s how much. 2) A loan? Fuck no it’s not a “loan”. Loans are meant to be re-paid, with market rate interest. And they could NOT repay the $$$ even if they wanted to. Get serious. 3) A reward for FRAUD? Yep, that is it, a fraud on taxpayers to cover the fraud of the unions. I wonder who is going to bail out my credit card? Or my trust deed? Or my student loan? Maybe I will call up Butch Lewis and Co. and ask them. I wonder what their response will be????

    Reply

  3. Posted by NJ2AZ on March 1, 2021 at 2:42 pm

    “No Structural Changes to Plans
    The bill would not impose any changes to the structure of
    multiemployer DB plans or plan funding rules to ensure
    that currently financially healthy plans do not need financial
    assistance in the future”

    why would they when .gov can just bail these disasters out

    Reply

  4. […] Posted on March 1, 2021March 1, 2021 by Mary Pat Campbell Pension Relief Plan in COVID-19 Stimulus Bill […]

    Reply

  5. Posted by Tough Love on March 1, 2021 at 3:42 pm

    A flat-out 100% TAXPAYER bailout w/ZERO structural changes or benefit restrictions (like an end to 30 & out provisions at ANY age)……… where the Taxpayer were never-a-party to these completely Union/Participating-employer arrangements, and where BOTH sides (the Unions AND the Participating Employers) knew for decades that the “negotiated” contributions were inadequate to fund the promised level of benefits.

    An astonishing ….. and 100% politically motivate …… abuse of America’s Taxpayers.

    Reply

  6. Posted by A on March 1, 2021 at 4:55 pm

    I personally thought the original concept was correct; to save the plan, cuts should be shared by all, even current retirees. Should be the model for public plans also, as I recall was done in Detroit and Rhode Island. (Except those over 80? That’s me before long, if I make it.)

    Reply

    • Posted by NJ2AZ on March 1, 2021 at 6:08 pm

      the idealist in me says that taxpayers were not party to these arrangements and should not be party to a bailout the pragmatist in me accepts thats never going to fly…but good grief…what sounds like a fully open ended bailout with no shared sacrifice or reforms at all is insulting

      Reply

    • Posted by Rex the Wonder Dog!🐶🐶🐶🐾🐾🐾 on March 2, 2021 at 12:48 pm

      I personally thought the original concept was correct; to save the plan, cuts should be shared by all, even current retirees.
      Why the fuck should ANYONE “share” the unfunded fraud of private unions Baby Einstein>>>???? How about you SHARE the payments of my Trust Deed and credit cards then Richie Rich….🤬🤬🤬

      Reply

  7. Posted by E on March 1, 2021 at 7:25 pm

    https://www.foxnews.com/us/loudoun-county-public-schools-dr-seuss-racial-undertones

    And folks wonder why some (morons) decided to storm the Capitol. Biden is a disaster so far. 40 days. No press conferences. Nothing. He is an embarrassment.

    Reply

    • Posted by Tough Love on March 1, 2021 at 7:46 pm

      And isn’t Trump ……….. with his new goal in life being to get REVENGE on those who voted for his impeachment ?

      Reply

    • Posted by Rex the Wonder Dog!🐶🐶🐶🐾🐾🐾 on March 2, 2021 at 1:01 pm

      https://www.foxnews.com/us/loudoun-county-public-schools-dr-seuss-racial-undertones

      And folks wonder why some (morons) decided to storm the Capitol. Biden is a disaster so far. 40 days. No press conferences. Nothing. He is an embarrassment.
      Hehehe… OK… Wait For It… because it is going to send El Feo into orbit again!
      .
      EG, guess who I used to see driving around town on a regular basis? Always in her huge brand new Cadillac???? … Come on EG, make a guess!
      .
      YEP, Dr Seuss’ WIFE Audrey! … And NO, I did not “know” her, nor did I ever “work out” with her (so don’t make shit up like you did with Lyle Alzado!) 🤦‍♂️🤦‍♂️🤦‍♂️ I just saw her cruising town in her great big brand new Caddy 👍👍👍 And the fact is there is only one reason I, or anyone else, even knew it was her … Guess how we knew???? She had personalized license plates on her Caddy 🐾🐾🐾
      .
      If you’re a good lil boy today EG I may even tell you what her personalized plate said … But only if you’re on your best behavior … Try taking a couple of guesses, anyone🐾🐾🐾

      Reply

      • Posted by E on March 2, 2021 at 3:19 pm

        CATNHAT?

        I feel that’s too easy tho.

        Reply

        • Posted by Rex the Wonder Dog!🐶🐶🐶🐾🐾🐾 on March 2, 2021 at 10:18 pm

          CATNHAT? I feel that’s too easy tho.
          That is actually a pretty spot on guess, but no…. Her personalized CA license plate said “MSGRNCH”.

          Reply

    • Posted by E on March 1, 2021 at 10:41 pm

      https://www.justice.gov/usao-nj/pr/sussex-county-woman-charged-concealing-terrorist-financing-syrian-al-nusra-front-foreign

      This you, TL? 🙄
      Just because a bad cop gets arrested doesn’t
      Mean good cops don’t deserve what they negotiated with their employer.
      But you’ll also post the stories of cops getting gunned down serving their communities tho right? No you won’t. You post this and other stories because you are jealous of me. Guess what, you can fuck yourself, bitch. How about that? Friendship over. Fuck you!!!! Petty woman. Grow the fuck up.

      Reply

      • Posted by E on March 1, 2021 at 10:43 pm

        I take back the bitch comment. Rest of it stands.

        Reply

      • Posted by Tough Love on March 1, 2021 at 11:08 pm

        Quoting …………..

        “Just because a bad cop gets arrested doesn’t mean good cops don’t deserve what they negotiated with their employer.”

        You’re correct. The bad cop has nothing to do with it.

        But they don’t deserve what they “negotiated” because they hold sway over the person(s) with whom they are “negotiating”. As once miserable CA Union SOB said ……….. “we put you in office, and if you don’t support our agenda, we can get you out of Office”.

        Reply

      • Posted by Tough Love on March 1, 2021 at 11:13 pm

        Quoting ………..

        “But you’ll also post the stories of cops getting gunned down serving their communities tho right? No you won’t. You post this and other stories because you are jealous of me. ”

        No E, I posted that as a “dig” ………. because you’re comments are moving into “nasty” territory.
        —————–

        Nice end to that comment …………….. really called for.

        Reply

        • Posted by E on March 1, 2021 at 11:51 pm

          Bullshit!! At least you admit it was a dig. Which I already knew, hence the nasty comments. You have some issues TL. I have repeatedly stuck up for you when others on here have gone after you for one reason or another. You’ve never done the same when the stick snd stones come my way. In fact, almost all the stick and stones are from you. Even when I try to be nice and even when we agree on a topic. You have issues. I can at least admit when I am wrong….as in thinking as much of you as I did. You got some work to do……try not to disappoint me and improve.

          Reply

      • Posted by Rex the Wonder Dog!🐶🐶🐶🐾🐾🐾 on March 2, 2021 at 1:05 pm

        You post this and other stories because you are jealous of me. Guess what, ⏩you can fuck yourself, bitch⏪. How about that? Friendship over. Fuck you!!!! Petty woman. Grow the fuck up.
        I called it a month ago, the EG-TL online Bromance 💕💕was on the rocks heading for stormy weather😎 … Well, looks like the EG-LV “Love Boat” just capsized and the online Bromance is officially over 🤣🤣🤣

        Reply

        • Posted by E on March 2, 2021 at 3:23 pm

          She gave me some props with mea culpa on the next topic. Every once in a while she needs to be put in her place. She likes me, that’s why she knows she crossed line when I spew venom back at her. I like her too, I’m a forgiving guy. I realize she can’t help herself sometimes. Life’s too short as they say.

          Reply

  8. Posted by NJ2AZ on March 2, 2021 at 12:01 am

    Hey TL (or anyone who wishes to chime in) i want to bounce something off you. Been trying to come up with a good way to explain to lay people why ‘wealth’ is often BS voodoo. Seems so obvious a small part of me assumes i’m missing something.

    Consider a closed universe of 3 people. A possess 101 shares of X-Co and $0. B and C both possess $100 but hold zero shares.

    A sells 1 share to B for $1. A now has $1 and 100 shares. B has 1 share and $99. C has 0 shares and $100.

    B turns around and sells their share to C for $2. B now has 0 shares and $101, C has 1 share and $98. B and C repeat this process of selling the 1 share back and forth 99 times times, each time increasing the sale price by $1. The final transaction is for $100.

    And the end, A still has 100 shares and $1. B has 0 shares and $150. C has 1 share and $49.

    On paper, A is now worth $10,001 (his $1 and 100 shares valued at $100 each). B is now worth $150 (all cash), and C is worth $149 (1 share worth $100 + $49 cash).

    And yet, the total universe is still 101 shares and $200, A’s $10,000 is just a figment of everyone’s imagination. The only person to have locked in a real gain is B who is up $50.

    Perhaps an oversimplification, but where (if anywhere) am i making an error?

    Reply

    • Posted by MJF on March 2, 2021 at 5:29 am

      Stock certificates have no real underlying value, they are pieces of paper worth only what you can sell them for. Bonds are IOU’s, you may recover what you paid for them or not. The magic trick that gives A the $10,000 is the money supply. It is created by the government. So the closed universe has a giant hole punched in it which creates the illusion. Relentless money printing and debt creation has always ended the same way, currency collapse and everything going to zero. Total US government, industry and personal debt now sits up around $250 Trillion. Maybe the music will stop at some point and the universe will close again.

      Reply

      • Posted by NJ2AZ on March 2, 2021 at 11:22 am

        It sounds like we largely agree. That being said, would you say that although its simplistic, there is nothing actually straight up wrong with the example i made up?

        Reply

        • Posted by MJF on March 2, 2021 at 4:51 pm

          Of course, it is a classic Ponzi. Something of no value becomes a gold mine on paper. But surely none of that paper: stocks, bonds and currency have any value when the house collapses. My sorry philosophy has always been that if you can’t throw a chain around it and tow it away it isn’t yours.

          Reply

  9. Posted by Tough Love on March 2, 2021 at 3:42 am

    Link: https://www.wsj.com/articles/prelude-to-a-state-pension-bailout-11614547953

    Excerpt:

    Ordinarily, insolvency means pension freezes and benefit reductions, but multiemployer pensions are run by labor unions, a key Democratic constituency. And so the House Covid bill plans to dole out an estimated $86 billion from 2022 to 2024 to 186 pensions, enabling these plans to pay full benefits through 2051. With no incentive to cut costs, there’s little reason to think the pensions will be solvent after 2051. Look forward to more spending down the road.

    Bailout supporters argue they’re helping impoverished workers make ends meet, but that doesn’t add up. The average monthly benefit from a plan like Central States is a seemingly modest $1,400. But that average is skewed downward by large numbers of employees who retired after only a few years of service. The one-third of Central States retirees who receive more than $2,000 a month — plus Social Security benefits — make a bailout expensive. No one in this group is even close to being in poverty.

    ….

    The larger worry is that Congressional Democrats’ willingness to bail out private-sector multiemployer pensions signals they would do the same for state and local employee plans. Public-employee pensions operate under the same loose funding rules as multiemployer pensions, and public plans in Illinois, Kentucky, New Jersey, Texas and other states are no better funded than the worst multiemployer plans.

    Author(s): Andrew Biggs

    Reply

    • Posted by E on March 2, 2021 at 1:22 pm

      You voted for this. Now take your medicine and swallow.

      Reply

      • Posted by Tough Love on March 2, 2021 at 1:44 pm

        While there is no justification for this, it’s the order-of-magnitude larger State & Local Pension Plan bailouts that are of much greater concern.

        It would be hard to imagine extending such bailouts to State & Local Public Sector Plans w/o material restrictions, limitations, caps etc. It will NEVER pass muster to bailout $100K+ pensions.

        Reply

        • Posted by E on March 2, 2021 at 2:12 pm

          1) PFRS won’t need a bailout
          2) you voted for this

          Reply

          • Posted by Tough Love on March 2, 2021 at 6:24 pm

            PFRS is RIGHT NOW in such poor condition, that if it were a single employer Private Sector Plan, NO FURTHER ACCRUALS would be allowed ………. because it’s funded ratio (using the required PRIVATE Sector assumptions and methodology) would be WELL BELOW the 60% cutoff that requires such a freeze.

            Just being in better shape than other POORER-funded Plans (e.g. the Teacher’s Plan), DOESN’T help the VERY POOR financial position that PFRS is now in.

            Reply

          • Posted by E on March 2, 2021 at 9:07 pm

            Respectfully, can you run the numbers that back up your claim?

            Reply

          • Posted by Tough Love on March 2, 2021 at 9:52 pm

            Take the PFRS “official” funding ratio and then ……….. to adjust it for the MUCH lower interest rates used in Single Employer Private Sector DB Plan valuations ………… multiply that ratio by 2/3.

            PFRS is about 50% funded on that basis …….. well below the 60% cutoff below which Private Sector DB Plans can grant no further accruals.

            Reply

  10. Posted by A on March 2, 2021 at 1:01 pm

    “…explain to lay people why ‘wealth’ is often BS voodoo.”

    No, I don’t get it. May be “often” is the keyword.

    The few stocks I own are index funds. I have seen the value drop substantially, then recover several times. My best hope is the money will always be there, and protected from inflation. Yes, I realize at some point they may ultimately lose some, but not all value.

    Here is where I really need education. How much is Bitcoin, and all its cousins worth? And why? I wouldn’t touch that with a ten foot pole.

    (And some (my?) pension plans want to invest in it?)

    Reply

    • Posted by E on March 2, 2021 at 1:24 pm

      Index funds are a great way to hedge against inflation without taking too much risk. The guy that invests in CD’s and money market accounts will run out of dough. The stock market is an excellent way to accumulate wealth over a couple decades etc. so is a pension. 👍

      Reply

    • Posted by Tough Love on March 2, 2021 at 1:46 pm

      Whatever some one will pay for them ……… just like a Rembrandt.

      Reply

    • Posted by MJF on March 2, 2021 at 4:58 pm

      Run Forrest….run…Bitcoin can be vaporized by gov with a keystroke. And likely in my opinion it will because it jams up their printing press. Imagine all those shipping containers of ink and paper going to the bottom of the ocean. No way they will let it happen.

      Reply

    • Posted by A on March 2, 2021 at 9:42 pm

      When I first heard of Bitcoin, it was for privacy and “freedom”. Keep ” The Man” out of my business.

      Apparently it was a factor in financing both Charlottesville and the Jan. 6 Capitol Trump incited erection.

      “The IRS relies upon the taxpayer to correctly track and pay tax on Bitcoin and other crypto currencies. Even if the IRS doesn’t know about your Bitcoin activities you are still responsible for complying with the tax code.”

      Reply

  11. Posted by Larry Gagnon on March 2, 2021 at 4:29 pm

    The absolute worst example of socialism is throwing money at a “problem” without ever even attempting to hold the “needy” accountable. Who in the world came up with the idea to provide 100% thru 2051? I would think many union people would be embarrassed by these ridiculously generous provisions.

    Reply

    • Posted by Tough Love on March 2, 2021 at 6:28 pm

      Quoting ………..”Who in the world came up with the idea to provide 100% thru 2051?”

      AND paid to the Plan in a single Lump Sum over the next 2 years.

      Absolutely CRAZY !

      Reply

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