Joe Biden’s multiemployer pension plan rescue is turning into a political disaster

John Dizard in the Financial Times stated the obvious to anyone paying attention.

Excerpts:

Union-friendly members of Congress and senators, in particular Sherrod Brown of Ohio, pushed the team of President Joe Biden to incorporate a relief plan for federally guaranteed pension plans that would provide (forgivable) 30-year federal loan along with other support.

The cost of the bailout was estimated by the Congressional Budget Office to be about $86bn, of which $82bn would be spent in 2022. If everything worked out, that would have been a good talking point for Democratic candidates during the midterm elections next year, especially in the hotly contested rust-belt states.

But rather than specify the actuarial details of how the rescue would work, the congressional sponsors and the administration left this job to the experts at the Pension Benefit Guaranty Corporation, a US government agency. They may regret that decision.

……

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Even before then, the unions and employers who act as trustees for the multiemployer funds are probably facing legal troubles if they accept bailout money. As the committee went on to point out: “Trustees of such [troubled] plans who decide to take SFA face the risk of litigation from active employees, while those trustees who elect not to seek SFA risk being sued by retirees.”

In other words, what started as a programme to provide some free money for pension bailouts will start a generational war between active workers and retirees. Some of us believe such a war was coming anyway, and maybe the PBGC and its actuaries are right to formally declare hostilities.

…….

Unfortunately, this year’s shambolic “rescue” of the multiemployer plans is turning into yet another example of failed pension promises. Voters in key industrial states will notice, and remember.

3 responses to this post.

  1. Posted by geoxrge on December 20, 2021 at 1:28 pm

    According to John Bury’s table, all three reels of the SFA slot machine stop on cherries for Local 138 tomorrow 12/21 (which might mean 12/22). But will there be $110M in the payout tray? Where will it come from?

    Reply

  2. Posted by aon12345 on December 21, 2021 at 2:49 pm

    “But rather than specify the actuarial details of how the rescue would work, the congressional sponsors and the administration left this job to the experts at the Pension Benefit Guaranty Corporation, a US government agency”

    – this is what should have been done, unfortunately Congress told the actuaries how this would be done so it is an epic fail.

    Reply

  3. Posted by geoxrge on December 21, 2021 at 3:17 pm

    ARPA Final Rule Expected in January

    “PBGC was taking a “close look” at stakeholder comments on the interim final rule that urged PBGC to expand the scope of permissible investments.”

    https://www.natlawreview.com/article/arpa-final-rule-expected-january

    Reply

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