Archive for the ‘Multiemployer Pensions’ Category

Multiemployer Bailout Committee Answers

The hearing lasted about two hours today. Here is all of it (including 13 minutes of a silent overture):

And here are some excerpts I found notable:
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Bailout Committee Questions of PBGC

The Joint Select Committee on Solvency of Multiemployer Pension Plans is holding a hearing today examining the state of the Pension Benefit Guarantee Corporation (PBGC) and Co-Chairman Orrin Hatch (R-Utah) delivered an opening statement that posed the following questions of his witness for the day, soon-to-be ex-PBGC Executive Director Thomas Reeder, most of which are already answered on the PBGC’s website though, if not clearly enough, I take a swing at.

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Central States – GAO Report Coming

The General Accountability Office (GAO) has a draft report to Congress out there on investment policy decisions and challenges facing the Central States Pension Fund (CSPF) that “has not been fully reviewed within GAO and is subject to revision” which is why I can’t share the report with you but I can give you my impressions after reading it.

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Breaking News: PBGC Gets a Hearing

The Joint Select Committee on the Solvency of Multiemployer Pension Plans (Bailout Committee) today announced they will convene a hearing in one week to examine the state of the Pension Benefit Guarantee Corporation (PBGC) with PBGC Executive Director Thomas Reeder the only scheduled witness.

“With more than 100 multiemployer pension plans on the brink of failure, 1.3 million workers and retirees across the country are counting on this committee to solve this crisis,” said Sherrod Brown (D-Ohio). “As this committee works toward a bipartisan solution, this hearing will help us better understand how to fix the system, so we can protect the benefits workers have earned after a lifetime of hard work and the small businesses that could end up on the hook for pension liabilities they can’t afford to pay. We have a responsibility to get this done before it is too late.”

What they could be hearing:

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United Mine Workers Update (2)

Last year we did an update on the status of the United Mine Workers of America (UMWA) 1974 Pension Plan. Last week that plan was spotlighted in a new report from the office of U.S. Sen. Joe Manchin, D-W.Va. detailing the pending crisis facing multi-employer pension plan and  claiming:

The UMWA Pension Fund is the most at risk of insolvency. This critical plan, which covers 87,000 retired miners–27,000 in West Virginia-and 20,000 full vested current workers, is projected to become insolvent in 2022. Their insolvency will come even sooner if we see a market downturn or additional coal company bankruptcies.
If plans like the UMWA 1974 Plan become insolvent, participants will receive significant cuts to their pension payments. The PBGC will only be able to provide a fraction of guaranteed benefits for participants in insolvent plans like the UMWA Plan. Currently, the average UMWA pension is $586 per month. If PBGC were to take over the plan, the average benefit would fall by 21 percent to $470 per month, or $5,640 annually.

But there is worse news.
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Central States – Drop Dead Date

According to the people who run the plan:

The Central States Pension Fund that covers 400,000 retirees and active workers will be insolvent by Jan. 1, 2025, and only an act of Congress can save it, the fund’s executive director told members in a conference call Wednesday evening.

Thomas Nyhan issued the insolvency notice in a session aimed at getting those 400,000 members to bombard senators and representatives to save the fund.

“Without your voice, there will be no legislation, and the fund will become insolvent,” Nyhan said on the call.

Based on Schedule H 5500 data from 2009 through 2016 Mr. Nyhan looks a bit of an optimist.

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Worst Funded ‘Nonendagered’ Multiemployer Plans

The Pension Benefit Benefit Guaranty Corporation (PBGC) keeps track of troubled multiemployer plans and form 5500 filings have these MB actuarial certifications where the plans assign risk classifications to themselves. Last year we did a blog based on 2015 MB data and developed this spreadsheet. These were the four multiemployer plans with the largest unfunded liabilities based on 2015 data:

Downloading MB data does not yield plan name (possibly on purpose) but it is easy enough to find with the EIN. 36-6044243 is Central States which admits to being in risk category D (Critical and Declining) while the next three report their status as N (Not Endangered or Critical). Is that really the case or are they playing games with actuarial assumptions?

You decide:

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