Archive for the ‘Multiemployer Pensions’ Category

Multiemployer Plan Bailout Plan

Today’s hearing of the Joint Select Committee on the Solvency of Multiemployer Pension Plans (Bailout Committee) in Columbus, Ohio to get an “understanding [of] what’s at stake for current workers and retirees” touched on all the expected points:

  • there is a real crisis
  • PBGC premiums are too high
  • withdrawal liabilities are too high
  • something needs to be done now!

But of note was one minute (literally) where Representative Richard Neal (D-MA) laid out the plan:

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Bailout Committee Hearing Workers

Bailout Committee Protest

According to a press release from the Pension Rights Center:

On Thursday July 12th, thousands of active and retired mineworkers, truck drivers, warehouse workers, bakery workers and others who worked hard to earn a lifetime pension are rallying in Columbus, Ohio to urge lawmakers to protect their benefits. The rally is being organized to coincide with a field hearing that will be convened in Columbus on Friday, July 13th by members of the Joint Select Committee on the Solvency of Multiemployer Plans.

………………….

There are currently 1.5 million blue-collar retirees and workers in 130 financially-troubled multiemployer pension plans who stand to lose as much as 50-70% of their pension benefits if Congress does not act quickly. “At a time when the country is so divided, this is a perfect all-American issue for Republicans and Democrats to unite on, and find the right solution,” says Karen Friedman, the Executive Vice President of the Pension Rights Center. “Retirees earned these benefits and if their pensions are cut, it will affect their families, their communities and the economy.”

Sounds reasonable enough but I have a few questions for these protestors (and the bailout committee) to ponder.

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Bailout Committee To Hear Current Workers and Retirees

The Joint Select Committee on the Solvency of Multiemployer Pension Plans (Bailout Committee) just announced they will convene a hearing this Friday (July 13) in Columbus, Ohio to get an “understanding [of] what’s at stake for current workers and retirees.”

The witnesses:

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The Appropriateness of Keeping Segal in the Multiemployer Business

There is a crisis in the world of multiemployer (union) plans necessitating significant reductions in participant benefits and a bailout after the midterm elections. There are several reasons for the demise of these plans with actuaries one of the more significant abettors. If honest actuarial assumptions were used to value these plans there would be no crisis – and also a lot fewer defined benefit plans as they would be unaffordable to those currently allowed to use factors that inflate funding levels – which is the reason the actuaries doing valuations for 28% of all multiemployer plans in the country do not want the bailout committee to consider forcing the use of honest actuarial assumptions.

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P&I Multiemployer Editorial Responses

In their May 28, 2018 issue Pensions & Investment (P&I) editorialized against a bailout of multiemployer plans but wound up suggesting just that. To add to the confusion in their June 25, 2018 issue there were two Letters to the Editor (copied at the bottom of this blog) from:

  1. Teamsters president James P. Hoffa calling the P&I editorial “simplistic and poorly reasoned”, and
  2. Russell Kamp and Ronald J. Ryan supporting the Butch Lewis Act.

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GAO on PBGC

The United States Government Accountability Office (GAO) released a 60 page report this week that “provides an update on the nation’s fiscal health as of the end of fiscal year 2017 and describes its likely fiscal future if policies don’t change” where the Pension Benefit Guaranty Corporation (PBGC) and multiemployer plans got a mention:

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