Archive for the ‘Multiemployer Pensions’ Category

National Retirement Fund Plan: Worse Than Central States?

The Central States, Southeast & Southwest Areas Pension Plan is, by participant count, the fourth largest multiemployer plan in the country whose demise is likely to take down the Pension Benefit Guaranty Corporation and eventually the entire US pension system. They naturally get a lot of attention to it but what about the third largest multemployer plan which is also in code red but has drawn little media attention nor has it applied to Treasury to cut benefits under MPRA? What is the National Retirement Fund of White Plains, NY up to?

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Multiemployer Pension Plans: Current Status and Future Trends

The Center for Retirement Research at Boston College released a special report that provides a good overview of the current status of multiemployer (union) plans. Excerpts follow which include some interesting charts that the authors developed mostly from 5500 data:

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Breaking News: PBGC 2017 Deficits Announced

In a press release the Pension Benefit Guaranty Corporation (PBGC) just announced new deficit amounts for 2017:

  1. Single Employer Plans: $10.9 billion from $20.6 billion
  2. Multiemployer Plans: $65.1 billion from $58.8 billion

As for the reasons behind the numbers here is my explanation for (1) and PBGC’s for (2).

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Multiemployer Plan Bailout Bill

It is called the Butch Lewis Act and according to a press release by its sponsor, Senator Sherrod Brown of Ohio, is supoposed to ensure Ohio retirees can keep the pensions they have earned in plans like:

How does the Butch Lewis Act work?

This legislation creates a new office within the U.S. Treasury Department, known as the Pension Rehabilitation Administration (PRA). The PRA would allow pension plans to borrow the money they need to remain solvent and continue providing retirement security for retirees and workers for decades to come.

The money for the loans and the cost of running the PRA would come from the sale of Treasury-issued bonds to financial institutions.

To ensure that the pension plans can afford to repay the loans, the PRA would lend them money for 30 years at low interest rates. The 30-year loans would buy time for the pension plans to make smart long-term investments for the future, while continuing to pay benefits owed to current retirees.

The bill would not allow any plan to borrow more than it can pay back to taxpayers. It would also prohibit any borrowed funds from being used to make risky investments. And it requires plans that borrow money to submit reports every three years to demonstrate that the plans are on track to getting back on solid footing.

The PBGC would fill the gap between money borrowed from the PRA and any additional funding needed to pay benefits owed to current retirees while the plans get back on track. The bill provides this money to the PBGC, but any money needed for the PBGC would be a tiny fraction of what it would otherwise be on the hook for if Congress fails to act.

My initial questions:

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Breaking News: Machinists Motor City Pension Gets MPRA Letter

The Intl Assoc. of Machinists Motor City Pension Fund out of Troy, MI was the twelfth multiemployer (union) plan to file for benefit cuts under MPRA in an attempt to avoid insolvency.

They just got their MPRA letter:

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Western Pennsylvania Teamsters Pension

The Pittsburgh Post-Gazette reported yesterday:

The Western Pennsylvania Teamsters fund — which has about 48 cents for every $1 in benefits it owes to retirees and workers — notified participants in April that it is considering cutting benefits in order to insure that the fund doesn’t become insolvent. The plan is expected to pay out nearly $129 million in benefits this year but will collect only about $54 million in contributions.

If the current level of benefits is maintained, the fund is projected to run out of money in 2028.

….

Mr. Lickert and Mr. Mettley speculate that trustees for the Western Pennsylvania Teamsters fund will submit their proposal to Treasury [for benefit cuts under MPRA] no later than the first quarter of next year.

Since a 5500 form for 2016 was recently filed let’s check the updated funded status of this plan (and it’s not as rosy as the article presents).

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Breaking News: Alaska Ironworkers Withdraw MPRA Application

The withdrawal letter just popped up on the MPRA website.

Excerpts for the latest 5500 filing:

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