It could be another trillion dollars in unfunded Defined Benefit pensions either picked up by taxpayers or defaulted upon. Fox Rorthschild’s newsletter For Your Benefit presents the situation in an article on page 4:
In early December, the United States Supreme Court announced that it will hear three consolidated cases to decide whether pension plans established by religiously-affiliated employers are entitled to the same treatment as plans established by churches. All three cases involve defined benefit pension plans maintained by church-affiliated healthcare systems; in each case, lower courts have ruled that the plans are not exempt from ERISA and must comply with all plan qualification requirements.
Three years ago, participants, concerned about their benefits (and knowing that PBGC guarantees will not be available), began to file lawsuits claiming that the plans maintained by their religiously-affiliated employers should not be church plans and should not be exempt from ERISA. The Supreme Court agreed to hear these cases because the appellate courts in the Third, Seventh and Ninth Circuits have ruled in favor of the plaintiff employees, while district courts in other circuits have taken the contrary position.
A decision that plans maintained by religiously-affiliated employers are not church plans reportedly could affect millions of employees across the country and trigger pension funding liabilities in the billions of dollars.
Today we got:
Text of Amicus Brief of U.S. to Supreme Court on Definition of Church Plan (PDF)
U.S. Department of Labor [DOL]; Pension Benefit Guaranty Corporation [PBGC]; U.S. Department of the Treasury; and U.S. Department of Justice
Why are these government agencies so anxious to keep these ‘church’ plans exempt from ERISA?
On December 16, 2016 the Ironworkers Local 17 Pension Fund became the first (and only) multemployer (union) plan allowed to reduce benefits under MPRA by, in this case:
when all Participants are considered, the average monthly benefits will be reduced under the Suspension Plan by 20%, from $1,401 to $1,120.
However, for those benefit cuts to go into effect as of February 1, 2017, a majority of 1,938 eligible plan participants and beneficiaries had to vote for it. Yesterday the results of that vote were released:
Defined Benefit plans in the public sector are a disaster as the actuarial/political cabal has consistently undervalued their costs to the point now where defaults are inevitable – which is something unions representing public employees do not want to hear so they use a good chunk of their members’ dues to create an alternative reality.
P.L. 2007, c. 29, which became effective on January 1, 2008, was reform legislation “designed to ensure the system serves career public employees rather than political appointees” and to “cut out the entrenched core of abuse that has been corrupting our pension and benefits systems from within.” One of the components of the new law, N.J.S.A. 43:15A-7.2, excluded professional services contractors, such as municipal lawyers, architects and engineers from enrolling in the state’s PERS pension system.
At least one lawyer in New Jersey had a problem with that and his employers offered help.
While a reasoned report put forth by pension experts fades away and politicians fiddle with otiose gimmicks in an election year in New Jersey we have former governors recognizing the crisis:
and a prospective governor stepping up:
Health benefits are the immediate concern as participants in the United Mine Workers of America 1974 (UMWA) Pension Plan are unlikely to see any significant cuts in their pensions primarily because the average retiree receives about $6,900 annually, far less than the PBGC guarantee, so even after exhaustion of all trust assets by 2025 the Mine Workers will likely have the PBGC continuing to pay most of their benefits (unless of course the PBGC itself goes belly-up by then too).
Yesterday S175 was introduced by Senator Joe Manchin (D-W.V.):
A bill to amend the Surface Mining Control and Reclamation Act of 1977 to transfer certain funds to the Multiemployer Health Benefit Plan and the 1974 United Mine Workers of America Pension Plan, and for other purposes.
Immediately following S176 was introduced by Senate Majority Leader Mitch McConnell titled:
A bill to amend the Surface Mining Control and Reclamation Act of 1977 to transfer certain funds to the Multiemployer Health Benefit Plan, and for other purposes.
Both bills propose funneling money past April from the Abandoned Mine Reclamation Fund to pay health benefits to “orphaned” retired miners and their dependents left adrift by coal companies that have gone bankrupt. However S175 also wants the UMWA Pension Plan to get some money. The question is from where? Continue reading
The New York Times headline seemed interesting:
But then it turned out NOT to be about why there is supposedly less oversight over journalists but rather implied a nonsensical link between having fewer people working on newspapers and somehow there being less coverage of important government actions.