Lawmakers on Wednesday were finalizing a deal to shore up
the government's pension insurance fund with provisions that would raise
premiums and allow troubled pension plans covering more than one employer to
cut retiree benefits.
As
of midday Wednesday, the reform provisions, which drew loud opposition from
unions and other groups representing retirees, were not included in the latest
version of a massive, $1.1 trillion spending bill, according to a spokeswoman
for the House Appropriations Committee. The measure may be voted on as an
amendment in the Rules Committee, she said.
Payments
to backstop these so-called multiemployer pension plans have run to hundreds of
millions of dollars in the last decade. The Pension Benefit Guaranty Corp. has
warned it may run out of funds unless Congress implements reforms.
But
the changed proposed Tuesday has drawn fire from unions and other retirement
advocates.
"The
problem is much more serious than skimming retirement benefits to keep the PBGC
on life support," said Richard Greer, a spokesman for the Laborers'
International Union of North America. This proposal "would siphon off tens
of millions of dollars in hard earned retirement benefits to try and rescue the
PBGC."
About
a quarter of the roughly 40 million workers who participate in a traditional
"defined benefit" plan—those that pay retirees a guaranteed check
every month—are covered by these multiemployer plans, according to the Bureau of Labor Statistics.
Both
public and private pension funds were hit hard by the 2008 financial crisis,
which wiped out trillions of investments used to pay retiree benefits. Since
then, many private plans have recovered those losses and are on a more solid
footing.
But
multiemployer plans—which typically cover smaller companies and unions—face a
different set of financial challenges. Declining union enrollments, for
example, mean there are fewer active workers to cover the cost benefits for
retirees, many of whom are living longer than expected than when these plans
were established.
Multiemployer
plans also face the added burden of their pooled pension liabilities. When one
member of the plan fails to keep up with contributions, for example, the burden
on the other members increases.
In
the last four years, the Department of Labor has notified workers in more
than 600 of these plans that their plans are in "critical or endangered
status."
Last
year, the PBGC reported that its
program backing multiemployer plans was $5 billion in the red. It projected
that—unless Congress acted—there was "about a 35 percent probability"
its assets would be exhausted by 2022 and "about a 90 percent
probability" by 2032.
Single-employer
pension plans are covered by a separate PBGC program that is on a much more
solid financial footing.
Proponents
of the proposed PBGC reforms argue that they will help prevent more
multiemployer plans from going under and that retirees are better off with
smaller monthly payments than none at all.
"We
have a plan here that first and foremost works for the members of the unions,
the workers in these companies, and it works for the companies," said
George Miller, D-Calif., who was involved in talks with Republicans over the
pensions provisions.
But
critics contend that the issue is too complex to be resolved with a last-minute
rider to a $1.1 trillion spending bill.
"With
more than 1,600 pages, there's no way lawmakers can read and have robust debate
about the spending choices included in the bill," said Lindsay Koshgarian,
research director at the National Priorities Project, a budget watchdog.
"This is a lot of money to commit in a whirlwind process with so little
transparency that even lawmakers don't have time to understand the bills
they're voting on."
Source:
CNBC.com
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