Time is Running Out for Multiemployer Pension Plans
Monday, November 24, 2014 - 10:30am - U.S. Chamber of Commerce
— Written by Sean Hackbarth
Some pension plans are at risk of going insolvent leaving retirees and employers
holding the bag, the Wall Street Journal reports [subscription
required]:
At issue are multiemployer plans, common in transportation, construction
and some other industries, that cover workers from many companies. Problems in
some large multiemployer plans are so severe that they are likely to bankrupt
the federal safety-net program for those pensions within the next decade,
according the governmentfs Pension Benefit Guaranty Corp.
The dire conditions reported in the PBGCfs 2014 annual report raise the
pressure on Congress to address the looming crisis.
The Associated Press reports that the deficit for PBGCfs gmulti-employer insurance program
increased by $8.3 billion in the past year to $42.4 billion.h
Employers who are part of multiemployer plans worry that if other companies
in the plan go bankrupt, theyfll end up paying a greater share of retiree
benefits—even for workers that never worked for them.
For example, bakers in one plan, faced this situation when Hostess when bankrupt in 2012.
In addition, some companies remaining in multiemployer plans are seeing
estimates of their withdrawal liability—their share of unfunded benefits they
would pay if they left the plan—be more than the worth of their companies.
Aliya Wong, Executive Director of Retirement Policy at the U.S.
Chamber, wrote earlier this year:
Without
multiemployer reform, many employers – including many small, family-owned
businesses – are in danger of bankruptcy. Without real reform to the
multiemployer system and resolutions to the underlying problems, more
employers will be forced into bankruptcy and more workers will be left without
a secure retirement.
Rep. John Kline (R-MN), Chairman of the House Committee on Education and the
Workforce calls the current, unsustainable path of the multiemployer pension
system, a gticking time
bombh that will force businesses to close and put retirement security at
risk.
The National Coordinating Committee for Multiemployer Plans (NCCMP), composed
of labor and business leaders, developed a set of comprehensive reforms. Congress needs to act before itfs too
late.