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Following CBO Projections of Pension Backstop Insolvency, Labor & Business Urge Immediate Action

In the Face of New CBO Projections that the PBGC Multiemployer Fund will be Exhausted in Seven Years, PMRS Calls for Urgency from House Committee to Preserve Retirement Security

(WASHINGTON) – With official government projections predicting the insolvency of the principal multiemployer pension backstop in just seven years and drastic reductions in benefits to follow soon after, the Partnership for Multiemployer Retirement Security (PMRS) is urging Congress to take action to protect these important retirement funds and allow multiemployer pensions to modernize their plans to extend and preserve benefits for retirees.

In a letter to the House Education and the Workforce Committee Subcommittee on Health, Employment, Labor and Pensions, the PMRS urges action on the “Solutions Not Bailouts” approach to avert the dire February 2014 Congressional Budget Office (CBO) projections showing the Pension Benefit Guaranty Corporation’s (PBGC) multiemployer fund could be exhausted by 2021 and that reductions to financial assistance would follow. The baseline projections predict that by 2021, the PBGC “will reduce financial assistance to a level that could be supported with premium income.” Making it clear that “doing nothing is not an option,” and that “some multiemployer plans are at risk of losing nearly all their benefits unless something happens – and soon,” the letter urges immediate action.

From the letter:

The recent Congressional Budget Office (CBO) baseline projections for the Pension Benefit Guaranty Corporation (PBGC) highlights further threats facing this universe of retirees, active participants and their employers. These projections make real for more than a million participants in at-risk multiemployer plans the possibility of seeing their pensions reduced by 90 or 95 percent depending on when they retire.

The CBO’s report on the PBGC’s multiemployer guaranty fund underscores the need for immediate action.

The fact is, under the Solutions Not Bailouts reforms, current and future retirees would fare much better than they would under existing law. We urge your committee to take action and provide solutions for the millions of multiemployer participants before it becomes a crisis.  Our recommendations provide measured, economically sound, “self-help solutions” because we believe that we can help ourselves before it’s too late, if we are given the flexibility to find workable solutions tailored to the economic realities facing each pension plan. As the CBO’s recent projections highlight, doing nothing will ensure future retirees will have nothing for retirement.

The last thing anyone wants is for pension benefits that have been negotiated; for which wage increases were foregone; and on which elderly workers depend for survival - to be reduced.  Nevertheless, the reality is that without prompt Congressional action, hundreds of thousands of participants in insolvent plans are certain to have their benefits reduced dramatically. And in less than a decade, those reductions could be even more catastrophic.

To read the full letter, click here.

The Partnership for Multiemployer Retirement Security is a unique partnership of business and labor groups that has formed to urge passage of common-sense, self-help reforms to the multiemployer pension system following the release of their report Solutions not Bailouts. The report offers private sector solutions to shore up the nation’s multiemployer pension plan system. Included are recommendations to boost solvency, provide opportunities for growth for employers, and increase retirement security without relying on an expensive, and unlikely, taxpayer bailout. The recommendations provide meaningful technical enhancements to the system on the whole, as well as provide new, innovative plan designs that will solidify and strengthen the fiscal future of the multiemployer pension system. This set of critical reforms to the multiemployer system will also protect multiemployer plans, spur economic growth by ensuring that retiring workers have income they can spend, help participating employers remain competitive and features a set of safeguards for those plans that face the danger of insolvency.

Learn more:

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Posted 15:17PM on March 19 2014 by Jessica
Categories: Press Release