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New Data Highlights Urgent Need for Multiemployer Pension Reform

 

New Data Highlights Urgent Need for Multiemployer Pension Reform 

Business-Labor Partnership Unveils New Chart Featuring Data from a Real Multiemployer Plan Demonstrating Why Pension Reform Needs to be On Congress’ November To-Do List

Washington, DC: The Partnership for Multiemployer Retirement Security unveiled a new chart today, highlighting the urgency for multiemployer pension reform. The chart uses data from an actual construction industry multiemployer plan in the Midwest and shows that if Congress does not act now to give plans the tools they need, the consequences will be disastrous.

The chart, as seen below, illustrates three possible future scenarios:

  1. Congress does not act: Benefits exhausted by 2028, plan becomes insolvent;
  2. Congress implements Solutions Not Bailouts: Giving trustees the ability to take immediate action would return the plan to solvency; and
  3. Congress waits to act: By waiting just two years, measures to rescue the plan are no longer sufficient.

 


The Partnership issued the following statement:
“We can’t wait a moment longer for Congress to reform the multiemployer pension system. Our proposal not only gives plan trustees the tools they need to survive and thrive, it also protects taxpayers by avoiding a costly bailout. Solutions Not Bailouts has the support of business and labor and is designed to keep the multiemployer pension system strong for decades to come – now we just need Congress to act.” 

As the above chart shows, this plan will exhaust its assets in the year 2028 if nothing is done. When that happens, the average participant, including retirees, will have his/her benefit cut by 50% to the meager PBGC guarantee level. Making matters worse, the PBGC itself is on the path to insolvency within the next ten years, which means the participants in this plan face the possibility of losing their retirement benefits in their entirety. The plan has exhausted all reasonable measures to restore solvency, including doubling the contribution rate to approximately $10 per hour, slashing the benefit accrual rate by half, and imposing other cutbacks.

Under Solutions Not Bailouts, however, the trustees of the plan could voluntarily enact a 10% benefit suspension on all plan participants, which is projected to be sufficient to return the plan to solvency. This suspension will put the plan on a path to recovery and is preferable to a 50% benefit loss later. If corrective action is delayed by only two years, the 10% voluntary suspension is no longer adequate.

What does this mean in dollars, and “sense”?

The plan in the chart currently pays an average benefit of $1,700 per month.  If Congress does not give the trustees the tools necessary to prevent insolvency, the average benefit will decline to approximately $750 per month under the PBGC.  With Solutions Not Bailouts, the trustees could voluntarily adopt a recovery program that would preserve the average monthly benefit payment at 90%, or $1,500 per month.  Taking that action prevents insolvency and the catastrophic cuts that come with it. Solutions Not Bailouts makes sense.

 

About the Partnership for Multiemployer Retirement Security

The Partnership for Multiemployer Retirement Security, a joint initiative of business and labor, was formed in February 2013 with the release of Solutions not Bailouts: A Comprehensive Plan from Business and Labor to Safeguard Multiemployer Retirement Security, Protect Taxpayers and Spur Economic Growth.” The recommendations in the plan were developed by the National Coordinating Committee for Multiemployer Plan’s Retirement Security Review Commission over a period of 18 months.  The Commission studied the challenges facing the multiemployer pension system and designed a series of recommendations that safeguard retirement security and specifically address the challenges facing multiemployer plans. This comprehensive plan from business and labor, if enacted, will ensure that multiemployer plans continue their decades-long mission of providing cost-effective and reliable retirement benefits to millions of working class Americans while protecting taxpayers from risk.  Learn more at: www.solutionsnotbailouts.com

 

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Posted 17:59PM on October 21 2014 by Jessica
Categories: Press Release