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Randy DeFrehn Statement on Treasury Decision Regarding Central States Pension Fund

Treasury Decision Could Mean Massive Benefit Cuts, Overwhelm Federal Safety Net and Impact Entire Multiemployer Pension System 

WASHINGTON, D.C. – Today, following the decision of the United States Treasury Department and the review of the Treasury Secretary’s Special Master Kenneth Feinberg regarding the Central States Pension Fund, Randy G. DeFrehn, Executive Director of the National Coordinating Committee for Multiemployer Plans issued the following statement on behalf of the Partnership for Multiemployer Retirement Security: 

“While today’s decision by the U.S. Department of the Treasury to deny Central States Pension Fund’s rescue plan will temporarily spare many from cuts to their hard-earned benefits in the short-term, it also sentences participants to an insecure retirement where massive benefit cuts are inevitable. 

“Yes, these decisions are tough, but the mathematical reality is simple: without being able to use these benefit preservation tools, Central States and the Pension Benefit Guaranty Corporation (PBGC) multiemployer fund – the social safety net provided to all multiemployer plan participants which already faces its own insolvency – will both be bankrupt.  This decision is not limited to Central States.  Without an expensive and highly unlikely congressional bailout more than 75,000 hard-working Americans and their families currently receiving PBGC benefits and any others who are in plans headed for insolvency that do not qualify for these preservation tools will, for all practical purposes, lose this safety net and find their benefits reduced to nearly zero. 

“The tools being leveraged by the Central States Pension Plan were carefully created by a coalition of dozens of business and labor organizations working together to address the looming crisis facing a significant minority of multiemployer defined benefit pension plans and their participants.  Those reforms had bipartisan support in Congress and were thoroughly vetted over a period of several years. They were designed recognizing the political reality that a Congressional bailout was not an option and that the federal backstop for pension plans would likely fail to adequately protect retirees.  By their decision today, Treasury is gambling that Congress, which has flatly refused to assist these plans or the PBGC in the past, will now appropriate the more than one hundred billion dollars required to rescue not just Central States, but the entire system.  It is a big bet. Unfortunately, rather than those who made this decision, it will be the pensioners who pay the price if it is lost.”

The Stakes for Multiemployer Pension Participants

Following the Treasury decision, Central States may have the opportunity to resubmit their plan, however:

  • Even if, after reconsideration, the Plan is able to craft a plan that is acceptable to Treasury the required benefit reductions will be even deeper because of the delay.
  • If the Plan is not able to develop a new rescue plan, it will run out of money and, by law, all Plan benefits will be cut to the levels guaranteed by the Pension Benefit Guaranty Corporation (PBGC).
  • This is especially tragic for the more than 130,000 disabled and elderly Central States pensioners whose benefits would have been fully protected under the plan that was proposed, whose benefits will now be subject to the full reductions to the meager PBGC guaranty levels.

About the Partnership for Multiemployer Retirement Security

The Partnership for Multiemployer Retirement Security 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 10:30AM on May 12 2016 by Jessica
Categories: Press Release