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Washington Post Editorial: Time for the Hard Truths on Multiemployer Pensions

Editorial Board Hails “Responsible Leadership” of MPRA Reforms, Highlights Growing Shortfalls of Pension Plans and Federal Guarantor, and Calls on Congress to Be Honest About Solutions

WASHINGTON, D.C. – In an editorial on June 21, the Washington Post, called on Congress to level with multiemployer pension participants about the prospects and costs of solutions, just days after the federal backstop for these pensions reasserted its own shaky financial footing. The editorial board cites the passage of the Multiemployer Pension Reform Act (MPRA) of 2014 and called the bipartisan efforts that led to its enactment “responsible,” but lamented that “this law is being undermined before it has had a chance to work,” referring to the decision by the U.S. Treasury Department to reject the request of the Central States Pension Fund to use the self-help tools provided in the MPRA to secure the retirement of its participants. The Post describes a “red-ink tsunami” that “threatens to swamp the agency responsible for backstopping the plans,” and closes by calling on lawmakers to be honest with pension participants, writing “The sooner politicians level with [pensioners]…the better.”

“In 2014, Congress acknowledged the serious challenges of plans facing insolvency and passed legislation that offers many such plans a self-help “lifeline” to remain solvent and, more importantly, provide higher benefits than participants would otherwise receive from the PBGC,” said Randy G. DeFrehn, Executive Director of the National Coordinating Committee for Multiemployer Plans. “Unfortunately for the participants of Central States, the first plan to apply for such relief, Treasury opted to engage in a series of ‘listening sessions;’ a process that favored empathy over one of problem solving pragmatism, ultimately at the expense of those very same pensioners to whom they had come to listen.”

The Post writes:

ANY POLITICIAN can make a career promising tax cuts, pay increases or other goodies — and many do. It takes leadership, however, to address realistically situations with no pleasing solutions.

Believe it or not, responsible leadership did emerge two years ago, in the form of Reps. John Kline (R-Minn.) and George Miller (D-Calif.), who pushed through bipartisan legislation that would preserve benefits for everyone over the long-term by enabling pension plans to trim benefits for some over the short-term.

Alas, this law is being undermined before it has had a chance to work.

If Central States collapses and the PBGC takes over, retirees would, by law, get even less than they would under the just-rejected proposal. And if the PBGC itself is insolvent — an alarmingly real possibility — retirees might get almost nothing. …

Not for a minute do we underestimate the plight of pensioners facing a major financial hit that they were told, long ago, they would never have to face. What we do dispute is that there’s a cost-free way out of their predicament. The sooner politicians level with them about that, the better.

Click here or see below to read the full editorial.

Will senators finally face up to the hard truth about pensions?

By Editorial Board

June 20, 2016

ANY POLITICIAN can make a career promising tax cuts, pay increases or other goodies — and many do. It takes leadership, however, to address realistically situations with no pleasing solutions. Just such a situation is presented by the large and growing funding shortfalls of multi-employer pension funds covering more than 10 million truckers, grocery store employees and other blue-collar workers, active and retired. This red-ink tsunami threatens to swamp the agency responsible for backstopping the plans, the federal Pension Benefit Guaranty Corp. (PBGC). 

Believe it or not, responsible leadership did emerge two years ago, in the form of Reps. John Kline (R-Minn.) and George Miller (D-Calif.), who pushed through bipartisan legislation that would preserve benefits for everyone over the long-term by enabling pension plans to trim benefits for some over the short-term.

Alas, this law is being undermined before it has had a chance to work. Last year, the Central States Pension Fund , which supports retired Teamsters, asked the Treasury Department to approve a Kline-Miller solvency plan that would have reduced payments by an average of 28 percent for about 115,000 current retirees. The alternative, Central States argued, was bankruptcy within a decade. But last month a special master designated by Treasury rejected the plan, asserting that it didn’t really assure long-term solvency because its assumptions about future returns on investments were too rosy. The remedy to that, of course, would be to propose even greater benefit cuts, something Central States has said it cannot conscientiously do. And so the financial death spiral continues.

Critics of Treasury’s decision smelled an election-year evasion; an unsurprising hunch given the fact that 46 senators, mostly Democrats, signed a letter in April urging rejection of the Central States plan, and that Democratic presidential insurgent Sen. Bernie Sanders (I-Vt.) has been campaigning on a proposal to bail out the multi-employer pensions with federal funds. Mr. Miller, now retired from Congress, told Politico the Treasury ruling “was a calculated response to sort of stop the discussion in this political year.”

Treasury insists that is untrue; we take the department at its word. Still, if Central States says it has no alternative to a proposal Treasury says isn’t adequate, exactly what is supposed to happen next? If Central States collapses and the PBGC takes over, retirees would, by law, get even less than they would under the just-rejected proposal. And if the PBGC itself is insolvent — an alarmingly real possibility — retirees might get almost nothing.

Mr. Sanders, characteristically, advocates federal rescue, without explaining why this is more feasible politically than it was in 2010, when a Democratic Congress declined to act on a similar proposal. Nor is it clear why defined-benefit pensioners should have a higher claim on taxpayer resources than the many people who do not have such pensions — and, indeed, often make less money than union members.

Not for a minute do we underestimate the plight of pensioners facing a major financial hit that they were told, long ago, they would never have to face. What we do dispute is that there’s a cost-free way out of their predicament. The sooner politicians level with them about that, the better.

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 10:08AM on June 22 2016 by Jessica
Categories: Press Release