(Editor’s note: this is yet another article on the funding crisis involving multiemployer pension plans, which cover all over the building trades unions).
Congress has left Washington for the summer and with each passing week of inaction the problems facing the 10.4 million multiemployer plan participants become tougher to fix.
With key provisions of the Pension Protection Act of 2006 expiring in December , employers, participants and trustees in the multiemployer pension universe face the uncertainty that comes with the approaching deadline without any guidance from policymakers.
Employers need a system that doesn’t place their businesses at risk, and employees and retirees need to know that their retirements are secure. They deserve a pension system – and retirement benefits – that they can count on, yet the longer Congress waits to take action, benefit losses become more likely and more severe. The system can recover if Congress takes timely action to provide the tools needed so the worst-off multiemployer plans can preserve and extend benefits for retirees and shore up the system for future beneficiaries.
Nationwide, there are approximately 4 million retired Americans who rely on multiemployer pensions for retirement security. These retirees use this income to buy goods and services, fueling local economies and supporting their communities. All told, multiemployer pensions have an estimated national economic impact of $38 billion. Now, thanks to a brand new online tool, we have data that documents the Multiemployer Pension Impact – or #MPI – in each state.
This new online at www.solutionsnotbailouts.com/map shows the number of contributing employers, retirees and the gross annual benefits payments to retirees in each state. It also shows how many plans in each state are in critical status, many of which face possible insolvency. This digital tool should serve as a resource for policymakers in Congress, reminding them that these pensions are integral to our economy and to people’s lives.
(According to the online map for Michigan’s Multiemployer Pension Impact, our state has 2,847 contributing employers and 56,489 retirees in multiemployer plans. Those retirees get $642 million per year in annual payments. Michigan has 11 multiemployer plans in “critical” funding status. The survey that produced these figures only captured 40 percent of the total multiemployer pension universes, so the actual totals are even higher).
The Great Recession delivered a big financial hit to some multiemployer pensions and their participants. Despite exhausting all of the options at their disposal, including reducing benefit levels for active workers and raising plan contributions, often by reducing wages, at least one hundred multiemployer plans now face the real possibility of insolvency – leaving retirees at risk.
Fortunately, there’s a way forward that both labor and business support and doesn’t require an expensive taxpayer bailout. This proposal, known as Solutions Not Bailouts, is under consideration by some in Congress. It doesn’t ask for a bailout, but rather for the tools for plans to shore up their pensions themselves. They are self-help solutions, but Congress must give the trustees of these plans the flexibility to carry them out, and they must act now. Every day of inaction results in fewer plans that can be rescued by these common sense solutions and lower ultimate benefit payments for participants.
With only a few short weeks of congressional action remaining in the year and Congress’ to-do list growing, multiemployer plan participants are understandably nervous. With modest reforms to federal pension laws, Congress could provide long-term stability to multiemployer plan participants, shift the risk of potential responsibility away from the taxpayer, and reduce the financial pressure on thousands of American employers struggling to maintain pensions for their workers. With the impacts on each state now made so clear, the question is: don’t these employers and retirees deserve action?
(via the Huffington Post)