The federal agency which steps in to provide pension payments – though greatly reduced – when a company’s traditional defined benefit pension plan goes broke has unveiled a rule to let financially failing multi-employer pension plans merge into other plans. But it warns that even such mergers may not prevent cuts in current retirees’ benefits.

The Pension Benefit Guaranty Corporation’s proposal, published on June 6, could affect up to a million workers in one of every ten multi-employer plans, which are common in industries such as construction, trucking and food warehouses and factories.

"Plan mergers can make multiemployer pensions more stable and secure," said PBGC Director Tom Reeder. "PBGC can help save troubled multiemployer plans before they fail. That helps plan participants and reduces the long-term costs of the pension insurance program." Mergers can stabilize or increase the number of contributing employers, combine plan assets for more efficient investing, and reduce plan administrative costs, Reeder elaborated.

PBGC said “most multiemployer plans are not in danger of running out of money. But more than 10 percent of all participants in multiemployer plans -- over a million people -- are covered by troubled plans that are projected to run out of money.”

PBGC proposes to approve plan mergers after the plans meet standards designed to insure the failing multi-employer plans – or their successors – can continue to pay pension benefits. And PBGC promises technical aid and in some cases, money, to ease mergers.

Its proposal responds to a 2014 pension law rewrite that attacked the problem of failing multi-employer plans. The catch was that the law’s main solution – deep cuts in current pensions in order to keep plans alive for future beneficiaries – drew nationwide opposition.

Top officials of the Teamsters and the Machinists led the campaign against that law. Unionists met nationwide to criticize the law and to blast the first big failing plan that sought relief – cuts – under it, the Teamsters Central and Southern States Pension Fund. The fund trustees and Teamsters leaders openly disagreed over how to handle the plan’s problems.

The Treasury Department, which must OK such relief, rejected Central States’ proposal as inadequate and built on faulty financial premises. Meanwhile, several pro-worker lawmakers, led by Sen. Bernie Sanders, Ind-Vt., introduced legislation to repeal the 2014 law.