The Plight of Multiemployer Pension Plans

The Plight of Multiemployer Pension Plans

I refer to a portion of an article, “The Multiemployer Pension Crisis” by Aliya Wong, Executive Director of Retirement Policy at the U.S. Chamber of Commerce, recently published in The Hill, regarding the plight of multiemployer pension plans to help bring this issue to light:

Defined benefit pension plans have long been favored for retirement because they promise a guaranteed level of income. It’s a painless way for retirees to enjoy their golden years. That is, unless the plan goes bust.

Unfortunately, that’s the condition a number of pension plans are close to being in, particularly so-called “multiemployer” defined benefit plans. It is no exaggeration to say that these plans face a crisis. There is currently a shortfall of more than $124 billion in these plans. Roughly 1,141 of these plans, covering 1.3 million workers, face more than $36 billion in shortfalls and are likely to start going bankrupt in as little as five years.

One might think that employers in these plans could simply pay more to shore them up, but the amounts are so large that they could cause many employers to go into bankruptcy; not to mention, the government backstop for these plans – the Pension Benefit Guarantee Corporation (PBGC) – is itself predicted to go bust by 2025.

To address this issue, Congress has decided to establish a bipartisan committee tasked with drawing up legislation by the end of the year. The U.S. Chamber of Commerce and the National Coordination Committee for Multiemployer Plans (NCCMP) have issued a set of joint principles to aid the committee in its work.

Missing from this group are Labor Unions, whose members are the primary recipients of these benefits. 

Without substantive and timely multiemployer plan reform, businesses will go broke, workers will be left without benefits, and taxpayers may face a hefty bill. 

To read Ms. Wong’s article, in its entirety go to: http://thehill.com/blogs/congress-blog/labor/391953-the-multiemployer-pension-crisis

Bill Pienta, SOAR President