- Ohio university quiz implies atheists are naturally smarter than Christians
- Rep. Henry Cuellar on border crisis: ‘Playing defense on the one-yard line’
- Activists vow to occupy fast-food restaurants to get higher pay
- Rep. Luis Gutierrez: Senate Dems wary of immigration politics
- Summer camp for 1 percenters: Sushi, limos and shopping at FAO Schwarz
- Colorado gun crackdown law found to be built on faulty data
- Hank Aaron steps to fundraising plate for Democrat Michelle Nunn
- ISIL terrorists blow up burial site of Jonah, vow more of same
- Impeach Obama, say 35 percent in new poll
- Taliban yank 14 Shiites off bus, bind and shoot them on Afghan road
Feds may run out of money to cover faltering pension plans within 15 years
Question of the Day
The federal program that protects workers in multiemployer pension plans expects to be exhausted in 10 to 15 years, and the financial hit will most likely land on retirees, a new report said this week.
The Government Accountability Office said the Pension Benefit Guaranty Corporation will be overwhelmed because so many multiemployer plans are so seriously underfunded that they will soon be unable to meet their obligations to retirees.
The plans have suffered from various factors, including losses in the stock market, the impact of the recession on the companies that sponsor the plans, and the growth in the ranks of the retired.
The report recommends Congress consider reforms to allow for the restructuring of the plans, in which a number of companies, bargaining with a union, join in a single pension plan for their employees.
There are about 1,500 such plans, covering more than 10 million workers, the report said. Workers affected are in such diverse fields as grocery stores, hotels, restaurants, theaters, construction and trucking.
GAO reported that 24 percent of the plans are critically underfunded, and an additional 16 percent are underfunded enough to be considered endangered.
“While most critical status plans expect to recover from their current funding difficulties, about 25 percent do not and instead seek to delay eventual insolvency,” the report said, citing figures from the 107 plans it surveyed.
The report says the number of plans that are insolvent is expected to more than double in the next four years. A plan is considered insolvent if it cannot pay pension benefits at federally guaranteed levels for a full plan year.
“PBGC is at risk of having neither sufficient tools to help multi-employer plans deal with their problems nor the funds to continue to pay benefits beyond the next decade under the multiemployer insurance program,” Joshua Gotbaum, director of the PBGC, told a House committee in December.
Beneficiaries are certain to feel the impact. Many plans, struggling to stay solvent, have already reduced benefits and increased employer contributions – which, in turn, reduced the amount of money employers could devote to pay raises or other benefit programs.
When a multiemployer plan becomes insolvent, PBGC sends it money to keep benefits flowing to retirees and to fund the plan’s administrative operation. The aid is nominally a loan, although the money is almost never repaid, the report said.
Two large multi-employer plans are currently expected to become insolvent within the next 20 years. If one of them becomes insolvent sooner, the PBGC could run out of money in as little as two to three years, the report said.
“Comprehensive action must be taken to shore up the PBGC for future generations of employers and retirees,” said the Partnership for Multiemployer Retirement Security, a partnership of business and trade groups, in a statement.
“There is no easy way to address some of the challenges facing these plans, the GAO recognized what we know to be true – we need balanced solutions supported by both business and labor that do not put taxpayers at risk,” the statement said.
The GAO report, based on input from representatives of the pension plans as well as other industry experts, recommends that Congress change the rules governing multiemployer plans to address the penalties employers face for withdrawing from the plans, and to ease the restrictions on the design of the plans’ benefits for retirees.
TWT Video Picks
Second- and third-stringers eye 2016 if front-runner stumbles
- Michelle Obama says money in politics is bad, asks donors for 'big, fat check'
- Presidents of Honduras, Guatemala blame U.S. for border children crisis
- 'We're coming for you, Barack Obama': Top U.S. official discloses threat from ISIL terrorists
- EDITORIAL: Detroit's water 'spigot bigots'
- NAPOLITANO: What if our democracy is a fraud?
- Hamas rejects Kerry's call for cease-fire; Fears grow others could join fight against Israel
- Brian Kelly, Notre Dame ready for different route to title
- Obama orders Pentagon advisers to Ukraine
- PRUDEN: The Democratic-wannabe mice under Hillary Clinton's feet
- Tom Petty: 'No one's got Christ more wrong than the Christians'
Obama's biggest White House 'fails'
Celebrities turned politicians
Athletes turned actors
20 gadgets that changed the world
Fighting in Iraq