Congress uses $1.9 trillion relief plan to rescue multiemployer pension plans
It looks like Congress has finally come to the rescue of troubled pension plans that provide benefits to more than 1 million truck drivers, grocery store workers, construction workers and other union jobs.
The $1.9 trillion American Rescue Plan is best known for sending $1,400 checks to most Americans and extending unemployment benefits to millions of workers hurt by the pandemic.
After a decade-long wait, it’s also bailing out some multiemployer pension plans, which are pension plans operated jointly by unions and employers.
There are about 1,400 such plans in the U.S. Most are in good shape, but about 130 covering more than 1 million workers are in trouble, according to the Washington, D.C.-based Pension Rights Center.
Among the plans is the massive Central States Pension Fund that covers about 400,000 retirees and workers paying into the fund. More than 40,000 of those are in Ohio.
Without action, the Central States fund would have gone broke in four years.
The fund had assets of $10.9 billion on Sept. 30. It is spending over $2 billion a year more than it is taking in on benefits.
Like other troubled funds, the Central States fund has been plagued with a variety of problems that date back years. More recently, it has been hurt by a drop in the number of active workers participating in the fund.
“I’m over the moon with pensions getting settled,” said Mike Walden, a retired truck driver who is president of the National United Committee to Protect Pensions and a member of the Central States fund. He has worked for eight years to get the fund back on stable footing.
Walden blames Congress for making the situation worse by not coming up with a suitable plan to address the problem years ago. Solving the problem a decade ago might have cost $10 billion, he said.
Now, most estimates peg the cost the cost to help the hard-hit multiemployer plans at more than $80 billion.
Doing nothing would cost twice as much if not more, according to National Coordinating Committee for Multiemployer Plans, an advocacy organization based in the nation’s capital.
During the pandemic, Congress has acted to save airlines, small businesses, farmers and others through various relief programs, Walden said.
“I’m proud to say we’re getting a bailout like everyone else is getting theirs,” Walden said.
The House is expected to vote Wednesday on the Senate version of the bill that passed Saturday. It then would go on to President Joe Biden.
Not a single Republican in either the House or the Senate has supported the legislation.
Key provisions of the aid package for the multiemployer funds are based on the Butch Lewis Act that Sen. Sherrod Brown, D-Ohio, recently reintroduced in the Senate in case the overall bill didn’t include help for the multiemployer funds.
Lewis was a retired truck driver and Teamsters leader from West Chester, near Cincinnati, who lost sleep and fretted constantly about the cuts he and his fellow Teamsters faced because of the Central States problems. The stress took a toll: On New Year’s Eve 2015, he died of a massive stroke. He was 64.
The legislation would create a special program under which cash payments would be made by the federal Pension Benefit Guarantee Corp. to those funds to ensure that payments to retirees can continue.
The plan keeps the plans solvent for 30 years with no cuts to the benefits of participants and beneficiaries. It also would restore full benefits for retired in plans that have had to take cuts in recent years.
Finally, it requires plans that receive assistance to file regular status reports with the federal government and Congress.
“After years of fighting alongside Ohio retirees, workers and small businesses, we finally have a solution that will not only protect these pensions but will stimulate our local economies and prevent a major bailout that would have cost taxpayers hundreds of billions of dollars if we did nothing,” Brown said.