Bill aims to bolster pension funds
Legislation introduced by U.S. Sen. Sherrod Brown on Thursday aims to shore up the country’s struggling multi-employer pension plans.
The bill would put the Central States Pension Fund back on stable footing without imposing cuts on retirees, according to an analysis of the bill by the fund.
“If Congress passed the legislation, and the loan and financial assistance were received beginning effective July 1, 2018, and based on reasonable assumptions at this point in time, the fund is projected not to become insolvent,” the fund said this week in a letter to Brown and U.S. Rep. Richard Neal, a Massachusetts Democrat who also is a sponsor of the proposal.
Last week, Brown, an Ohio Democrat, proposed a loan program that would allow struggling multi-employer plans to borrow money to remain solvent and keep providing pensions. Backers of the legislation, including retirees, were in Washington for a news conference Thursday, when the bill was formally introduced.
Many congressional Democrats are on board, but Republican votes will be needed to get the legislation passed because the GOP controls the House and Senate.
“It’s going to be a battle,” said Mike Walden, president of the National United Committee to Protect Pensions. Walden has been working for several years to preserve pensions for retirees of Central States and other, similar funds.
The analysis by Central States was important to show that the plan will work.
“It was something of a relief,” Walden said of the analysis. “There was concern about how it would be scored.”
The Central States fund provides benefits primarily to retired Teamsters truck drivers and their families. Nearly 50,000 of the fund’s 400,000 participants live in Ohio, more than in any other state.
The fund is running out of money, and to save it, Central States proposed pension cuts of 50 percent or more for some beneficiaries, following a law passed in 2014. The Treasury Department turned down that plan last year, finding that the proposed cut didn’t comply with the law.
But the fund’s finances are deteriorating, and if nothing is done, it will run out of money in less than 10 years, according to some projections.
Brown’s plan would create an office, the Pension Rehabilitation Fund, within the Treasury Department. The office would supervise the loans, and the money for the loans would come from bonds sold by the government to investors.
Walden said that under the plan, Central State retirees and survivors would be removed from the plan and given an annuity that would pay their benefits every month with no reduction. The payments would come from the money the fund would borrow, plus money from the Pension Benefit Guarantee Corp., a federal agency that insures multiemployer funds and also is in financial trouble.
Central States then would have about $15 billion on hand to cover 60,000 active workers and no retirees, Walden said. Over time, the fund should be able to take care of those 60,000 workers as they retire, while building up enough money to repay the loan in 30 years.
“What we’re driving at is to keep our pensions,” Walden said.
The goal, he said, is to be able to attach the legislation to a congressional spending bill. Action probably would be needed over the next few weeks so the program could begin next summer.