Brown wants aid for pension plans, their insurer

WASHINGTON — The cochair of a special committee tasked with solving a crisis that threatens the pensions of 1.3 million Americans said Congress must shore up both the pensions and the insurer of those pensions.

Sen. Sherrod Brown, D-Ohio, said during a hearing Thursday of the Joint Select Committee on the Solvency of Multiemployer Pension Plans that any plan must effectively do both in order to keep the problem from recurring.

That means shoring up the multiemployer pension plans such as the Central States Plan, which covers 60,000 Ohioans, and shoring up the Pension Benefit Guaranty Corp., which insures such plans.

The multiemployer plans allow employers to pool resources in providing workers with a retirement benefit. For years, most plans ran at a surplus. But market crashes between 2000 and 2009, corporate bankruptcies that reduced the number of companies paying into the plans, and new laws have rendered many plans virtually unsalvageable.

Brown said that simply shoring up the PBGC would do nothing to help pensioners at risk of seeing their pension plans default, nor would it help the businesses that owe their retirees promised pensions.

“Ask anyone who’s ever totaled a car or dealt with flooding or fire in their homes — you’re sure glad you have insurance,” he said. “But you’d much rather have avoided the disaster in the first place.”

Under questioning by Brown, PBGC director Tom Reeder said that if nothing is done, workers and retirees will continue to lose the benefits promised to them as part of their employment agreements.

In addition, Reeder said, companies will continue to make contributions for active workers for benefits those workers will never get, and the PBGC would have to cut the minimum benefits that it’s obligated to pay to retirees if a plan fails.

Reeder estimated it would cost $16 billion over 10 years to shore up just the PBGC for two decades. But the PBGC’s failure, he said, would be “catastrophic.”

Sen. Rob Portman of Ohio, a Republican on the panel, said that Central States retirees who will already see their pensions cut if those are not shored up would see reductions of about 90 percent if the PBGC fails.

“As bad as it is for these retirees and for these individual plans, it also has a broader impact on our economy, and not just the local communities that will obviously be affected, but also the larger economy,” Portman said.

The committee has scheduled two more hearings in June, and a final two in July. Brown said the committee, which has until November to come up with a solution that Congress will consider in an up-or-down vote, will begin negotiating a solution to the crisis in July.