Thread: MEP Watch
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Old 07-01-2014, 11:37 AM
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campbell campbell is offline
Mary Pat Campbell
Join Date: Nov 2003
Location: NY
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here is the NYT version of the story:

In 2006, Congress passed a law intended to strengthen company pensions, and the new study looked, for the first time, at how employers were responding to it. Adding this behavioral information required a major change in the pension organization’s methodology, which Mr. Gotbaum said was among the main reasons the report came out months late.

The 2006 law required severely troubled multiemployer plans to set up rehabilitation programs and file the details with the government. In general, companies were supposed to put more money into their shared investment pools, workers were supposed to build their benefits more slowly, and retirees were supposed to give up the parts of their pensions that were not considered core benefits.

But when the researchers began started tracking employer behavior, they found that a significant number of multiemployer plans were so hard hit that their trustees decided not to use all the medicine prescribed in 2006. They did not think it would do any good and might even make things worse.

Mr. Gotbaum said the agency realized this over the last year or two, because more and more plan officials had been notifying the government that they were not in compliance with their own rehabilitation plans.

“They told us, ‘It’s not that we’re not willing to do it,’ ” he said. Rather, the plan trustees told the government that they had run into limits in how far they could push their companies and workers without destroying their whole pension plans.

Much of the problem was demographic. The most troubled plans often had more retirees than active workers. Trustees of those plans realized that they were pushing the workers to tighten their own belts in order to let the retirees keep receiving bigger benefits than the workers thought they would ever get themselves. If they kept pushing, the workers or the sponsoring companies would drop out of the pool, setting up a slow but steady death spiral.

“There is a concern that if the severely distressed plans fail, that this might lead to efforts to abandon healthy plans, too,” Mr. Gotbaum said.


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