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  #521  
Old 06-29-2018, 02:20 PM
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Mary Pat Campbell
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WITHDRAWAL LIABILITY

https://www.benefitnews.com/opinion/...c25f6a50415ce9

Quote:
Views Looking at an expanding landscape: Multiemployer plan withdrawal liability
Spoiler:
If an employer withdraws from a multiemployer pension plan such that the employer no longer has an obligation to contribute to the plan, the withdrawing employer is generally responsible for its share of the plan’s underfunding. This is referred to as withdrawal liability.

Typically, in the context of an asset sale transaction, the seller is the entity that has withdrawn from participation in the multiemployer plan, and any withdrawal liability assessment applies to the seller. However, where the seller does not or is unable to pay, the multiemployer plan may seek to recover the withdrawal liability assessment from the buyer on the theory that the buyer is the successor to the employer.

In general, the buyer in an asset purchase transaction might be deemed to be a successor employer — and thus liable for the seller’s withdrawal liability obligation — if the buyer (1) had notice of the liability and (2) substantially continued the business operations.


However, a recent case decided by the United States Court of Appeals for the Ninth Circuit, Heavenly Hana, LLC v. Hotel Union & Hotel Industry of Hawaii Pension Plan, illustrates that a buyer might be determined to be a successor employer even if the buyer does not have actual notice of the withdrawal liability. In the case, the buyer (Heavenly Hana) agreed to purchase a hotel and related assets owned by the seller. Under the seller’s collective bargaining agreement with the hotel union, the seller contributed to the Hotel Union & Hotel Industry of Hawaii Pension Plan, the multiemployer plan covering the seller’s union workers.

Ten days before the deal closed, the seller ceased contributing to the multiemployer pension plan and on the closing date formally withdrew from the Plan. The seller’s withdrawal from the multiemployer plan triggered withdrawal liability of nearly $760,000. Following the closing date, the multiemployer plan demanded payment from the buyer as successor to the seller.

Because the buyer operated the hotel, used the assets acquired from the seller in the operation of the hotel, and employed the majority of the seller’s employees, the second prong of the successor employer test — continuity of business operations — was satisfied. However, the buyer challenged the plan’s assessment on the grounds that buyer lacked actual notice of the liability. The court rejected this argument and applied a constructive notice standard; that is, the court determined that the buyer should have discovered the seller’s withdrawal liability and thus was deemed to have notice of it.

The court based its determination on the fact that the buyer (1) had previously operated a hotel that participated in a multiemployer plan, (2) was aware of the unionized workforce, and (3) had the awareness to ask legal counsel whether it could incur withdrawal liability in connection with the transaction. (Counsel incorrectly advised that it could not.) In essence, the court determined that the buyer should have known about the potential withdrawal liability.


Due diligence considerations

During the due diligence process, asset purchasers should inquire about the existence of union employees participating in multiemployer plans. If such a plan exists, asset purchasers should review union agreements, plan documents, and any withdrawal liability estimates prepared by the multiemployer plan. Armed with this knowledge, an asset purchaser may negotiate purchase price adjustments, indemnities, or escrow accounts to minimize its financial and legal exposure.

This article originally appeared on the Foley & Lardner website. The information in this legal alert is for educational purposes only and should not be taken as specific legal advice.
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  #522  
Old 07-07-2018, 03:00 PM
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VALUATION

https://www.segalco.com/multiemploye...#Multiemployer

Quote:
The Multiemployer Pension Plan Crisis: Segal’s Observations

Spoiler:
Currently, around 130 multiemployer pension plans are projected to become insolvent in the next 20 years. Some of these plans are projected to run out of money within the next 10 years. As these plans become insolvent and are taken over by the Pension Benefit Guaranty Corporation (PBGC); the PBGC, in turn, is then projected to become insolvent around 2025, after which it will not be able to pay guaranteed benefits for insolvent multiemployer plans. If these events occur, more than one million workers, retirees and beneficiaries will see their hard-earned pension benefits drop to nearly zero. Despite these disquieting statistics, it’s important to keep in mind that, under current law, the majority of multiemployer plans are on target to fully satisfy their benefit obligations. (For the latest data on the financial status of Segal’s clients, see an infographic of key findings.) What Congress Is Doing to Help Troubled Plans Earlier this year, Congress formed the Joint Select Committee for the Solvency of Multiemployer Pension Plans and charged it with recommending a legislative solution to this pressing issue. The Joint Select Committee is weighing options for strengthening the multiemployer pension system and making it more sustainable for the future. In the first two public hearings held by the Joint Select Committee, some members raised questions suggesting that one way to reduce the risk associated with multiemployer plans would be to force them to use more conservative actuarial assumptions and to adhere to stricter funding standards — in other words, follow funding rules similar to those in place for single-employer plans. When considering possible solution to the Multiemployer Pension Plan Crisis, it is important for the Joint Select Committee to understand the nature of multiemployer pension plans, and how they are fundamentally different from single-employer plans. Unreasonable Funding Requirements for Multiemployer Pension Plans Could Destabilize the System. Applying single-employer funding rules to multiemployer plans would be unreasonable and inappropriate. Moreover, it could significantly increase, rather than decrease, the risk facing the multiemployer system. Here’s why: Both the amount and volatility of contribution requirements for multiemployer plans would drastically increase. Many participating employers would not be able to afford significantly higher contributions, which would drive them to withdraw from the plans in which they participate. In some cases, financially weak employers may be forced into bankruptcy. If new, unreasonable funding standards precipitate employer withdrawals, contribution bases will be significantly weakened. Many otherwise-healthy plans could be pushed toward insolvency. In the first two public hearings held by the Joint Select Committee, some members raised questions suggesting that one way to reduce the risk associated with multiemployer plans would be to force them to use and adhere to more conservative and stricter funding standards — in other words, follow funding rules similar to those in place for single-employer plans. However, that suggestion ignores one key piece of information about these stricter single-employer rules – as we discuss below these stricter rules have neither preserved or stabilized the single-employer defined benefit plans: As a result of these rules the number of active single employer defined benefit plans has declined because of increased cost and significantly increased variability in annual contribution requirements. Since implementing the rules, relief measures have had to be adopted to restore stability to the single-employer system, with minimal positive impact. In a letter to the Joint Select Committee, we shared our concerns about the possibility of requiring multiemployer plans to use actuarial assumptions that currently only apply to single-employer plans. See Segal’s Letter to the Joint Select Committee › To quantify the impact of a change in the funding rules relating to multiemployer interest rate assumptions used to discount liabilities, Segal Consulting performed a detailed analysis of two national multiemployer plans. We found the increase in the necessary contributions to meet current funding standards would not be sustainable for either of the plans, both of which are currently considered healthy or on the road to good health. In fact, a change to a considerably lower discount rate would create a much greater pension crisis than the one that already exists. Download the Report to See the Study Results › Multiemployer Interest-Rate Assumptions Are Not the Problem. For multiemployer plans, the Pension Protection Act of 2016 (PPA’06) reduced the period over which shortfalls must be funded, but it kept the interest-rate assumption used to measure plan liabilities as the expected investment return on plan assets. Today, most multiemployer plans have interest-rate assumptions in the range of 7.0 to 7.5 percent. In recent years, there has been increased scrutiny of those assumptions. Some even believe the assumptions contributed to the current multiemployer solvency crisis. That belief is not supported by data. Even taking into account the investment losses from the 2000s, actual historical returns for multiemployer plans have consistently exceeded 7.5 percent on a rolling 30-year basis.* Because investment returns are, by nature, volatile, pension plans must be permitted to build surpluses following periods of strong investment returns, so they have a cushion against the periods of investment losses that will likely follow. Unfortunately, pension funding and tax laws prevented plans from building up surpluses following the strong investment returns of the 1990s. As a result, multiemployer plans were less able to withstand the investment losses that came in the 2000s. Employer Withdrawals and Bankruptcies Are a Major Concern. Many multiemployer plans strike a delicate balance in keeping employers participating in the plan. Employers often consider the cost of paying ongoing contributions to remain in the plan versus the cost of exiting and paying withdrawal liability. Given the significant increases in contribution rates in recent decades, withdrawal has become a more attractive option for many employers. If multiemployer contribution requirements were significantly increased, many more financially healthy employers would come to the conclusion that it no longer makes financial sense to continue participating in the plan, and they would decide to withdraw. Less healthy employers may find they cannot afford the higher contributions needed to remain in the plan, nor can they afford to pay their withdrawal liability. This could drive some employers into bankruptcy. The compounding effect of employers withdrawing from the plan or being driven into bankruptcy is a major concern. As more employers withdraw from the plan, the burden on the remaining employers will continue to increase, motivating them to withdraw as well. A significant number of plans could be pushed into mass withdrawal, insolvency, or both. In the end, this could significantly increase the projected liability for PBGC’s multiemployer program. A Destabilized Multiemployer Pension Plans System Would Have Significant Collateral Damage. The PBGC’s multiemployer system would be further strained, as more plans would require financial assistance. More workers, retiree, and beneficiaries would be at risk of losing their pensions, increasing their dependency on social programs. Furthermore, the distress placed on participating employers could have negative effects on the broader economy. Multiemployer plans are the single most effective tool available to workers seeking a lifetime income stream in retirement. More than 10 million workers and their families rely on this system to contribute towards their financial security in retirement. Ninety percent of those workers are participants in plans fully capable of meeting the promise of a secure retirement. Correcting Common Misperceptions About the Funding Rules for Single-Employer Plans Single-employer funding rules have not strengthened retirement security. When Congress passed the Pension Protection Act of 2006 (PPA’06), it made stark changes to funding standards for single-employer pension plans. Notably, PPA’06 required plan liabilities to be measured using more conservative actuarial assumptions, and it shortened the period over which plan sponsors must fund any shortfalls. Some may say these changes improved funding levels security for single-employer plans, but they also contributed to the continued decline of participation in defined benefit (DB) plans. Increasingly, corporate sponsors are freezing their DB plans. Many are considering termination once interest rates rise. Instead, employees participate in defined contribution (DC) plans, which are inefficient at providing lifetime retirement income. It is too early to measure the societal effects of the shift in employer-provided retirement plans from DB plan to DC plans. Some experts, however, believe we will begin to see increasing numbers of employees working longer than they are able due to inadequate retirement savings, and increasing numbers of retirees outliving their savings. Both of these factors could increase dependency on social programs. Single-employer plan funding requirements are not based on market rates. PPA’06 intended to apply the principles of financial economics to single-employer plan funding standards, requiring plan liabilities to be measured based on current market interest rates rather than expected returns on plan assets. Specifically, PPA’06 mandated a three-segment yield curve of corporate bond rates to measure single-employer plan liabilities, representing a risk free (or at least low-risk) discount rate. PPA’06 took effect in 2008, and it was almost immediately followed by the Global Financial Crisis. To stimulate the economy, the Federal Reserve began to cut interest rates, which soon reached historic lows. Suddenly, corporate bond yields were producing unreasonably low interest rates for measuring single-employer plan liabilities — and, therefore, unreasonably high contribution requirements on employers that cannot afford them. Congress passed a series of relief measures allowing “interest-rate smoothing” for single-employer plan sponsors, including a provision in 2012 that allows the use of a 25-year average of market interest rates.† The funding relief provided by Congress to single-employer plans was well-placed, and it highlights how the theoretical principles of financial economics often have practical shortcomings with pension funding. Multiemployer Plans Are Fundamentally Different from Single-Employer Plans. There are certain fundamental differences between multiemployer plans and single-employer plans. For this reason, many of the funding rules that have been implemented for single-employer plans are inappropriate for multiemployer plans. For one, contributions to single-employer plans are made at the discretion of the sponsoring employer. The rate of contributions to multiemployer plans, on the other hand, is established through collective bargaining and is locked in through the duration of the contract. For this reason, multiemployer plans cannot easily adapt to the volatility of contribution requirements that would result from market-based measurements, shortened funding periods, or both. Additionally, multiemployer plans by definition have more than one participating employer. Having many participating employers provides advantages such as pooling of risk. Conversely, when employers withdraw from a multiemployer plan — whether voluntarily or due to a bankruptcy — they leave “orphan” liabilities that become the responsibility of the remaining employers. If multiemployer funding requirements were to be increased, the greater burden on participating employers would not be isolated to the benefits of their own employees, but it would include a portion of orphan liabilities as well. For many plans, the increased burden associated with orphan liabilities would be too much for the remaining employers to bear. Most Multiemployer Plans Have Already Taken Significant Corrective Actions. Over the past two decades, most multiemployer plans have taken significant corrective actions to improve funding levels following the investment losses of the 2000s. These corrective actions most often include reductions in the rate of future benefit accruals for active plan participants and increases in contribution rates for participating employers. Several plans in critical status have already declared they have exhausted all reasonable measures, meaning that they cannot reasonably emerge from critical status within the statutory timeframe (usually 10 years). Even plans currently in the “green zone” (neither endangered nor critical) have had to more than double contribution rates over the last dozen years or so, while slashing the rates of future benefit accruals to a fraction of what they once were. If multiemployer funding requirements were substantially increased, it would require plans to take additional corrective action to meet the higher funding targets. Depending on the magnitude of the change in funding requirements, some multiemployer plans may be able to make further changes to contributions and benefits to adhere to the new standards. Many (if not most) plans, however, would find further significant increases to contributions or reductions in benefit levels to be unsustainable. Meeting the Challenge It is in everyone’s interest — workers, retirees, beneficiaries, employers and taxpayers — to find a solution to the multiemployer pension solvency crisis that strengthens the system for future generations. The components of a comprehensive solution exist already: Establish a federally guaranteed loan program to provide financial assistance to troubled plans. The loan program should be designed to allow troubled plans time to resolve their problems. Avoid undue cost and financial burdens to healthy plans by keeping PBGC premiums at a reasonable level. Develop an understanding of the multiple factors that have contributed to the financial solvency crisis of some plans. Recognize the solution is complex and do not be lulled into a false comfort level with simplistic ideas, such as solely focusing on funding rules. Adopt legislation, such as the GROW Act, which would give healthy plans more flexibility and tools to remain healthy plans. Do not require plans to become insolvent before making plan redesign tools or composite plans available. * Based on an analysis of median annualized returns for multiemployer plans by Segal Marco Advisors, the investment solutions provider of The Segal Group. † The Moving Ahead for Progress in the 21st Century Act (MAP-21) permitted the use of a 25-year average of segment rates for determining funding requirements for single-employer pension plans.

I am not going to fix the way that copy/pasted. You can go to the link.

letter to the joint select committee:
https://www.segalco.com/media/3815/j...-committee.pdf

study:
http://www2.segalco.com/study-altern...-funding-rules

John Bury's comments:
https://burypensions.wordpress.com/2...oyer-business/

Quote:
The Appropriateness of Keeping Segal in the Multiemployer Business
Spoiler:
There is a crisis in the world of multiemployer (union) plans necessitating significant reductions in participant benefits and a bailout after the midterm elections. There are several reasons for the demise of these plans with actuaries one of the more significant abettors. If honest actuarial assumptions were used to value these plans there would be no crisis – and also a lot fewer defined benefit plans as they would be unaffordable to those currently allowed to use factors that inflate funding levels – which is the reason the actuaries doing valuations for 28% of all multiemployer plans in the country do not want the bailout committee to consider forcing the use of honest actuarial assumptions.


In their plea for the status quo Segal Consulting (Segal) took a look at…

two of their well-funded plans that would not be well-funded using lower interest rates,
some random historical interest rates that back up their position (ie. not that Bank of England study showing the period Segal studied as having by far the highest rates over the last 5,000 years), and
trying to gull the bailout committee away from requiring higher contributions that would cause many plans (and the fees Segal gets from them) to disappear.
Of 1091 multiemployer plans with MBs filed for 2016 so far, Segal are the actuaries for 304 of them.
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  #523  
Old 07-10-2018, 02:01 PM
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Mary Pat Campbell
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Originally Posted by campbell View Post
VALUATION

https://www.segalco.com/multiemploye...#Multiemployer



I am not going to fix the way that copy/pasted. You can go to the link.

letter to the joint select committee:
https://www.segalco.com/media/3815/j...-committee.pdf

study:
http://www2.segalco.com/study-altern...-funding-rules

John Bury's comments:
https://burypensions.wordpress.com/2...oyer-business/
https://www.plansponsor.com/segal-co...mployer-plans/

Quote:
Segal Consulting: Change to Actuarial Assumptions Not Reasonable for Multiemployer Plans
David Brenner, senior vice president and national director of Multiemployer Consulting points out that, “a change to a considerably lower discount rate would expand the current pension crisis from about 10% of multiemployer plans to every multiemployer pension plan.”
Spoiler:

In the first two public hearings held by the Joint Select Committee for the Solvency of Multiemployer Pension Plans, some members raised questions suggesting that one way to reduce the risk associated with multiemployer plans would be to force them to use more conservative actuarial assumptions and to adhere to stricter funding standards—in other words, follow funding rules similar to those in place for single-employer plans, according to Segal Consulting.

To determine the impact of such a change, the firm performed a detailed analysis of two national multiemployer plans.

Segal Consulting found that the increase in the necessary contributions to meet current funding standards would not be sustainable for either of the plans studied, both of which are currently considered healthy. If the discount rate changed to 3.7%, the contribution rate for the first plan it studied would have to more than double (to more than $20/per hour) to avoid a funding deficiency. The impact of a 3.0% discount rate would be considerably more severe: contributions would have to nearly triple (to around $30/per hour).

If the discount rate were to change to 3.7%, to prevent a funding deficiency and remain in the green zone, contributions for the second plan it studied would have to increase from $40 million to over $400 million over the next three years.

David Brenner, senior vice president and national director of Multiemployer Consulting points out that, “a change to a considerably lower discount rate would expand the current pension crisis from about 10% of multiemployer plans to every multiemployer pension plan.”

Segal Consulting concludes that applying single-employer funding rules to multiemployer plans would be unreasonable and inappropriate. Many participating employers would not be able to afford significantly higher contributions, which would drive them to withdraw from the plans in which they participate. In some cases, financially weak employers may be forced into bankruptcy. If new, unreasonable funding standards precipitate employer withdrawals, contribution bases will be significantly weakened. Many otherwise-healthy plans could be pushed toward insolvency.

The firm says the suggestion ignores key information about these stricter single-employer rules:

As a result of these rules the number of active single employer defined benefit plans has declined because of increased cost and significantly increased variability in annual contribution requirements.
Since implementing the rules, relief measures have had to be adopted to restore stability to the single-employer system, with minimal positive impact.
Segal Consulting shared its findings with Joint Select Committee for the Solvency of Multiemployer Pension Plans. A link to the letter and the firm’s study results can be found here.

During a hearing before the committee, witnesses suggested that a long-term, low-interest-rate loan program would be a solution to the multiemployer pension crisis.
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  #524  
Old 07-10-2018, 03:32 PM
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VALUATION

https://www.natlawreview.com/article...-pension-plans
Quote:
Recent Developments in the Joint Select Committee on Solvency of Multiemployer Pension Plans
Spoiler:
The solvency crisis bearing down on the multiemployer pension plan system has captured the attention of Capitol Hill. Since March, the Joint Select Committee on Solvency of Multiemployer Pension Plans (the “Committee”) has held a series of hearings examining the multiemployer pension system. Although it is unclear whether the bipartisan Committee ultimately will agree on legislation, the hearings represent the most significant focus on multiemployer pension plans since Congress passed the Pension Protection Act in 2006.

The Committee was established by the Bipartisan Budget Act of 2018 (P.L. 115-123) and is comprised of 16 members—8 from the House, and 8 from the Senate. Committee members are tasked with devising recommendations and legislative language that will “significantly improve the solvency of multiemployer pension plans and the Pension Benefit Guaranty Corporation” (PBGC). In furtherance of this mission, the Committee has held hearings exploring the inner workings of the multiemployer pension system, the role of the PBGC, and the ways in which contributing employers are affected.

At the Committee’s inaugural session on March 14th, members expressed hope that a bipartisan solution could be reached—yet the potential for a partisan divide was evident. The Committee held its first substantive hearing on April 18th, at which members received a primer on multiemployer plan issues from experts from the Joint Committee on Taxation and the American Academy of Actuaries.

The Committee’s May 17th hearing focused on the impending solvency crisis facing the PBGC. PBGC Director W. Thomas Reeder cautioned the Committee that the PBGC multiemployer insurance program is headed toward insolvency. According its projections, the PBGC needs $16 billion over the next ten years to stay afloat. Director Reeder emphasized that if the multiemployer insurance program becomes insolvent, the PBGC will be able to fund only a small fraction of the benefits it currently guarantees—which, in many cases, are already significantly less than the amount promised in a pension. Committee members inquired into the structure underlying the broader multiemployer pension system, and examined the primary controls available to Congress—a loan program and PBGC premium increases—that could help remedy the PBGC’s looming insolvency.

In June, the Committee shifted its attention to contributing employers’ perspectives on multiemployer plans. Most of the witnesses agreed that a long-term, low-interest-rate federal loan program for troubled plans would be a significant step in the right direction. Some Republican Committee members expressed precedential concerns about creating a loan program, as well as misgivings over Congress’ ability to ensure that loans would be repaid. Some Democratic members indicated that a loan program—such as that proposed in the Butch Lewis Act (S. 2147, H.R. 4444) sponsored by Sen. Brown (D-OH) and Rep. Neal (D-MA)—should be part of a legislative solution.

The Committee is anticipated to hold additional hearings, including a field hearing in Columbus, Ohio, on July 11, and a hearing featuring participants and retirees in late July in Washington, DC. November 30 is the Committee’s deadline to vote on a report, which, if approved, will be submitted along with legislative language to the President, Vice President, and congressional leadership. As the Committee accelerates its negotiations over final recommendations and advances toward its statutory deadline, Covington will continue to monitor these developments closely.



http://www.pionline.com/article/2018...-congress-told
Quote:
More conservative discount rates would hurt multiemployer pension system, Congress told
Spoiler:
Using more conservative interest rates to value multiemployer pension liabilities could put the whole multiemployer system at risk, the National Coordinating Committee for Multiemployer Plans told members of a special joint select committee in a letter.

Some members of the congressional Joint Select Committee on Solvency of Multiemployer Pension Plans have raised the possibility of using more conservative discount rates to forestall having more distressed plans in the future, so the NCCMP had Horizon Actuarial Services LLC model the potential impact on the entire multiemployer system and had Segal Consulting do the same for a representative sampling of their multiemployer clients.

The Horizon analysis found that changing discount rates would cause a dramatic increase in required contributions and volatility, while basing discount rates on corporate bond yields would cause the percentage of well-funded "green zone" plans to drop to 7% from 60%.

RELATED COVERAGE
GAO: Central States pension fund's investment costs 'in line' but funding still decliningEmployers open to multiemployer loan programWestern States multiemployer plan applies for third time for benefit cuts
In a study released with the letter, Segal Consulting found that using a 3.7% discount rate as a proxy for the current two-year corporate bond yield would require one plan to more than double its contribution rate to avoid a funding deficiency. For a second plan, contributions would jump to $400 million from $40 million over the next three years to avoid a funding deficiency.

For a portfolio with a 50/50 S&P 500/bond index asset allocation, Segal Consulting said annual rolling 30-year returns have never gone below 6.7%, and the average return for the five most recent 30-year periods was 9.1%. Segal officials recommended against considerably lower discount rates, which would expand the current pension crisis from about 10% of multiemployer plans to every multiemployer plan, they said.

Changing discount rates to the 30-year Treasury rate or rates based on bond yields used by single-employer plans, as some members of the joint select committee have proposed, would force most healthy plans "to take immediate and drastic action to correct a new problem that would only be created" by such legislation, NCCMP executive director Michael Scott said the letter Friday to the joint select committee.


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  #525  
Old 07-11-2018, 03:22 PM
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BAILOUT

http://www.pensionrights.org/newsroo...essure-congres

Quote:
Thousands of Workers and Retirees Head to Ohio to Protest Pension Cuts and Pressure Congress to Act
Spoiler:
COLUMBUS, OHIO - On Thursday July 12th, thousands of active and retired mineworkers, truck drivers, warehouse workers, bakery workers and others who worked hard to earn a lifetime pension are rallying in Columbus, Ohio to urge lawmakers to protect their benefits.

The rally is being organized to coincide with a field hearing that will be convened in Columbus on Friday, July 13th by members of the Joint Select Committee on the Solvency of Multiemployer Plans. The Joint Select Committee, created by Congress in a bi-partisan budget deal last February, is charged with developing a consensus solution to the multiemployer pension crisis affecting families across America.

Pensions are the most fundamental of economic promises. Workers give up cash wages and other benefits in exchange for the promise of a guaranteed pension at retirement. But that promise was undermined when Congress passed the Multiemployer Pension Reform Act (MPRA) in 2014, which allowed for the first time for severely underfunded multiemployer plans to reduce retirees’ benefits as a misguided way of saving pension plans. Now, there is a general acknowledgment that MPRA as a seriously flawed law that needs to be replaced with a better, fairer solution.

There are currently 1.5 million blue-collar retirees and workers in 130 financially-troubled multiemployer pension plans who stand to lose as much as 50-70% of their pension benefits if Congress does not act quickly.

“At a time when the country is so divided, this is a perfect all-American issue for Republicans and Democrats to unite on, and find the right solution,” says Karen Friedman, the Executive Vice President of the Pension Rights Center. “Retirees earned these benefits and if their pensions are cut, it will affect their families, their communities and the economy.”

The rally will be held on Thursday, July 12 at 11:00 at the Statehouse Grounds at 1 Columbus Square, Columbus Ohio and will feature speeches from union officials and retirees who either have lost a portion of their pensions or may face big pension cuts in the future.

The Field hearing in Ohio – convened by Senator Sherrod Brown (D-OH), and Senator Rob Portman (R-OH) – will be held on Friday, July 13th at 2:00 p.m. at the Ohio Statehouse, Richard H. Finan Hearing Room, Room 126, 1 Capitol Square, Columbus, Ohio.
https://burypensions.wordpress.com/2...ittee-protest/
Quote:
Bailout Committee Protest
Spoiler:
According to a press release from the Pension Rights Center:

On Thursday July 12th, thousands of active and retired mineworkers, truck drivers, warehouse workers, bakery workers and others who worked hard to earn a lifetime pension are rallying in Columbus, Ohio to urge lawmakers to protect their benefits. The rally is being organized to coincide with a field hearing that will be convened in Columbus on Friday, July 13th by members of the Joint Select Committee on the Solvency of Multiemployer Plans.

………………….

There are currently 1.5 million blue-collar retirees and workers in 130 financially-troubled multiemployer pension plans who stand to lose as much as 50-70% of their pension benefits if Congress does not act quickly. “At a time when the country is so divided, this is a perfect all-American issue for Republicans and Democrats to unite on, and find the right solution,” says Karen Friedman, the Executive Vice President of the Pension Rights Center. “Retirees earned these benefits and if their pensions are cut, it will affect their families, their communities and the economy.”

Sounds reasonable enough but I have a few questions for these protestors (and the bailout committee) to ponder.


Won’t that bailout money be coming from another set of people who also worked hard?
Why is there a need for a bailout? Were there no funding rules in place for these plans?
What about the vast majority of private sector hard-workers who were gulled into accepting inadequate 401(k) plans to replace secure defined benefit plans?
If this bailout goes through then where is the incentive to fund defined benefit plans honestly?
Who’s next?
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Old 07-15-2018, 06:47 PM
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SHEET METAL WORKERS

http://www.indeonline.com/news/20180...-pension-pinch

Quote:
Sheet metal workers feeling pension pinch

Spoiler:
The Sheet Metal Workers’ Pension Fund covers approximately 4,500 people who are current employees or retirees.

A few thousand local sheet metal workers and retirees could lose a significant chunk of their retirement pensions later this year, as a pension crisis is being felt nationally.

Officials who manage the Sheet Metal Workers’ Pension Fund applied in the spring with the U.S. Treasury Department to reduce payout amounts to workers. The treasury has until December, or 225 days from the filing date, to respond to fund managers with a decision.

“Basically, it’s a last ditch effort to save the plan,” said Brad Klausner, a business agent with the pension fund, on Friday at the Sheet Metal Worker’s Local 33 union office in Massillon. “It’s a small fund — not the best — but people count on it.”

The pension fund covers approximately 4,500 people who are current employees or retirees of Local 33. It had $41.4 million in assets and $84.9 million in liabilities as of April 30, 2017, according to a Form 5500 filing.

Related content
66,000 Ohio pensions at risk; senators hear concerns
July 13, 2018
“If the fund goes insolvent, everybody loses,” Klausner said, “but maybe it just gets shaved a little.”

Many pension plans have not recovered from an economic downturn that started a decade ago. A shaky real estate market and bad stock investing have caused some funds to fail, according to Dana Vargo, chairwoman of the Ohio-Canton Local 92 Retirees Committee, one of the groups working to save pensions.

If the treasury accepts a plan to save the sheet metal workers’ fund, a vote of the union membership would follow. A majority voting “yes” for any cut would make the change official, Vargo said. But if a vote does not take place among the membership, the cut would summarily be approved.

“These (sheet-metal workers) are people who gave up vacation time and health care to put money away for their pension,” said Vargo. “They deserve to keep their investment.”

Generally, amounts of any pension fund reduction are based on how long a union worker has been a participant in the plan, Vargo said, but some cuts occasionally reach 50 percent or more of annual worker payments.

Cleveland iron workers accepted pension cuts of about 60 percent in 2017, she said.

Many pensions in jeopardy

Numerous Ohio pension plans, including Central States Teamsters, United Mine Workers, Ironworkers Local 17, Ohio Southwest Carpenters, Bakers and Confectioners are on the brink of failure.

If nothing is done to the plans, they will likely fail. As a result, retirees would face massive cuts to pension benefits earned over tenures of employment, Vargo said. The crisis has put at risk the pensions of about 1.3 million retirees and active workers.

Without new congressional legislation, the Pension Benefit Guaranty Corporation — the federal entity that insures pensions — could go belly up.

A statement via email Friday to The Independent from the office of U.S. Rep. Bob Gibbs, R-Lakeville, said the promise to retirees who have pensions should be kept.

“Congressman Gibbs has publicly urged a solution that takes into consideration the promises made to the millions of hardworking Americans who have planned their retirements under the presumption their pensions would be there,” said Dallas Gerber, the congressman’s deputy chief of staff.


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Old 07-15-2018, 08:35 PM
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http://www.dispatch.com/news/2018071...ension-hearing
Quote:
Big crowd expected Thursday for Statehouse rally before pension hearing

Spoiler:
WASHINGTON — Denny Pickens spent more than 43 years working in coal mines in anticipation of the prize at the finish line: the pension he’d spent four decades working for.
Now, with that pension in danger, the 66–year–old from Wheeling, West Virginia, will head to Columbus on Thursday with a singular message: Let me keep that pension.
“These pensions are what keep us going and all we worked for,” he said. “We have to have these. This money isn’t fun money. This is money that pays our bills.”
That same urgency will drive other retirees to Columbus for a rally Thursday that may draw thousands. On Friday, there will be a field hearing of a bipartisan joint congressional committee tasked with solving a pension crisis that has put at risk the pensions of about 1.5 million retirees and active workers.
The committee, made up of four Republican senators, four Democratic senators, four Republican House members and four Democratic House members, chose Columbus in part because of how deeply the state is connected to the crisis — 66,000 pensioners in at–risk plans are in Ohio — and partly because its co-chairman, Sen. Sherrod Brown, is from Ohio. Sen. Rob Portman, R-Ohio, is also a member of the committee. The hearing is scheduled for 2 p.m. at the Statehouse.
The hearing is coming at a critical point in the committee’s work. By the end of the month, the committee will conclude the fact-finding part of its investigation and move on to finding a solution.
That solution, due in November, must be virtually bulletproof: It has to be approved by five out of eight members of each party on the committee and then pass both the House and the Senate by an up-or-down vote, with no amendments allowed.
The stakes are high, and if a solution isn’t found, so is the potential for catastrophe.
Listen to the latest Buckeye Forum politics podcast:
“There is no easy solution,” said Brown, a Democrat who fought for creation of the committee. “If there were an easy solution, Congress would’ve done it a long time ago.”
But failure, he said, would mean businesses on the hook to pay pensions could be at risk, retirees could lose money and the Pension Benefit Guaranty Corporation — the federal entity that insures pensions — could go under.
At issue are about 150 to 200 of the 1,400 multi-employer pension funds in the nation, created by companies that pooled their resources to provide their employees with retirement funds. For years, most of the plans ran at a surplus, but the recession, combined with corporate bankruptcies and a rash of baby-boom retirements, has taken a toll on the solvency of the pension plans.
Those who watch the issue worry that if those 150 to 200 plans go under, the others could fall like dominoes — creating the potential for a catastrophe that could impact a vast swath of the economy.
“The only thing we know is that nobody knows for sure” what will happen if the plans fail, said Aliya Wong, executive director of retirement policy at the U.S. Chamber of Commerce.
“This isn’t just a retiree problem,” Wong said. “It’s a business problem, and it’s a jobs problem.”
She and others see few solutions that don’t involve some sort of loan program that would help offset the potential for catastrophe. But Republicans have been resistant — part of the reason the committee was set up was because a bill Brown introduced — the Butch Lewis Act, named after a Cincinnati–area retiree who died fighting for his pension — stalled in the Senate. That bill would have created a low-interest, 30-year federal loan to troubled pension plans, with no cuts to retiree benefits.
Portman, meanwhile, admits there’s a “fault line” between Republicans and Democrats on the issue, with Republicans opposing a loan program and Democrats saying the solution should be a loan program.
“My role has been from the start that we have to take the two points of view and reconcile them,” he said.
He said any solution that does not involve what he calls “shared responsibility” will likely “not stand the test of time.”
The very structure of the committee, with an equal number of representatives from both parties, “is very challenging,” Portman said, and the timing — the solution is to be presented around Election Day — does not help. “But that’s what we have to work with,” he said.
He is not the only one worried. Mike Walden, president of the National United Committee to Protect Pensions, said he sees the current process “as being deadlocked.”
Walden, one of six scheduled to testify at Friday’s hearing, said the only solution likely to pass would be one with “shared responsibility” — a solution that would involve pensioners giving up some of their pensions and employers as well as taxpayers also kicking in.
“Nobody is going to be 100 percent happy on this,” he said.

https://www.ai-cio.com/news/failed-p...-pbgc-minimum/
Quote:
Failed Plan Members May Receive Only Fraction of PBGC Minimum * | Chief Investment Officer

Spoiler:
PBGC says it would only be able to pay less than one-eighth the minimum benefit.
The Pension Benefit Guaranty Corp. (PBGC) is in such financial dire straits that members of failed multiemployer pension plans would likely receive only one-eighth of the minimum benefits they are supposed to be guaranteed, warned PBGC Executive Director Thomas Reeder during a congressional hearing last week.
During the hearing before the joint House-Senate Select Committee on Solvency of Multiemployer Plans, Sen. Sherrod Brown (D-OH) questioned Reeder about what would happen if plans fail, and PBGC insurance kicks in without help from Congress.
“If you do nothing today, workers and retirees will continue [to] lose the benefits that have been promised to them,” said Reeder. He said the administration has laid out a proposal for increased premiums to pay the benefits that have been promised. But he said “the longer we wait to put that money into the PBGC, the more that money will have to be over a shorter period of time.”
The PBGC acts as an insurance company for multiemployer pension plans, but it is severely underfunded. As a result, the more plans that fail put an increasing strain on the organization’s finances.
When asked if the PBGC would be able provide the minimum guaranteed benefit to failed plan members without congressional action, Reeder said “no,” adding that the PBGC would have to cut it to about one-eighth the minimum benefit, or less.
“If they’re making $8,000 in guaranteed benefits today, they’d get less than $1,000,” said Reeder.
Reeder said that without help from Congress, propping up the PBGC could cost taxpayers $16 billion over 10 years, and that would only keep the organization going for another 20 years.
When asked about the impact on the withdrawal liability for businesses, Reeder said he didn’t believe most plans facing insolvency in the near future would terminate, so he doesn’t expect a mass withdrawal. *
“But they will have a continuing obligation to make a contribution to a plan that has already become insolvent,” he said, “so they’re making contributions for active workers for benefits that they will never get.”
Although the line of questioning centered on multiemployer pension plans, their struggles could also become a burden for single-employer pension plans, even though the PBGC’s single-employer pension insurance is on much more stable financial footing.
A 2017 issue brief published by the American Academy of Actuaries that offered ways the PBGC could bolster its struggling multiemployer program proposed combining the program with its single-employer program.
“The single-employer program is currently in a stronger financial position than the multiemployer program,” said the brief. “However, this approach would generate potential inequities, as it adds new risks to single-employer plan sponsors and participants.”
It also warned that due to fundamental differences in how the single and multiemployer programs operate, combining the funding “could put stress on the single-employer system and further erode support for defined benefit plans.”



http://www.toledoblade.com/news/2018...nsion-fix.html
Quote:
Thousands rally for private pension fix - The Blade

Spoiler:
COLUMBUS — Thousands rallied on the lawn of the Ohio Statehouse Thursday in advance of a congressional hearing Friday seeking a way to save private pensions considered to be on the brink of failure.
If pensions that have not recovered from the 2008 recession should go under, some 1.3 million retirees nationally, including some 66,000 in Ohio, could lose their benefits entirely or see them cut.
“An attack on one worker is an attack on all workers, and seeing working people come together to fight for what’s right, to have the American people rally with us to protect the benefits we’ve earned is a beautiful thing,” AFL-CIO President Tim Burga told the crowd that filled the lawn in front of the Statehouse and wound around both sides of the building.
“Nothing is more sacred than the promise of a secure retirement after a lifetime of hard work,” he said.
Taxpayers could also find themselves on the hook if the Pension Benefit Guaranty Corp. that insures such pension plans should collapse under the weight of failing systems. The Congressional Budget Office has estimated the tab to taxpayers could be $101 billion over 20 years.
In a rare hearing on the road to be held Friday at the Statehouse, the 16-member House and Senate Joint Select Committee on Pensions, co-chaired by Sens. Sherrod Brown (D., Ohio) and Orrin Hatch (R., Utah), will hear testimony from workers, businesses, and union officials on the potential impacts.
The committee, on which U.S. Sen. Rob Portman (R., Ohio) also serves, is charged with coming up with a potential fix to the problem to be presented to Congress by late November.
The affected union pension funds affect coal miners, truckers, bakers, carpenters, and others.

https://abc6onyourside.com/good-day-...pension-crisis
Quote:
Combining forces: Sherrod Brown to hold hearing with Rob Portman on pension crisis | WSYX

Spoiler:
COLUMBUS, Ohio —*Ohio Democratic Senator Sherrod Brown is combining forces with his Republican colleague, Senator Rob Portman, to hold a hearing on a pension crisis that will affect thousands of Ohio workers.
Brown stopped by the Good Day Columbus studios ahead of that hearing to talk about the issue, as well as some of the big items the US Senate is taking on this fall.
The Friday hearing is the fifth meeting of the House and Senate Joint Select Committee on Pensions. Democrat Sherrod Brown and Republican Rob Portman, Ohio's two U.S. senators, are planning to attend.
The hearings will examine the financial effects of the potential failure of numerous pension plans guaranteed by the federal government on retirees, workers, small businesses and taxpayers.



http://radio.wosu.org/post/ohio-sena...risis#stream/0
Quote:
Ohio Senators Lead Congressional Meeting To Address Looming Pension Crisis | WOSU Radio

Spoiler:
Members of the U.S. Congress left Capitol Hill and held a special meeting in Columbus on the national pension crisis. Pension plans for more than one million union workers and retirees are in danger of collapse if something isn’t done soon. More than 60,000 Ohio workers could be impacted.
Union members from around the country traveled to Columbus, making their plea to Congress. They represent a range of sectors and professions, from coal miners and Teamsters to candymakers. The union members say they spent their lives working toward earning their pension, but those funds are drying up.
U.S. Sen. Sherrod Brown, a Democrat, said it was important to connect union workers with lawmakers. Brown is co-chairing the congressional Joint Select Committee with Ohio's other Senator Rob Portman.
“This whole industrial Midwest has been hit because of Wall Street malfeasance and other economic factors that have caused these pensions to almost collapse, and we have an obligation to fix this,” he said.
Brown’s proposal, the Butch Lewis Act, would offer low-interest, 30-year loans. But opponents call that a taxpayer-funded bailout.
The meeting came a day after thousands of union workers and retirees from across the country rallied at the Ohio Statehouse calling on Congress to pass a plan to save their pensions.

https://www.clevescene.com/scene-and...-comes-to-ohio
Quote:
Pension Crisis Showdown Comes to Ohio | Scene and Heard: Scene's News Blog

Spoiler:
COLUMBUS, Ohio - The Ohio Statehouse will be flooded with thousands of people this Thursday fighting to preserve their pensions. The rally comes a day before a congressional committee meets to discuss a solution to the multi-employer pension crisis. The retirement of the baby boomer generation, the recession and corporate bankruptcies are testing the solvency of 130 pension funds.
Dave Dilly of Coshocton is a retired coal miner, and among those at the rally with a message for policymakers. "Get 'er done, that's what we always say, 'Get 'er done,'" he states. "(If) this whole pension thing falls through, it could send us all into a tailspin downhill and the economy goes down the tubes with it." U.S. Sens. Sherrod Brown (D) and Rob Portman (R) of Ohio are on the Joint Select Committee on Multiemployer Pensions, which is charged with finding a solution by November. Without action by Congress, about 1.5 million retirees and workers could lose up to 70 percent of their pension benefits. Solutions that have been discussed include federal loan programs, cuts to pension benefits, and employers and tax payers helping to foot the bill. People from Indiana, Kentucky, Ohio, West Virginia and other states will be on hand for the rally. As a third generation coal miner, Dilly says he understands the impact on retirees and their families. "My dad died at 70 with black lung, so he paid the price there," Dilly relates. "My mom was fortunate enough because, the way the pension was set up, she was able to draw a little pension so that she could help support us after my dad died, and it helped her tremendously." The retirements of carpenters, ironworkers, coal miners and truck drivers are among those affected - pensions Dilly says were rightfully earned. "In America, we were told if you work long and hard, you'll get your rewards," he states. "And that's what most of these guys have done. "We've did our part, we've got a pension that we can rely on, and now it's a possibility it's going to be gone." He notes that a 1946 agreement with President Harry Truman guaranteed retirement security for coal miners, and it's a promise Dilly believes should be kept. Reporting by Ohio News Connection in association with Media in the Public Interest and funded in part by the George Gund Foundation.
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Old 07-15-2018, 08:38 PM
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MISSISSIPPI

https://mississippitoday.org/2018/07...r-legislators/

Quote:
Nearly $100 million jump in state pension costs will be issue for legislators | Mississippi Today

Spoiler:
It will cost an additional $99.6 million to fund the Mississippi Public Employees Retirement system starting with the fiscal year beginning July 1, 2019.
The PERS Board has voted to increase the employer contribution from 15.75 percent of payroll to 17.40 percent of payroll to help ensure the long-term stability of the program that provides retirement benefits for most state and local governmental employees. The employers that will be footing that extra 1.65 percent will be state agencies, universities, community colleges, public schools and local governmental entities.

Gil Ford Photography
House Appropriations Chair John Read, R-Gautier, said, “(the pension cost)*issue will come to the Legislature. At this time, we don’t know which way it will go.”
The increase approved by the PERS Board will force legislators during the 2019 session, starting in January, to determine whether they can come up with additional funds to help the state agencies, public school districts and universities and community colleges pay for the increased retirement costs for their employees. If legislators do not, those entities will be forced to provide the additional funds within their existing revenue.
Traditionally, the state does not help local governments funds their share of the retirement system.
To fund the increase, minus the local government’s share, would cost about $76 million*— $18.1 million for state agencies, $15.9 million for universities, $37.4 million for kindergarten through 12th*grade and $4.9 million for community colleges.
When asked if legislators would provide the additional funds during the 2019 session for state agencies and education entities, House Appropriations Chair John Read, R-Gautier, said, “That issue will come to the Legislature. At this time, we don’t know which way it will go.”
Theoretically, the Legislature could provide the total amount of needed revenue, a portion of it or none of it. But regardless, the governmental entities are still mandated by state law to provide the amount of money deemed necessary by the PERS Board to ensure the financial stability of the program, according to Pat Robertson, the outgoing executive director of PERS.
The extra money needed for the retirement system comes at a time when the Legislature has been grappling with funding for state agencies and education entities. The budgets of many agencies have been cut or underfunded in recent years.
In addition to what the government entities contribute to the program, each employee must pay 9 percent of their salary toward their retirement benefits.
Under state law, the PERS Board, which consists of elected officials, such as the state treasurer and members elected by employees, can increase the amount the governmental entities must contribute to the retirement program. But to raise the employee contribution requires action by the Legislature. In addition, there are court rulings and opinions by the office of the Attorney General indicating that legislators might be limited in their ability to increase the employee contribution without also providing additional benefits to the employees.
There are nearly 325,000 people in the PERS system, including current employees, retirees and other employees who used to work in the public sector but no longer do. The program has total assets of $26.5 billion.
The issue has been that PERS’ is funded at 61 percent of full funding, based on the latest numbers. That means that it has 61 percent of the assets needed to pay the benefits of all the people in the system, ranging from the newest hires to those already retired. It is about $17 million short of full funding.
Robertson stressed the program is financially stable, but the goal of the PERS Board is to become fully funded by 2047.

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Old 07-16-2018, 06:52 AM
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http://www.dispatch.com/opinion/2018...oo-big-to-fail

Quote:
Editorial: Are wobbly pension funds too big to fail?

Spoiler:
Later this year if we’re lucky, some groundwork laid in Columbus this past week could help to steady a precarious national house of cards known as multiemployer pension plans. These plans were the subject of a Statehouse rally on Thursday and an unusual congressional field hearing – the only one being held on this topic in the nation – on Friday.

If the plans can be shored up without triggering the collapse of a taxpayer-backed guarantee fund, much of the credit will go to Ohio’s U.S. senators, Democrat Sherrod Brown and Republican Rob Portman.

It is critical for them to continue giving this challenge their best efforts, not only for 66,000 Ohioans whose retirement funds are in jeopardy but also as many as 10 million people across the country who depend on multiemployer pension funds.

Brown and Portman are each to be commended for pushing the uphill challenge for solvency of these union-based pension plans this far. If Ohio’s senators can get that boulder the rest of the way to the crest, they stand to be nationally recognized for helping to engineer a rare bipartisan and bicameral legislative solution in a lethargic, partisan Congress. But we’re getting ahead of ourselves.

At issue is the critical financial status of hundreds pension plans created to allow companies with union employees to pool resources to provide pensions for their workers. They vary from small family-owned businesses such as bakeries and construction companies to larger trucking and mining companies. The biggest plan at risk of failure is the Central States Pension Funds for Teamsters plan with 50,000 Ohio participants, the most of any state.

These multiemployer funds have been around for decades, but changes in their industries complicated their ability to recover from the 2008 recession, and now many of them are poised to fail. If that happens, experts fear a “contagion effect” that could topple other plans as well, straining social-service safety nets and the economy as a whole.

The shortfall in troubled plans is pegged at about $100 billion. And the Pension Benefit Guaranty Corporation, a federal fund created in 1974 to help protect these and other pension funds, is itself projected to fail in about seven years.

Both Ohio senators deserve credit for devoting years of efforts to this issue. Portman is a recognized authority in Congress on pensions and Brown is a primary architect of the select committee, an unusual legislative vehicle created in a bipartisan budget deal earlier this year. Brown has offered a potential solution involving a federal loan fund but is open to other options.

The 16-member select committee, which Brown co-chairs with Sen. Orrin Hatch, R-Utah, is balanced evenly between the House and Senate and between Republicans and Democrats. If the committee meets its charge of identifying a credible solution and gaining support of at least five of its members from each party by Nov. 30, the full Congress would get just an up or down vote, with no opportunity for amendments.

The rarely used process is a reflection of the complicated nature of the problem and the high degree of confidence placed in members of the committee and their expertise.

The process has also attracted support from multiple interest groups – not just the unions that brought thousands of members and retirees to Thursday’s Ohio Statehouse rally but also AARP and the U.S. Chamber of Commerce.

The chamber is especially concerned about the potential loss of entire businesses and their jobs, according to Aliya Wong, its executive director for retirement policy. “We’ve never been in this situation before, and uncertainty creates its own problems,” she said.

“Some employers who may wish to exit the multiemployer system are trapped because withdrawal liability exceeds the value of their business,” the chamber said in a report produced for the committee.

The pensions at risk wouldn’t put any their beneficiaries on Easy Street. Brown says the average retiree is owed just over $1,000 a month, with miners receiving just $500 and even less for others.

But the cost of not fixing the problem and letting these pensions fail will be felt acutely by those who are counting on their modest retirement, and it would send ripples far and wide across the nation with a potential tab to taxpayers of $100 billion.

However this plays out, the union retirees and those still hoping to retire will likely end up with something less than they had expected. As most other workers have learned to accept, defined benefit pensions for a lifetime have run their course.

Any solution Senators Brown and Portman can create probably won’t please all stakeholders.


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