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  #491  
Old 05-20-2018, 05:47 PM
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BAILOUT

https://www.forbes.com/sites/tedknut.../#37549633769c

Quote:
Some Union Retirees Could See Pension Benefits Cut 90%, PBGC Chief Warns
Spoiler:
Some union retirees could see their pension benefits cut by 90 percent, Pension Benefit Guaranty Corporation Director Tom Reeder warned today. A retiree getting $8,000 annually now could be cut to less than $1,000.That is a danger, cautioned Reeder, if Congress doesn’t act soon to shore up troubled multiemployer union pension plans and the PBGC’s insurance program that backs them up.

A multiemployer pension plan is typically a workplace retirement savings program created by a union and companies in an industry where people often work for more than one employer in a year like trucking or construction.

Ohio Democratic Senator Sherrod Brown, co-chair of a joint House and Senate committee focused on the issue, said he thinks the chances are high a solution will be found by the time the unit is mandated to come up with a plan in December. He expects serious negotiations among the members will start in July. The Senator said he doubts if prospects for the Democrats to take control of the House and/or the Senate could spur or stop a blueprint from being drafted or alter its contents.


During the joint House-Senate committee hearing, Reeder said the PBGC’s multiemployer insurance fund was running a $65 billion deficit with only $2 billion in assets. The program, which covers 10 million participants and their families in 1,400 plans, is projected to go insolvent in 2025 without a legislative fix.

It will be soon paying out more in insurance benefits than it is taking in from employers in premiums, Reeder said. The PBGC chief said a proposal in President Trump’s 2019 budget to raise premiums for companies in the multiemployer insurance plan would likely be sufficient to shore-up the program for the next 20 years.

“There would be a sticker shock,” if premiums were increased, Reeder acknowledged. But he asserted companies in multiemployer plans have been paying very low premiums for a long time.

He added additional actions may be necessary to address all the problems facing the broader multiemployer plan system, but he did not specify what actions.

Roughly about one-tenth of the workers are in plans that are considered in critical or declining shape.

If Congress doesn’t provide a fix, Reeder warned the result will be catastrophic for many people—current and former workers and their communities. Taxpayers could also suffer from Congressional inaction by increased demands on social programs as the beneficiaries slide into financial hardship, he said.

A handful of reasons are often cited for the descent of the plans into financial trouble. One factor that has hit the Central States (Teamster) Pension Fund hard is deregulation which has cut trucking industry revenues, profits and jobs. He added the financial crisis in 2008 and the Recession also took a toll by reducing plan investment returns after years of healthy gains which inspired increased benefit promises ---promises which are now in danger of not being kept.

Senator Brown said Wall Street shares the blame for union pension plan ills by “squandering some of the money” and that the government has also contributed to the problem through perverse tax incentives, insufficient premium levels and inadequate tools and financing for the PBGC.

Single-employer plan beneficiaries have much richer maximum pension guarantees if their plans fail than multiemployer pension plan beneficiaries do: $65,045 annually against $12,870 for a union plan worker with 30 years of service.

In addition, the single-employer pension plan guarantees are indexed for inflation, whereas those for multiemployer plan beneficiaries are not.


https://www.thinkadvisor.com/2018/05...-are-lousy-he/
Quote:
PBGC Multiemployer Pension Guarantees Are Lousy: Hearing Revelation
For high earners, pension benefits could fall to 6% of what was promised, from 50% today.
Spoiler:
The Pension Benefit Guaranty Corp. (PBGC) still has the assets to make good on benefits guarantees when multiemployer pension plans fail today, but the guarantees are awful.

W. Thomas Reeder, the PBGC director, warned members of Congress about the weak level of multiemployer plan guarantees Thursday, at a hearing organized by the new Joint Select Committee on Solvency of Multiemployer Pension Plans.

(Related: Meet Your Multiemployer Pension Nightmare: Actuary to Lawmakers)

Congress set up the committee to look into strategies for shoring up the multiemployer plan program, which is on track to run out of stored up assets, and to have to rely on current employer contributions to make benefits payments, sometime in the 2020s.

Why This Matters to Financial Professionals
Fewer life and annuity agents now sell new group annuities or other products or services to multiemployer plan clients. But some still service plans sold to labor organizations years ago.

Even financial professionals who have never had any connection with pension plan sales may find that many of their individual clients have been including streams of benefits from multiemployer plans in their retirement income planning arrangements.

Some affluent and mass affluent business owner clients have businesses with revenue that depends heavily on sales to retired police officers, retired teachers, and other retirees who are living off of multiemployer pension plan benefits.

The Testimony

Reeder told the lawmakers at the hearing that the PBGC multiemployer plan program has always had looser funding rules than the single-employer plan program, which is now solvent. Early on, the rules were different pension experts thought that multiemployer plans would be more diversified and more stable than single-payer plans.

The benefits guarantee levels for the multiemployer plan participants are also much lower than the guarantees for single-employer plan participants, Reeder said.

“The multiemployer guarantee has not increased since 2001 and is not indexed for inflation,” Reeder said.

The maximum guaranteed benefit today for a participant in a single-employer plan is $65,045 per year.

For a participant with 30 years of service in multiemployer plan, the maximum guaranteed annual benefit is just $12,870.

Reeder gave the 2017 failure of the Road Carriers Local 707 Pension Fund as an example of the kind of pain the low multiemployer benefits guarantee level already causes.

About half of the Local 707 participants will be getting less than 50% of the pension benefits they had earned, Reeder said.

The administration of President Donald Trump has proposed program changes that could keep the multiemployer plan solvent for about 20 years, Reeder said.

But, if Congress does not enact those reforms, or comparable reforms, and the multiemployer plan guarantee fund does fail, then, even if employers continue to participate in multiemployer pension programs and pay PBGC premiums, the PBGC could probably pay less than one-eighth of the current maximum guaranteed benefit amount, Reeder said.

That means typical participants in failed multiemployer plans could end up with only about 6% of the benefits they were promised, according to calculations based on Reeder’s figures.

Reeder acknowledged that, based on the latest available figures, only 11.4% of multiemployer plans are classified as “endangered” or “seriously endangered.”

About 56% are in the “green zone,” and are classified as “not in distress,” Reeder said.

But “the green zone does not mean hunky dory,” Reeder said.

Plans classified as not in distress may still have problems, such as a low ratio of active participants to inactive participants, Reeder said.

http://am1050.com/2018/donnelly-call...-pension-cuts/
Quote:
Donnelly Calls for Action to Protect Retiree Pensions, Highlights Hoosier Workers Who Would be Harmed by Looming Pension Cuts
Spoiler:
This week U.S. Senator Joe Donnelly spoke on the Senate floor, calling for action to protect the hundreds of thousands of workers and retirees across the country at risk of losing the pensions they earned through decades of work. Donnelly highlighted the stories of a number of Hoosiers who would be harmed by pension cuts.

Donnelly said, in part, in his speech, “We are here once again calling on Congress to enact pension legislation before it’s too late…If we don’t act soon, in my home state of Indiana, nearly 22,000 Teamsters and 2,700 mineworkers could face significant pension cuts…They don’t want a handout…They did their part, now it’s time for us to help make good on what they were promised. They don’t care about politics. They don’t want anything to do with partisanship. They just want us to fix this. That’s part of why we were sent here, to solve problems, and it’s time solve this problem now. Let’s reach a solution that allows American workers to retire with the financial security they expected and the financial security they earned.”

Without congressional action, the nearly 150 multiemployer pension plans listed by the U.S. Department of Labor as in “critical or endangered status” could fail, potentially leading to the collapse of the federal pension insurance program, the Pension Benefit Guaranty Corporation. This could impact thousands of Hoosier Teamsters and mineworkers.

Donnelly has advocated for and worked to protect the pensions of Hoosier workers. He helped introduce the bipartisan Miners Pension Protection Act, which would ensure the necessary funds are available to keep the United Mine Workers of America 1974 Pension Plan solvent. He also co-sponsored the Butch Lewis Act, which would put pension plans on solid footing through new financing options, while safeguarding pensions for retirees and current workers. Earlier this year, Donnelly also spoke on the Senate floor, highlighting the importance of protecting the pensions of thousands of Hoosiers.

Last year Donnelly helped lead the charge to pass and enact a permanent, bipartisan fix to ensure Indiana’s retired mineworkers and their families receive the health care benefits they earned. Thanks to that fix, thousands of coal miners across the country and in Indiana were able to keep their health care benefits.

https://www.dailysignal.com/2018/05/...payer-bailout/

Quote:
How a New PBGC Director Could Help Protect Private Pensioners and Prevent a Taxpayer Bailout
Spoiler:
The Pension Benefit Guaranty Corporation is a government entity that provides mandatory insurance to private pension plans.

The PBGC’s multiemployer program deficit—estimated to be between $65 billion and $101 billion—and looming insolvency threatens workers who stand to lose their insured pension benefits, as well as taxpayers who could be forced to pick up the tab.

In response to troubled union-run pension plans, Congress created a Joint Select Committee on Solvency of Multiemployer Pension Plans.

With this committee now up and running and scheduled to report a proposed plan for addressing multiemployer pensions and the PBGC’s multiemployer program to Congress in November, President Donald Trump’s move to appoint Gordon Hartogensis as the new PBGC director likely signals the White House’s intent to have a role in the future of the PBGC and troubled union-run pension plans.

The liberal Left continue to push their radical agenda against American values. The good news is there is a solution. Find out more >>

The administration’s budget called for nearly $16 billion in additional multiemployer premiums for the PBGC over the next 10 years. The current premium of only $28 per year is far less than private insurers would charge and is not sufficient to cover the program’s costs.

According to the president’s budget, its proposed premium increases would keep the PBGC solvent for 20 years, instead of running out of funds in 2025 as is currently projected.

Without premium increases, workers and retirees of failed union-run pension plans could lose as much as 90 percent of their insured benefits when the PBGC’s multiemployer program runs out of money.

The insolvency of many multiemployer pension funds and the PBGC that insures them threatens the future financial security of millions of workers and retirees. And calls for federal bailouts of private pension plans threaten the future financial security of taxpayers.

Moreover, a federal bailout of private pensions could set the stage for a multi-trillion-dollar bailout of state and local pension plans and might discourage more pension plans from properly funding their promised benefits.

Although it’s too late to save many troubled plans, and although the most significant changes to multiemployer pensions must come from Congress, the PBGC director has some latitude to impact pension reforms.

For example, the PBGC director could use the corporation’s authority to take over failing plans and reduce benefits before the plans run dry.

He could also suggest an alternative premium structure—including both higher premiums as well as risk-based premiums that reward responsible plan administration and penalize reckless management. The director could ask for—and Congress should grant—authority for the PBGC to adjust premiums as it sees necessary and fit to ensuring the corporation’s solvency.

Troubled multiemployer pensions threaten millions of workers and retirees and hundreds of millions of taxpayers across the U.S. The president’s nomination of a new PBGC director signifies that the administration cares about the future of these private pension plans and wants to have a role in working toward an outcome that will minimize pension losses and taxpayer costs.

If confirmed, Trump’s nominee, Hartogensis, will replace current Director W. Thomas Reeder Jr., who was appointed by President Barack Obama in 2015. Hartogensis has a background in financial management and also co-founded and ran Auric Technology.

As former PBGC Director Joshua Gotbaum commented, “What the retirement community needs now is an active, creative PBGC to help figure out how to preserve multiemployer plans and the hundreds of businesses and millions of people who depend on them. If Mr. Hartogensis takes on these challenges with the energy he showed in private business, he’ll turn out to be a good choice.”

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  #492  
Old 05-22-2018, 05:40 AM
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Mary Pat Campbell
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NABISCO
BAKER & CONFECTIONARY UNION

https://burypensions.wordpress.com/2...employer-plan/

Quote:
Nabisco Sidesteps Union To Exit Multiemployer Plan
Spoiler:
The Bakery & Confectionery Union & Industry International Pension Fund is one of those multiemployer plans that will be taking down the PBGC in the very near future. The plan is in Critical & Declining status and one of their larger employers is looking for a novel way out:

To end a two-year contract standoff with about 2,000 union members at its six Nabisco bakeries in the U.S., Mondelez International is offering to triple its proposed contract ratification bonus to $15,000 per employee. All workers would have to do to get that money is … let the company withdraw from their union’s pension plan and reduce their health insurance benefit.

It’s a limited-time-only offer, Mondelez labor relations director Pamela DiStefano said in an April 25 letter to Bakery Confectionery Tobacco and Grain Millers (BCTGM) vice president Jethro Head. The offer expires at midnight May 20.

My brother-in-law is one of those 2,000 union members and, after a little research, this is what I recommended to him.


From the latest 5500 filing:

Plan Name: Bakery & Confectionery Union & Industry International Pension Fund

EIN/PN: 52-6118572/001

Total participants @ 12/31/16: 110,714 including:

Retirees: 58,180
Separated but entitled to benefits: 31,913
Still working: 22,340
Asset Value (Market) @ 1/1/16: $4,422,406,512

Value of liabilities using RPA rate (3.28%) @ 1/1/16: $11,883,964,319 including:

Retirees: $7,788,195,205
Separated but entitled to benefits: $1,856,227,689
Still working: $2,239,541,425
Funded ratio: 37.21%
Unfunded Liabilities as of 1/1/16: $7,461,557,807

Asset Value (Market) as of 12/31/16: $4,272,936,422

Contributions 2016 (MB): $157,198,481

Contributions 2016 (H): $161,225,103

Payouts 2016: $624,261,911

Expenses 2016: $26,663,832

As with almost all multiemployer plans, union payroll comes out of the fund:





Recommendation: Take the money though, considering health benefit reductions are also involved, I would haggle to get up to $25,000. The average retiree in the pension gets $10,730 so the PBGC (or whoever is legislated to pick up their obligations) will likely cover a good chunk of that amount when trust money runs out while any benefit reduction necessary to keep the zombie plan alive will almost definitely limit future accruals which, especially for younger employees, could make the combination of 401(k) deferrals and company matching contributions more valuable.


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  #493  
Old 05-22-2018, 01:49 PM
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BAILOUT

https://www.marketwatch.com/story/go...sis-2018-05-21

Quote:
Government money should help solve this pension crisis
It’s government missteps that made the situation as bad as it is


Spoiler:
For those of you who do not think about pensions on a daily basis, multiemployer plans are private sector defined-benefit plans created by collective bargaining agreements between a labor union and two or more employers. They typically exist in industries with many small employers.

While the majority of multiemployer plans are returning to financial health since the financial crisis, a substantial minority — covering about one million of the 10 million participants — face serious funding problems and could run out of money within the next 15 to 20 years. These plans have been deemed “critical and declining.”

Read: A midlife career change doesn’t have to be drastic — how to figure out the next step

The size of the “hole” (the difference between assets and the present value of promised benefits) for “critical and declining” multiemployer plans is between $35 billion and $76 billion, depending on the interest rate used to discount promised benefits. One plan — Central States Teamsters — accounts for about 45% of the problem.


What to do in your 50s to build wealth for your retirement

In February, the Congress created a bipartisan House and Senate Joint Select Committee on Solvency of Multiemployer Pension Plans. This committee — co-chaired by Sen. Orin Hatch (a Republican from Utah) and Sen. Sherrod Brown (an Ohio Democrat) — is charged with producing a bill to solve the pension crisis by the final week in November. The issue rolling around in my head is whether a clear case can be made for an infusion of government revenues as part of a solution.

I think the answer is unequivocally ”yes.”

My rationale is threefold.

First, the government has not established a meaningful insurance program for participants in bankrupt multiemployer plans. When Congress enacted the Employee Retirement Income Security Act in 1974, no multiemployer plan had ever terminated, so the legislation gave the Pension Benefit Guaranty Corporation (PBGC) discretion over whether or not to insure these plans. When three multiemployer plans sought PBGC protection, Congress in 1980 extended PBGC insurance protection to all multiemployer plans. But the maximum guarantee in 2018 for multiemployer participants (at age 65 with 30 years of service) is only $12,870 compared with $65,045 for those in single employer plans. And even these small amounts are at risk since the PBGC’s multiemployer insurance program is expected to run out of money within 10 years.

Second, while the law requires exiting employers to pay a withdrawal liability to cover their share of the plan’s underfunding, the rules often produce inadequate amounts. If an employer exits when a plan is fully funded, as many plans were prior to 2000, the employer does not face any withdrawal liability. The risk here, though, is that liabilities that seem fully funded at the time an employer exits may turn out to be underfunded down the road, because plan funded status fluctuates over time with investment returns. In situations where unfunded liabilities do exist when the employer exits, the withdrawal payments are based on past contributions rather than attributed liabilities and are capped by law at 20 years. In addition, the withdrawal liability payment is invested by the plan in risky assets, rather than being used to purchase an annuity to finance the liability. The bottom line is that an exiting employer can end up leaving the remaining employers with the liabilities of the exiting employer’s so-called “orphan participants.”

Third, the “crisis” of multiemployer plans is really about one plan: Central States Teamsters. If not for the imminent failure of Central States, moderate reforms to the PBGC multiemployer program and withdrawal liability procedures could right the multiemployer retirement system. The government has known about the decline of Central States since the late 1970s, when it put the plan into receivership. The government has enabled this problem to grow for four decades and imperil the rest of the system.

So, yes, government money should be part of the solution.


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  #494  
Old 05-23-2018, 01:01 PM
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BAILOUT

http://radio.wosu.org/post/sherrod-b...-race#stream/0

Quote:
Sherrod Brown Pushes Pension Solution, As Crisis Looms Over Senate Race
Spoiler:
Some 1.3 million retired unionized workers are facing a growing crisis surrounding underfunded pensions. With 60,000 of those workers in Ohio, it’s sure to be an issue in this year’s campaign for U.S. Senate.

Incumbent Sen. Sherrod Brown has a proposal he wants to see passed by the end of the year.

Ohio’s Democratic Senator is pushing the Butch Lewis Act, named in memory of a Cincinnati labor leader, which would use Treasury bonds to create loans to shore up multi-employer pension funds.

Brown said he wants bipartisan support for his act from the rare joint House-Senate Committee considering it.

“It goes direct to the Senate floor and the House floor – no amendments, no monkey business – voted up or down and sent to the President,” Brown said. “That’s the way we wrote it because we wanted to take it out of politics as much as you can in an election year.”

The 16-person committee, which Brown co-chairs, is evenly divided between Democrats and Republicans and needs the support of 10 members to pass the act. Ohio's Republican Senator, Rob Portman, is also a member.

Brown said it’s not a bailout, but he doesn’t have an estimated cost yet.

Brown's opponent this fall, U.S. Rep. Jim Renacci, said through a spokesperson that he also wants a lasting solution, the Butch Lewis Act wouldn’t pass Congress and potentially would come at a tremendous cost to the taxpayer.


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  #495  
Old 05-25-2018, 03:31 PM
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BAILOUT

https://www.theblaze.com/news/2018/0...ly-on-solution

Quote:
OH-Sen.: Ohio has a big pension problem — but candidates disagree sharply on solution
Spoiler:
The state of Ohio doesn’t have enough money to fund its approximately 60,000 retired union workers’ pensions, WVXU-FM reported.

Democratic Sen. Sherrod Brown believes the solution is to create loans using treasury bonds to fund the pensions, but his midterm opponent, Republican Rep. Jim Renacci, said that solution is not only costly to taxpayers, but has little chance of passing Congress.

The issue could define the Ohio Senate race, and Renacci may need to present a strong solution in order to unseat his incumbent opponent in November.

What’s the problem?
The pension problem can be traced back to the economic collapse in 2007-08 that led to the Great Recession, which bankrupted numerous companies that pension funds relied on.

Nationally, the collapse negatively impacted the pension funds of more than 1.3 million people.

Now, the pension system relies heavily on the Pension Benefit Guaranty Corp., which, according to the Columbus Dispatch, is the “only thing keeping many pensions afloat.” That leaves the financial security for many retirees on relatively shaky ground.

“I heard the PBGC director say, ‘If we don’t do something, there are serious problems with PBGC overall,'” Brown said, the Dispatch reported. “That’s going to undermine pensions across the board.”

What to do?
Brown supports the Butch Lewis Act, which he introduced in the Senate in November.

The bill would “amend the Internal Revenue Code of 1986 to create a Pension Rehabilitation Trust Fund, to establish a Pension Rehabilitation Administration within the Department of the Treasury to make loans to multi-employer defined benefit plans.”

Brown tried to assure constituents that the bill “is not a handout.”

Renacci, on the other hand, is skeptical of the bill. For one thing, he doesn’t think it has a chance to get through Congress. And since the cost of the plan is unknown, that could be an issue for taxpayers.

Brittany Martinez, communications director for the Renacci campaign, issued a statement to TheBlaze on Wednesday:

Jim has met with retirees, active employees, and businesses who all want to see a lasting solution to the pending insolvency of Central States. He is committed to finding a solution to prevent insolvency that can pass Congress while protecting taxpayer dollars. Simply put, the Butch Lewis Act would not pass Congress and potentially comes at a tremendous cost to the U.S. taxpayer.


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  #496  
Old 05-29-2018, 09:26 AM
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https://www.ai-cio.com/news/100-us-m...ce-insolvency/

Quote:
Over 100 US Multiemployer Pension Plans Face Insolvency
Despite rising funded status trend, many plans will run out of assets within 10 years.
Spoiler:
While many US corporate pension plans have enjoyed steadily rising funded levels over the past couple of years, others are still struggling to stay afloat, as 107 multiemployer pension plans are projected to become insolvent over the next 20 years, according to a report from the Society of Actuaries.

By most accounts, corporate pension plans have been moving toward full funding levels in recent years, and have seen significant improvements in their status since being devastated by the financial crisis 10 years ago.

Consulting firm Milliman reported earlier this month that the aggregate funded ratio of all multiemployer pension plans in the US reached 83%, the highest since 2008.

And Goldman Sachs Asset Management estimates that the funded level of the 50 largest US defined benefit plans in the S&P 500 surged to 85.4% at the end of 2017, from 81.1% at the end of 2016.

The Society of Actuaries report looked at the pending insolvency on 115 “critical and declining” multiemployer pension plans, their participants, and contributing employers. The plans cover approximately 1.4 million participants, 719,000 of whom are retired and receiving annual benefits totaling more than $7.4 billion. Approximately 11,600 employers contribute to the plans, many of which are at risk of becoming insolvent within fewer than 10 years, according to the report.

The current estimated liability for the 115 plans covered is approximately $98 billion using the minimum funding requirements’ approach. Some $57 billion of that is not funded, for an overall funded ratio of 42%. When using a discount rate of 2.90%, it is $108 billion, according to the report. The discount rate of 2.90% represents a liability-weighted average of Treasury rates in April.

The report forecasts a steady increase in the number of insolvent plans: by 2028, 50 plans are projected to become insolvent, increasing to 91 by 2033, and 107 by 2038. The 21 plans projected to become insolvent by 2023 will cover approximately 95,000 participants at that time, and include 350 contributing employers. The 50 plans projected to become insolvent by 2028 will cover approximately 545,000 participants, with about 2,700 contributing employers.

The 91 plans projected to become insolvent by 2033 are expected to cover approximately 920,000 participants, and about 5,100 contributing employers; and the107 plans that are projected to become insolvent by 2038 will cover roughly 875,000 participants and approximately 11,350 contributing employers.

Although the number of insolvent plans increases over time, the report found the number of participants in insolvent plans will decline after 2032, at which time deaths among the aging participants are expected to outpace the number of new employees among the ongoing plans.

The report also said that freezing benefit accruals, or closing plans to new entrants or new benefit accruals has little effect on either the timing or financial impact of insolvencies among the plans over the next 10 years.

Additionally, closing a plan to new entrants and freezing accruals “would deny the plan future contributions associated with active participants,” said the report, “which could outweigh the value of their future benefit accruals.”
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Old 05-31-2018, 01:33 PM
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BAILOUT

https://www.brookings.edu/opinions/t...ns-in-america/

Quote:
The politics of pensions in America
Spoiler:
When Hurricane Harvey decimated the Gulf Coast, causing some $125 billion in damage, Congress responded with tens of billions in aid. What would Congress do if instead the damage took place over more than a decade? We are about to find out as Congress is trying to prevent the collapse of multiemployer pension plans that would eliminate the pensions of more than 1 million Americans, bankrupt thousands of small businesses, and add possibly hundreds of thousands of dollars to Medicaid and other taxpayer obligations.

Congress faces this challenge in an unusual way. The Joint Select Committee on Solvency of Multiemployer Pension Plans is evenly divided between Senate and House members and by party. Its members are trying to reach bipartisan consensus this year. Multiemployer plans are negotiated between a union and an industry association. There are multiemployer plans for carpenters, truckers, musicians, mechanics, nurses, and more. Some 10 million workers for hundreds of thousands of large and small businesses all over America have these plans.

Like all U.S. pensions, multiemployer plans are underfunded. They are not underfunded because employers did not make contributions. They did, unlike some public plans. However, they relied on actuaries to decide how much to contribute. In the 1990s, the markets did better than actuaries predicted, so plans were overfunded. Since 2000, markets have done worse, so virtually all plans are now underfunded.

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However, actuaries do not guarantee their estimates, and someone else ends up holding the bag. Who pays for this? Employers who promised employees a pension and benefitted from a lifetime of their work are legally responsible to provide them. But what happens if the employers have gone out of business? Do other employers, pensioners themselves, government, or all three pay in that case?

In most multiemployer plans, the current employers and employees have stepped up, digging into their pockets and paying more to preserve other pensions. Fortunately, in most cases, that will be enough. But some plans, because of industry changes, employer bankruptcies, or the loss of union members, simply do not have enough contributing companies and employees left to make up the loss.

The United Mine Workers fund, for example, has fewer than 10,000 active workers, but it is severely underfunded and responsible for 100,000 pensions. The one remaining employer and those active employees could not pay the shortfall for those 100,000 pensions even if everyone contributed their entire salaries. So this fund, and many others like it, will run out of money. The total loss is about as much as the $125 billion property loss from Hurricane Harvey.

The catastrophe will not stop there. Pension fund collapses can also bankrupt thousands of small businesses that are legally obligated to pay the shortfall, not just of their own workers but also those other businesses. Furthermore, the Pension Benefit Guaranty Corporation that is supposed to insure lost pension benefits will itself be insolvent and unable to replace anything more than a tiny portion of the lost benefits.

Pension fund collapses can also bankrupt thousands of small businesses that are legally obligated to pay the shortfall, not just of their own workers but also those other businesses.

To give the committee a chance to work out of the political glare, it will not report until after the midterm elections. Furthermore, any proposal supported by a majority both of Republicans and Democrats will get an automatic up or down vote in the Senate. Nonetheless, getting any compromise will be very difficult because in every case, the proposals made by one constituency are political poison to another.

Some proposed the government lend several hundred billion dollars to distressed plans, which they would invest and, over decades, use the earnings to cover their underfunding. The loans would ultimately be repaid with interest. However, many Republicans remember the distaste of voters for the 2008 “big bank bailout” and are loath to risk taxpayer money for “union pension plans.”

Others proposed reducing retiree benefits now in order to prevent them from being eliminated entirely when plans run out of money in five to 15 years. Congress passed legislation to allow this in 2014, but the Treasury Department, afraid of the political heat, turned down most applications. Current members of Congress, particularly Democrats, remain steadfastly opposed to cuts, especially on those already retired.

Others have suggested quadrupling the premiums charged by the Pension Benefit Guaranty Corporation so it has the funds to pay at least partial benefits when the plans run out of money. Unsurprisingly, the non-distressed plans do not like this idea. The distressed ones are not thrilled either, because the Pension Benefit Guaranty Corporation does not pay the full pension benefit. Raising guarantee levels to provide better protection would, however, increase premiums even more.

Why is there any hope for compromise? Because the collapse of these pension funds could end up doing as much or more damage than Hurricane Harvey. This Congress might surprise folks and decide that acting now to protect millions of seniors, preserve small businesses, and save billions for taxpayers is better than waiting until disaster happens.


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Old 06-01-2018, 02:37 PM
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PBGC

https://www.forbes.com/sites/tedknut.../#544785a9525f

Quote:
PBGC: Over 90% Chance Union Pension Insurance Program Will Run Out Of Money By 2025
Spoiler:
Chances the union pension guarantee program covering 10 million participants will run out of money by 2025 have risen to over 90%, the Pension Benefit Guaranty Corporation warned today in its annual report.

At the same time, the agency said its single employer program covering about 28 million participants continues to improve and is likely to emerge from deficit sooner than previously anticipated.

“Recent increases in asset returns and decreases in expected future claims increase the likelihood that the (single employer) program will reach net surplus a few years earlier than previously projected,” the PBGC forecast.

The PBGC said the likelihood the multi-employer insurance program covering millions of union workers primarily in transportation, mining, construction and hospitality will remain solvent after 2026 has declined to 1% as the health of troubled plans has worsened.


It estimated about 130 multi-employer plans covering 1.3 million people will run out of money over the next 20 years.

About one quarter of all 1,400 multiemployer union pension plans are considered in "critical" status and will be unable to meet minimum funding requirements or remain solvent over the long term.

A special joint House-Senate Committee is charged with offering a legislative fix to the union pension plan crisis by December.

Without a fix, PBGC Director Tom Reeder has told Congress some union retirees could see their pension benefits cut by 90%.

As an example, a union retiree receiving $8,000 yearly today could see that sum drop to $1,000.

The health of multiemployer union pension plans has worsened compared to the viability of single employer programs as deregulation in some industries (notably trucking) have cost companies revenues and jobs.

Also, for many union pension plans there are fewer workers contributing to into retirement pools with a growing number of people taking money out.
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Old 06-04-2018, 11:54 AM
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https://www.mycspensionhandsoff.com/

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This Website is dedicated to the Memory of Estil "Butch" Lewis, Jr.,the Honor of his Family and the Honor of the Strong Work Ethics of our many Members who have preceded him in death.
We are Independent Committees of Retired & Actively Working Teamsters dedicated to preserving our earned Central States Pension Plan Benefits and further protection of All Plans, Social Security and Medicare
Please select a Committee or Group in your area & navigate to their Facebook Page for updates on meetings & activities for your participation:
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Old 06-04-2018, 12:35 PM
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https://www.portsmouth-dailytimes.co...ensions-future

Quote:
Report underscores peril of pension’s future

Spoiler:
WASHINGTON, D.C. – U.S. Senator Sherrod Brown (D-OH) Thursday said the newly released Pension Benefit Guaranty Corporation (PBGC) report detailing the fact that the agency’s Multiemployer Insurance Program will likely reach insolvency before it was initially expected to underscores the need to find a bipartisan solution to this crisis before it is too late. The new PBGC report states that the chance of the multiemployer pension program becoming insolvent before the end of Fiscal Year 2025, which was initially projected, has risen to 90 percent. In fact, there even remains a chance it could run out of money during FY 2024.

Brown co-chairs the bipartisan, joint House-Senate committee tasked with solving the pending pension crisis threatening small businesses and 1.3 million workers and retirees nationwide alongside Senator Orrin Hatch (R-UT). More than 60,000 Ohio workers and retirees are at risk.

“There are more than 100 multiemployer pension plans on the brink of failure, more than 1.3 million workers and retirees across this country at risk of losing their retirement security after lifetime of hard work, and small businesses in jeopardy of collapsing if they end up on the hook for pension liability they can’t afford to pay,” Brown said. “News that the PBGC could run out of money and put workers, retirees, and small businesses at risk even sooner than anticipated underscores the importance of this committee’s work and the need to find a bipartisan solution now, before it is too late. Failure is not an option when millions of American are counting on Congress to act.”

Brown has been fighting to solve the pension crisis for years and has introduced his own solution, the Butch Lewis Act. Earlier this year, he secured the creation of the joint, bipartisan House-Senate Committee as part of the overall budget compromise. At Brown’s urging, the Committee will have instructions to report a bill by the last week of November, and will be required to hold at least five public meetings, including the option of field hearings outside of D.C., so members of Congress can hear directly from retirees, workers and businesses affected by the pension crisis. The solution the Committee produces will be guaranteed an expedited vote in the Senate without amendments. The Committee is made up of eight Republicans and eight Democrats from both the House and Senate.

The committee has already held three hearings as its works to reach a bipartisan solution. During the most recent hearing, Executive Director of the PBGC Thomas Reeder confirmed that congressional action is needed to prevent devastation for workers, retirees and businesses and prevent a taxpayer bailout of the PBGC. PBGC serves as the insurance company for multiemployer pension plans. Brown said that, like any insurance plan, PBGC won’t kick in until after the damage is done – after plans fail, businesses are forced to close and jobs are lost. And even then, retirees would only be covered for a tiny fraction of the retirement they earned over a lifetime of work. What’s more, Brown said, the PBGC itself is severely underfunded, so allowing just one of the major plans to fail could put enough strain on the insurance system to bring down the entire PBGC multiemployer system. And if that happens, taxpayers could be on the hook for tens of billions of dollars.

Reeder confirmed to Brown during questioning during the most recent pensions hearing that if plans are allowed to fail and PBGC insurance kicks in, the insurance could only pay about one-eighth of the minimum benefit retirees are supposed to be guaranteed. Senator Brown pointed out that minimum benefit is already much lower than the retirement these workers earned, that they bargained for and gave up pay raises for – that they budgeted for when taking out mortgages, and that they count on to pay their bills. Cutting it down to one-eighth is unsustainable and could force retirees into poverty.

Numerous Ohio pension plans, including the massive Central States Teamsters Pension Plan, the United Mine Workers Pension Plan, the Ohio Southwest Carpenters Pension Plan and the Bakers and Confectioners Pension Plan are currently on the brink of failure. The Ironworkers Local 17 plan has already had to cut benefits. If nothing is done to the plans, they will fail and retirees will face massive cuts to the benefits they earned over decades of work.


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