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  #511  
Old 06-14-2018, 05:48 AM
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Mary Pat Campbell
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BAILOUT

http://thehill.com/blogs/congress-bl...pension-crisis
Quote:
The multiemployer pension crisis

Spoiler:
Defined benefit pension plans have long been favored for retirement because they promise a guaranteed level of income and don’t require individuals to manage assets. It’s a painless way for retirees to enjoy their golden years. That is, unless the plan goes bust.

Unfortunately, that’s the condition a number of pension plans are close to being in, particularly so-called “multi-employer” defined benefit plans. These plans typically cover unionized workers who move from job to job throughout their careers. It is no exaggeration to say that these plans face a crisis. There is currently a shortfall of more than $124 billion in these plans. Roughly 1,141 of these plans, covering 1.3 million workers, face more than $36 billion in shortfalls and are likely to start going bankrupt in as little as five years.

One might think that employers in these plans could simply pay more to shore them up. Perhaps, but the amounts are so large that they could cause many employers to go into bankruptcy, with a snowballing effect on jobs and the economy. Not to mention, the government backstop for these plans – the Pension Benefit Guarantee Corporation (PBGC) – is itself predicted to go bust by 2025.

So, we face a dilemma. We can let workers lose their retirement benefits, benefits they have been promised their whole careers would be there, look on as employers go broke and shut their doors, and perhaps see taxpayers called on to bail out the PBGC. Or, we can figure out ways to solve this problem.

Congress has decided to do just that, establishing a bipartisan committee tasked with drawing up legislation by the end of the year. The U.S. Chamber of Commerce and the National Coordination Committee for Multiemployer Plans (NCCMP) have issued a set of joint principles to aid the committee in its work.

First, all members of the Committee must recognize that rescue legislation is urgently needed. We can no longer kick the can down the road.

Second, these struggling plans will need financial assistance. Our recommendation is long-term, low-interest loans that will protect taxpayers from financial liability.

Third, all parties will have to be part of the solution, including plan beneficiaries and participating employers.

Fourth, while the PBGC may ultimately need more money, in the form of increased premiums paid by employers, these increases must be evaluated after tools to restore the solvency of these plans are put in place.

Finally, composite plans must be authorized so that healthy multiemployer plans can stay that way. Composite plans are a hybrid between traditional pension plans and individual accounts plans that can bridge the gap between current existing options.

Without substantive and timely multiemployer plan reform, businesses will go broke, workers will be left without benefits, and taxpayers may face a hefty bill. It is critical that Congress gets this right and take steps that will not only restore the system of today, but also allow it to remain solvent in the years ahead. The Chamber and NCCMP stand ready to help. The time to act is now.

Aliya Wong is the Executive Director of Retirement Policy at the U.S. Chamber of Commerce.


https://www.ohio.com/akron/news/loca...onal-committee
Quote:
Eventual pension crisis already threatens economy, panelists warn congressional committee
Spoiler:
WASHINGTON: The pension crisis that threatens the retirement savings of 1.5 million Americans including 60,000 Ohioans also poses the risk of driving the U.S. economy into a tailspin, a panel of witnesses told a congressional panel Wednesday.

Witnesses from the U.S. Chamber of Commerce and businesses including UPS told the Joint Select Committee on the Solvency of Multiemployer Pension Plans that should the estimated 150 to 200 endangered multiemployer pension plans become insolvent, the companies that paid into that plans will be held liable — a situation that will drive many companies into bankruptcy. Under current rules, employers can’t leave plans in crisis without paying large sums or declaring bankruptcy.

“This is not a future crisis,” said Aliya Wong, executive director of retirement policy at the U.S. Chamber of Commerce. “It is a current crisis.”

She said that uncertainty has caused the denial of credit, less optimal lending rates and problems with employee retention and is affecting employers not just in declining plans, but in healthy plans, as well as both union and non-union employees.

“Employers and workers are being impacted today, and it will only get worse the longer we wait,” she said.

Mary Moorkamp, chief legal and external affairs officer for Schnuck Markets in St. Louis, Missouri, said her company is forced to continue making contributions to a plan that is projected to be insolvent within seven years. And their employees, she said, will be fortunate if they receive any significant portion of their anticipated benefits. The crisis, she said, has caused recruiting problems, caused the company to be reluctant to grow and distorted business decisions.

The joint committee — made up of Republican and Democratic House and Senate members — faces a daunting task: Find a solution to save multi-employer pensions that are at risk of insolvency. The pension plans were created in order to allow employers to pool resources and provide their workers retirement security. The plans, negotiated by unions, are run by trustees selected by the union and employers. For years, most plans ran at a surplus, but economic crashes in 2000 and 2009 and corporate bankruptcies made those pensions far more dire. The committee so far has had one business meetings, three hearings and will hold three more hearings — two in Washington, D.C. and one in the field.

While some 10 million workers are served by 1,400 multi-employer plans nationwide, some 150 to 200 plans, covering 1.5 million workers and retirees, could run out of money within the next 20 years, according to the Pension Rights Center. Among them: Central States, a pension program that claims some 50,000 members in Ohio.

The committee, co-chaired by Sens. Sherrod Brown, D-Ohio, and Orrin Hatch, R-Utah, has until late November to find a solution. Congress must vote on any proposed solution on an up-or-down vote, with no amendments. Sen. Rob Portman, R-Ohio, also serves on the committee.

Brown is pushing a bill he introduced — the Butch Lewis Act, named after a Cincinnati-area retiree who died fighting for his pension — that would create a low-interest, 30-year loan to troubled pension plans, with no cuts to benefits.

On Wednesday, he said that while most people are aware of the threat to pensioners, “the threat to current workers and to small businesses — and to our economy as a whole — is equally real.

“If the multiemployer pension system collapses, it won’t just be the retirees who will feel the pain,” he said, adding “small businesses will be left drowning in pension liability they can’t afford to pay.”

But Hatch Wednesday made it clear he wasn’t convinced that that Butch Lewis proposal was tenable.

“I should be clear that I do not see our choices as being limited ot a referendum on some sort of loan program,” he said Wednesday, adding, “some of us have genuine concerns and questions about the nature of the proposed loan programs, which have yet to be fully analyzed. And a major question remains: what is the limiting principle on risk to the American taxpayer?”

Portman, meanwhile, said he wants “to keep everything on the table at this point” but urged continued research on possible solutions

The committee has until November to come up with a solution that Congress will consider in an up-or-down vote. Brown has said he hopes negotiations on a solution begin in earnest next month.


https://burypensions.wordpress.com/2...ing-employers/
Quote:
Bailout Committee Hearing Employers
Spoiler:
The Joint Select Committee on the Solvency of Multiemployer Pension Plans (Bailout Committee) met today “to hear firsthand from several employers about the challenges they face, as well as insight into how the multiemployer pension system can be improved.” Here is the full hearing (starting at the 42 minute mark):
.

[videos at link]
.
All bad news that most of you have heard before with these excerpts dealing with options:



.


.



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  #512  
Old 06-17-2018, 05:11 PM
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BAILOUT

https://www.cleveland.com/metro/inde..._to_fix_f.html

Quote:
Businesses want loans to fix failing multi-employer pension system

Spoiler:
WASHINGTON, D. C. - More than one million retirees around the country aren't the only ones who'd face financial ruin if multi-employer pension plans collapse.

Their failures would also be a fiasco for the companies who paid into them over the years, several companies and the U.S. Chamber of Commerce on Wednesday told a joint congressional committee seeking a bipartisan solution to the impending disaster.



"This is not a future crisis, it is a current crisis," Chamber of Commerce retirement policy chief Aliya Wong told the Joint Select Committee on Solvency of Multiemployer Pension Plans. "Employers and workers are being impacted today, and it will only get worse the longer we wait."

She said many of the pension plans - which were created to provide retirement benefits for workers in unrelated companies - ran into trouble when the tech stocks they bought took a nosedive around 2000 as retirements swelled and the number of active workers paying into the plans decreased.

Employers whose pension plans are in a "death spiral" face contribution rates that far exceed the value of their employees' benefits, said Wong, as well as potential penalties if they withdraw from the plans that exceed their businesses' value and make it hard for them to secure bank credit.

Sherrod Brown and Democrats have a plan to save pensions. Now Congress must decide if it's a rescue or a bailout
Sherrod Brown and Democrats have a plan to save pensions. Now Congress must decide if it's a rescue or a bailout

Sen. Sherrod Brown's pension rescue plan has been embraced by Democrats. Republicans aren't so sure.


UPS vice president Chris Langan told the committee co-chaired by Ohio Democratic Sen. Sherrod Brown that insolvent plans affect the financial health of well-funded plans by putting more pressure on remaining employers, participants and the Pension Benefit Guarantee Corp.

Langan, Wong, and other businesses who testified before the committee said providing long-term, low-interest loans to affected pension plans would stop the plans from having to sell assets to pay benefits, giving them a chance to regain their financial footing and fully repay the loans. Letting them fail would increase the retirees' dependence on government aid programs, said Langan.

The head of a South Dakota steel manufacturer whose workers are part of a failing boilermakers union plan said that if Congress does nothing, his company's already high contribution rates to the pension program and its liability for withdrawal will continue to rise, handicapping his business against its competitors. If there's another recession, Egger Steel Co. president Burke Blackman said his company would be squeezed, and the bank might limit its credit, threatening its survival.

A study on the topic released by the Chamber of Commerce recommended rescue legislation by Congress that would include long-term, low interest loans that will protect taxpayers from financial liability. It also suggested allowing the multi-employer plans to have hybrid pensions that include individual accounts.

Portman Addresses the Impact a Multiemployer Insolvency Would Have on Central States

Ohio GOP Sen. Rob Portman, who is a member of the committee, said he was concerned that a mass withdrawal by employers from the plans could lead to a "meltdown of the entire multi-employer system."

"I think it is something that we are going to have to address as part of whatever solution we come up with," said Portman.

The Republican co-chair of the committee, Utah's Orin Hatch, said the committee will consider "a range of possible policy options" to deal with the problem. Although federal policies contributed to the pension plans' difficulties, Hatch noted they are basically private contracts negotiated without federal government input.


https://www.planadviser.com/joint-co...pension-plans/

Quote:
Joint Committee Hears Testimony on Solvency of Multiemployer Pension Plans
Senator Sherrod Brown calls it imperative "to find a bipartisan solution to the crisis threatening 1.3 million Americans."


Spoiler:
In kicking off testimony before the Joint Select Committee on the Solvency of Multiemployer Pension Plans, Senator Sherrod Brown, D-Ohio, committee co-chair, said it is imperative “to find a bipartisan solution to the crisis threatening 1.3 million Americans.”

If a solution is not found, “claims for financial assistance by plans will quickly bankrupt the Pension Benefit Guaranty Corporation [PBGC] multiemployer insurance program,” Christopher Langan, vice president of finance for United Parcel Service (UPS), told the committee. “Retirees under these plans would then see their benefits drop to just a fraction of the already modest benefit guarantee.” Langan said the crisis is the result of “macro changes to many of the established industries in the United States with significant multiemployer plan participation and the 2008 market crash—which happened when many plans were still recovering from the earlier burst of the dot-com bubble.”

Langan said the macro changes include deregulation of industries, which gave rise to nonunionized workers, increased competition from foreign companies, and outsourcing of work to other countries. In addition, he said, the number of Baby Boomers retiring is putting pressure on the system, all the while participation in multiemployer plans has declined. The ratio of retirees in multiemployer pension plans rose from 48% in 1995 to 63% in 2013, he said. This has resulted in many companies going bankrupt and pulling out of a multiemployer plan, which increases the pressure on the remaining companies, he said. Finally, there has been an unusually low-interest-rate environment since the 2008 recession, he said.

The solution is not to require employers to contribute more, Langan said. Since the passage of the Pension Protection Act of 2006 (PPA), many employers are contributing twice what they were before the law was enacted, he said. To require employers to contribute more might put them out of business, exacerbating the multiemployer pension plan crisis, he said.

Furthermore, reducing benefits for retirees is not an option, either, as they have been counting on these benefits, Langan said. “For many participants, their modest pension benefits and Social Security are the only available source of income in retirement, and they have no other meaningful source of savings,” he said.

Langan said that a long-term, low-interest-rate loan program “could save the most troubled plans without imposing undue hardship on participants, contributing employers, the PBGC, the federal government, taxpayers or healthy plans.”

Aliya Wong, on behalf of the U.S. Chamber of Commerce, agreed with Langan that required employer contributions have become onerous and told Congress, “The contribution rates that many employers are currently paying into multiemployer plans are exorbitantly high because the contribution rates for the last several years have been imposed by the plans’ trustees via rehabilitation plans.”

Like Langan, Wong agreed that long-term, low-interest loans may be the solution. “While the PBGC may ultimately need more money, in the form of increased premiums paid by employers, these increases must be evaluated after tools to restore the solvency of these plans are put in place,” she said.

Mary Moorkamp, on behalf of Schnuck Markets, said, “The Food Association believes that the solution to the multiemployer funding crisis will require multiple phases. The fundamental rules governing multiemployer plans date back nearly 40 years and have not kept pace with the new economy, changing demographics, and today’s mobile work force. The system needs to be overhauled.”

That said, Moorkamp said the crisis is so pervasive that “immediate action is needed, and any realistic action must involve some federal loan structure, coupled with contributions and sacrifices by all other stakeholders.” She said that a long-term, low-interest-rate federal loan program should be paired with reductions in benefits and increased PBGC premiums.

Burke Blackman, president of Egger Steel Co., suggested that the committee independently assess the underfunding of multiemployer pension plans. His second recommendation was to “transition ‘orphaned’ beneficiaries to the PBGC,” and a third was to “stop making new defined benefit [DB] commitments”—rather, to open defined contribution (DC) plans. “The pension system may require federal loans to satisfy its short-term cash flow needs, but if it stops making new commitments while continuing to collect contributions, it will eventually be able to pay back its loans. We need to admit that the era of defined benefit retirement plans is over,” he concluded.
Tagged: funding status, Joint Select Committee on the Solvency of Multiemployer Pension Plans, multiemployer pension plans, PBGC, Pension Benefit Guaranty Corporation

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  #513  
Old 06-18-2018, 05:57 PM
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BAILOUT

https://www.plansponsor.com/long-ter...ension-crisis/

Quote:
Long-Term Loans Seen As Solution for Multiemployer Pension Crisis
Senator Sherrod Brown calls it imperative "to find a bipartisan solution to the crisis threatening 1.3 million Americans."
Spoiler:
In kicking off testimony before the Joint Select Committee on the Solvency of Multiemployer Pension Plans, Senator Sherrod Brown, D-Ohio, committee co-chair, said it is imperative “to find a bipartisan solution to the crisis threatening 1.3 million Americans.”

If a solution is not found, “claims for financial assistance by plans will quickly bankrupt the Pension Benefit Guaranty Corporation [PBGC] multiemployer insurance program,” Christopher Langan, vice president of finance for United Parcel Service (UPS), told the committee. “Retirees under these plans would then see their benefits drop to just a fraction of the already modest benefit guarantee.” Langan said the crisis is the result of “macro changes to many of the established industries in the United States with significant multiemployer plan participation and the 2008 market crash—which happened when many plans were still recovering from the earlier burst of the dot-com bubble.”

Langan said the macro changes include deregulation of industries, which gave rise to nonunionized workers, increased competition from foreign companies, and outsourcing of work to other countries. In addition, he said, the number of Baby Boomers retiring is putting pressure on the system, all the while participation in multiemployer plans has declined. The ratio of retirees in multiemployer pension plans rose from 48% in 1995 to 63% in 2013, he said. This has resulted in many companies going bankrupt and pulling out of a multiemployer plan, which increases the pressure on the remaining companies, he said. Finally, there has been an unusually low-interest-rate environment since the 2008 recession, he said.

The solution is not to require employers to contribute more, Langan said. Since the passage of the Pension Protection Act of 2006 (PPA), many employers are contributing twice what they were before the law was enacted, he said. To require employers to contribute more might put them out of business, exacerbating the multiemployer pension plan crisis, he said.

Furthermore, reducing benefits for retirees is not an option, either, as they have been counting on these benefits, Langan said. “For many participants, their modest pension benefits and Social Security are the only available source of income in retirement, and they have no other meaningful source of savings,” he said.

Langan said that a long-term, low-interest-rate loan program “could save the most troubled plans without imposing undue hardship on participants, contributing employers, the PBGC, the federal government, taxpayers or healthy plans.”

Aliya Wong, on behalf of the U.S. Chamber of Commerce, agreed with Langan that required employer contributions have become onerous and told Congress, “The contribution rates that many employers are currently paying into multiemployer plans are exorbitantly high because the contribution rates for the last several years have been imposed by the plans’ trustees via rehabilitation plans.”

Like Langan, Wong agreed that long-term, low-interest loans may be the solution. “While the PBGC may ultimately need more money, in the form of increased premiums paid by employers, these increases must be evaluated after tools to restore the solvency of these plans are put in place,” she said.

Mary Moorkamp, on behalf of Schnuck Markets, said, “The Food Association believes that the solution to the multiemployer funding crisis will require multiple phases. The fundamental rules governing multiemployer plans date back nearly 40 years and have not kept pace with the new economy, changing demographics, and today’s mobile work force. The system needs to be overhauled.”

That said, Moorkamp said the crisis is so pervasive that “immediate action is needed, and any realistic action must involve some federal loan structure, coupled with contributions and sacrifices by all other stakeholders.” She said that a long-term, low-interest-rate federal loan program should be paired with reductions in benefits and increased PBGC premiums.

Burke Blackman, president of Egger Steel Co., suggested that the committee independently assess the underfunding of multiemployer pension plans. His second recommendation was to “transition ‘orphaned’ beneficiaries to the PBGC,” and a third was to “stop making new defined benefit [DB] commitments”—rather, to open defined contribution (DC) plans. “The pension system may require federal loans to satisfy its short-term cash flow needs, but if it stops making new commitments while continuing to collect contributions, it will eventually be able to pay back its loans. We need to admit that the era of defined benefit retirement plans is over,” he concluded.

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  #514  
Old 06-19-2018, 11:37 AM
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https://bic.financial-planning.com/n...mmediate-issue

Quote:
Enough about Social Security: For some, pensions are the more immediate issue

Spoiler:
With the Social Security Administration’s recent update on its long-term financial health, advisors and their clients now have a new time frame for the anticipated depletion of the retirement program trust fund. Unless Congress acts, the trust fund is expected to run out of money in late 2034, at which point Social Security will be able to cover just 77% of retirement benefits.

For current and future retirees relying on Social Security, the thought of a 23% benefit cut may be worrisome, but at least they have 16 years to come up with a backup plan to make up for a potential reduction in benefits.

Many people in struggling private-sector pension plans don’t have nearly as much time. Some 1.4 million private pension participants may be seeing stiff pension cuts that in some cases could come as soon as 2028, according to recent report from the Society of Actuaries, a professional organization of actuaries.

The actuarial group analyzed 115 multiemployer pension plans identified under federal law as being “critical and declining” and projected that all but eight will become insolvent in 20 years. Of those, 50 are expected to go bust by 2028, affecting the retirement security of some 545,000 participants. By 2033, some 91 pension plans involving 920,000 participants will have gone belly up, according to projections.

As the name suggests, multiemployer pensions involve multiple employers, all usually within the same or related industries, and a labor union. Some 1,400 multiemployer pension plans covering almost 10.3 million participants, including 4 million retirees, are in effect today, according to the Department of Labor.

If the troubled 115 multiple employer plans become insolvent as expected, participants will receive anywhere from 90% to as little as 20% of benefits, said Lisa Schilling, a retirement research actuary at the Society of Actuaries.

And that’s with the support of the Pension Benefit Guaranty Corporation, a federal government agency that insures private-sector pension plans. In the same way that the FDIC insures bank deposits, the PBGC insures pension benefits up to a maximum annual amount of $12,870.

“It’s pretty grim,” said Schilling, explaining that the 115 troubled multiemployer plans suffer from what she calls “negative cash flow.” They’re paying out more in benefits than what they’re bringing in in investments.

Almost 75% of the plans have annual negative net cash flow or “burn rates” that is 10% or more of their assets, which means that unless they earn at least 10% per year, the plans will continue to weaken. Twenty-seven of the plans have burn rates of 20% or more.

“If you have a burn rate of 20%, that means you can expect to run out of money in five years,” said Schilling. “Even to slow it down, you have to get more than 20% year – year in and year out – to reverse the cycle that you’re in.”

The PBGC itself is in dire straits. In its latest annual report, it said that its multiemployer program is likely to run out of money by the end of 2025, which means that the level of financial assistance it can provide to failing plans will be significantly less if insolvency indeed happens.



While the number of pension plans has fallen sharply since the introduction of 401(k)s in the late 1970s, their number is still nevertheless significant. In addition to the 1,400 multiemployer plans, there are some 44,000 single-employer plans with more than 27 million participants, according to the most recently available data from the Department of Labor. Add to that another 6,000 public-sector pension plans covering nearly 20.5 million members.

While single-employer plans are generally in better shape than multiemployer plans, they too are struggling. Both types of plans are on the Government Accountability Office's high-risk list, the agency said in a recent report.

Sean Coumans, an advisor with California Credit Union in North Hills, California, urges advisors to take note. Advisors, he said, should not brush off pensions and forget to factor them into their clients' retirement planning as pensions are part of their post-retirement income, he said.

Importantly, he added, advisors can play a critical role in helping clients with decisions stemming from faltering pensions. One of his clients whose pension from a previous career was deemed in “critical status” was asked to choose between receiving an immediate monthly benefit of $100 or waiting until age 65 to receive a monthly benefit of $500. The client, 50, opted to wait 15 years for the higher payout despite the pension’s critical status.

The client, who now works in the insurance industry, had worked in a grocery store for 10 years as a young man and was vested in the store's pension, Coumans said.

At a minimum, advisors should encourage their clients to pay attention to the annual pension notices they receive in the mail, according to Michael Devlin, principal of BCG Pension Risk Consultants.

“If they see funding level below 80%, that’s not a good sign,” he said, adding that participants should raise the issue with management.

“They have a loud voice within the structure of the company,” he said.

Devlin also encourages participants to file their annual pension notices so that they can track progress. If a pension remains stubbornly at a 77% funding level, especially after the market’s record run over the past 10 years, participants need to take note and prepare, he said.

Advisors also need to steer their clients away from poor pension decisions, particularly when offered lump-sum pension payments, according to Devlin.

As an advisor to plan sponsors, Devlin has often seen participants make the mistake of taking the lump-sum payment and putting the money into savings accounts, where they get “crushed” with a 10% penalty and state and federal taxes.

“It’s sad to see some of these people just ruin a fantastic benefit,” he said.

If participants choose to take the lump sum, they should roll the funds into a qualified account, such as an IRA or 401(k), where the money will continue to enjoy tax benefits.

“This is not to buy a boat. You’re supposed to live off of this,” Devlin said he advises participants.
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Old 06-20-2018, 04:05 PM
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It would be interesting to trace the individual equity values for participants in one of the failing plans. By individual equity, I define the economic value of a participant's accumulated negotiated contributions, the portion of that contribution that was allocated to others, and the portion that remains for their benefit.

Then the political discussion would be a more enlightening one: Did the participant make an informed decision that some (large) portion of their payment was for benefit of others? Were the participant's representatives aware of this value transfer? Was the risk ever explained that someone else would have to be there to pay for the participant's benefit promises?

In more accusatory terms, who set up the ponzi schemes?
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Old 06-20-2018, 04:24 PM
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Oh, I imagine all sorts of people/companies will get/have gotten sued over this.

Not that there will be enough money taken out of the hides of various parties to make these guys whole, but ...
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Old 06-24-2018, 08:00 AM
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https://burypensions.wordpress.com/2...gao-on-pbgc-2/

Quote:
GAO on PBGC

Spoiler:
The United States Government Accountability Office (GAO) released a 60 page report this week that “provides an update on the nation’s fiscal health as of the end of fiscal year 2017 and describes its likely fiscal future if policies don’t change” where the Pension Benefit Guaranty Corporation (PBGC) and multiemployer plans got a mention:


The PBGC’s financial future is uncertain because of long-term challenges related to PBGC’s governance and funding structure. PBGC’s liabilities exceeded its assets by almost $76 billion as of the end of fiscal year 2017—an increase of about $40 billion from the end of fiscal year 2013 (see figure 9). PBGC reported that it is subject to potential further losses of $252 billion if plan terminations occur that are considered reasonably possible. PBGC’s single-employer program covers defined benefit pension plans that generally are sponsored by one employer, while the multiemployer program is a pension plan created through a collective bargaining agreement between employers and a union. The multiemployer program protects over 10 million workers and retirees in about 1,400 pension plans and the single-employer program protects about 30 million workers and retirees in about 22,500 pension plans. While the single-employer program’s financial condition is likely to improve over the next 10 years, the multiemployer program faces serious challenges and is likely to run out of money by the end of fiscal year 2025.



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Old 06-24-2018, 01:58 PM
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WESTERN STATES OFFICE

https://www.ai-cio.com/news/portland...its-reduction/

Quote:
Portland Pension Fund Applies for Benefits Reduction
Western States Office and Professional Pension is seeking a 30% cut in benefits.


Spoiler:
After withdrawing its previous two applications to the US Treasury Department for benefits reductions, the Western States Office and Professional Pension Fund is hoping that the third time is the charm.

The fund’s board of trustees is proposing a 30% benefit cut for all participants and beneficiaries, but with no reduction below 110% of the Pension Benefit Guaranty Corporation (PBGC) guaranteed benefit for each affected participant. The proposed cuts are on a sliding scale, with the size of the reduction decreasing after age 75, and with no reductions for participants who will be at least 80 years old on Oct. 31.

Participants who will be 75 as of Oct. 31 would be subjected to as much as 100% of the reduction amount; participants aged 76 would be subjected to up to 80% of the reduction amount; participants aged 77 would be subjected to up to 60% of the reduction amount; participants aged 78 would be subjected to up to 40% of the reduction amount; and participants age 79 would be subjected to up to 20% of the reduction amount.

Without a reduction in benefits, the plan’s actuary estimated that it would run out of money to pay benefits by 2036. However, the actuary said the plan is not expected to run out of money if the proposed reductions are enacted.

The pension is positioning its proposal as the lesser of two evils, and says that participants would see an even larger reduction in benefits if it has to seek relief from the PBGC. According to the plan’s application, a participant who currently receives $917.00 a month in benefits would see that lowered to $641.90 under the trustee’s proposal. But it said that same amount would only be $536.25 if the PBGC has to step in and help.

“This proposal is so unfair to the retirees who worked so hard and long and were counting on this money for their retirement,” said Joyce Archain of Ukiah, California, in comments submitted with the application. “They should figure out a way to maybe cut benefits for younger employees or cut salaries for the executives and CEO’s of the pension fund … younger members have time to invest in a 401(k) plan with their employer. The retirees do not have this option.”

Although the Treasury Department has up to 225 days (or Jan. 28, 2019) to review the application and make a final decision, the plan said it expects a decision by Oct. 1.


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Old 06-24-2018, 01:58 PM
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WESTERN STATES OFFICE

https://www.ai-cio.com/news/portland...its-reduction/

Quote:
Portland Pension Fund Applies for Benefits Reduction
Western States Office and Professional Pension is seeking a 30% cut in benefits.


Spoiler:
After withdrawing its previous two applications to the US Treasury Department for benefits reductions, the Western States Office and Professional Pension Fund is hoping that the third time is the charm.

The fund’s board of trustees is proposing a 30% benefit cut for all participants and beneficiaries, but with no reduction below 110% of the Pension Benefit Guaranty Corporation (PBGC) guaranteed benefit for each affected participant. The proposed cuts are on a sliding scale, with the size of the reduction decreasing after age 75, and with no reductions for participants who will be at least 80 years old on Oct. 31.

Participants who will be 75 as of Oct. 31 would be subjected to as much as 100% of the reduction amount; participants aged 76 would be subjected to up to 80% of the reduction amount; participants aged 77 would be subjected to up to 60% of the reduction amount; participants aged 78 would be subjected to up to 40% of the reduction amount; and participants age 79 would be subjected to up to 20% of the reduction amount.

Without a reduction in benefits, the plan’s actuary estimated that it would run out of money to pay benefits by 2036. However, the actuary said the plan is not expected to run out of money if the proposed reductions are enacted.

The pension is positioning its proposal as the lesser of two evils, and says that participants would see an even larger reduction in benefits if it has to seek relief from the PBGC. According to the plan’s application, a participant who currently receives $917.00 a month in benefits would see that lowered to $641.90 under the trustee’s proposal. But it said that same amount would only be $536.25 if the PBGC has to step in and help.

“This proposal is so unfair to the retirees who worked so hard and long and were counting on this money for their retirement,” said Joyce Archain of Ukiah, California, in comments submitted with the application. “They should figure out a way to maybe cut benefits for younger employees or cut salaries for the executives and CEO’s of the pension fund … younger members have time to invest in a 401(k) plan with their employer. The retirees do not have this option.”

Although the Treasury Department has up to 225 days (or Jan. 28, 2019) to review the application and make a final decision, the plan said it expects a decision by Oct. 1.


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Old 06-26-2018, 03:54 PM
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MEP

https://burypensions.wordpress.com/2...ial-responses/

Quote:
P&I Multiemployer Editorial Responses
Spoiler:
In their May 28, 2018 issue Pensions & Investment (P&I) editorialized against a bailout of multiemployer plans but wound up suggesting just that. To add to the confusion in their June 25, 2018 issue there were two Letters to the Editor (copied at the bottom of this blog) from:

Teamsters president James P. Hoffa calling the P&I editorial “simplistic and poorly reasoned”, and
Russell Kamp and Ronald J. Ryan supporting the Butch Lewis Act.

I had a similar skeptical response to the P&I editorial to what Hoffa started out with but then he lost me:

Investors would buy anything if it were guaranteed by the federal government and with these ‘special pension bonds’ having no reliable source of repayment wouldn’t that say much more about the federal backstop than the quality of the investment?
Central States corruption before 1978 may be ancient history but check out the Schedule C filings and witness the legalized pension raids going on since (which this bailout bill is designed to perpetuate).
ERISA may not apply to public plans but if a bailout ‘works’ for multiemployer plans (by ‘works’ I mean putting off complete default until the politicians voting for the bailout are long gone from office) it will be used for public plans.
Yes, as many as 3.5 million American workers and retirees may lose some of their pensions without a bailout but where were those people when their pensions were being surreptitiously stolen by the denier/defender syndicate that essentially sanctioned underfundings for their own benefit?
As for Kamp and Ryan, they fully supported the loan scheme claiming:

Our team’s analysis of the 114 [critical and declining] plans does not forecast any plan failures! In fact, the annual projected return on asset assumption, or ROA, to ensure solvency is only 6.5% for each of these plans.

…..

Why are we supporting so vigorously the Butch Lewis Act? Primarily because we are fearful that hardworking participants in failing multiemployer plans will not receive the benefits that they earned for years of dedicated service.

And maybe secondarily that consulting firms brought in by the PBGC to ‘help’ will not receive the fees that they will earn for reassuring everyone that a bailout works. And how do you do a study with an unlimited input (taxpayer-backed loan money) and not be able to forecast success? The ROA could be 1% and there would be no plan failures if loan amounts were large enough.


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