U.S. Congress Eyes Move To Cut Pension Benefits

US-Congress

Congress eyes move to cut pension benefits (CNBC, Dec 10, 2014):

The latest assault on private pensions may be coming from the U.S. Congress.

Lawmakers on Wednesday were finalizing a deal to shore up the government’s pension insurance fund with provisions that would raise premiums and allow troubled pension plans covering more than one employer to cut retiree benefits.

As of midday Wednesday, the reform provisions, which drew loud opposition from unions and other groups representing retirees, were not included in the latest version of a massive, $1.1 trillion spending bill, according to a spokeswoman for the House Appropriations Committee. The measure may be voted on as an amendment in the Rules Committee, she said.

Payments to backstop these so-called multiemployer pension plans have run to hundreds of millions of dollars in the last decade. The Pension Benefit Guaranty Corp. has warned it may run out of funds unless Congress implements reforms.

But the changed proposed Tuesday has drawn fire from unions and other retirement advocates.

“The problem is much more serious than skimming retirement benefits to keep the PBGC on life support,” said Richard Greer, a spokesman for the Laborers’ International Union of North America. This proposal “would siphon off tens of millions of dollars in hard earned retirement benefits to try and rescue the PBGC.”

About a quarter of the roughly 40 million workers who participate in a traditional “defined benefit” plan—those that pay retirees a guaranteed check every month—are covered by these multiemployer plans, according to the Bureau of Labor Statistics.

Both public and private pension funds were hit hard by the 2008 financial crisis, which wiped out trillions of investments used to pay retiree benefits. Since then, many private plans have recovered those losses and are on a more solid footing.

But multiemployer plans—which typically cover smaller companies and unions—face a different set of financial challenges. Declining union enrollments, for example, mean there are fewer active workers to cover the cost benefits for retirees, many of whom are living longer than expected than when these plans were established.

Multiemployer plans also face the added burden of their pooled pension liabilities. When one member of the plan fails to keep up with contributions, for example, the burden on the other members increases.

In the last four years, the Department of Labor has notified workers in more than 600 of these plans that their plans are in “critical or endangered status.”

Last year, the PBGC reported that its program backing multiemployer plans was $5 billion in the red. It projected that—unless Congress acted—there was “about a 35 percent probability” its assets would be exhausted by 2022 and “about a 90 percent probability” by 2032.

Single-employer pension plans are covered by a separate PBGC program that is on a much more solid financial footing.

Proponents of the proposed PBGC reforms argue that they will help prevent more multiemployer plans from going under and that retirees are better off with smaller monthly payments than none at all.

“We have a plan here that first and foremost works for the members of the unions, the workers in these companies, and it works for the companies,” said George Miller, D-Calif., who was involved in talks with Republicans over the pensions provisions.

But critics contend that the issue is too complex to be resolved with a last-minute rider to a $1.1 trillion spending bill.

“With more than 1,600 pages, there’s no way lawmakers can read and have robust debate about the spending choices included in the bill,” said Lindsay Koshgarian, research director at the National Priorities Project, a budget watchdog. “This is a lot of money to commit in a whirlwind process with so little transparency that even lawmakers don’t have time to understand the bills they’re voting on.”

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1 thought on “U.S. Congress Eyes Move To Cut Pension Benefits

  1. Yet, they hand billions to greedy guts who do nothing for the real economy or to employ any of the 100 million working age unemployed in the US.

    It is horrible, yet in light of what is happening in the world economy, and against the US, none of this will matter much. The US has sent tanks towards Russia. By this final act of defiance against all international laws of human rights, national rights and decency, the US has signed its own death sentence.

    In 1940, the world moved against another political madman called Germany. Today, we have another, only this one is called the USA. No regard for all the laws (many written by Americans) of human rights, against torture, attacking other nations without any cause…….all of these laws have been broken not once, but many times, and this final act of desperation seals the US’s judgment……that of a rogue nation, that must be stopped.

    Putin has done most of the work by using technology to end the need for any world reserve currency, let alone the US dollar. Over 70% of the world has dropped the dollar in favor of his open basket of currencies. After tonight, the percentage will rise as the EU will have an easy choice to make. Drop the dollar, and it will collapse. Money from Russia and many other nations will be made available to the EU, and dropping the US authored fool sanctions against Russia will feed their starving GDP. Far easier than providing troops or coalitions…….

    The entire debacle is about over. Crash the dollar, and the war contractors will melt away, they are too greedy to work for nothing……….the US has to be stopped.

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