As Clock Ticks in Congress, Union Retirees Face Pension Cuts of 90%

Unless Congress acts, some 10 million union retirees could see their pensions cut by 90%.

Many private pensions ultimately are backed by the taxpayer, much like big government-backed home lenders and, in practice, the major Wall Street banks during the 2008 crisis.

In a recent joint House-Senate committee hearing, insiders warned that pensions could insolvent by 2025 thanks to a deficit of more than $65 billion.

The dire prediction could become a harsh reality without the legislative intervention. The viability of so-called multiemployer pension plans has been deemed “critical and declining.”

Tom Reeder, director of the Pension Benefit Guaranty Corporation (PBGC), has been publicly urging Congress to remedy the situation.

The PBGC provides the insurance coverage that backs numerous plans. It currently has only about $2 billion in assets to cover failing pension plans.

A multiemployer pension plan is workplace pension savings plan funded by a union and several employers.

They are offered by unions and employers to benefit people who work for more than one employer annually, such as truckers and construction workers.

According to Reeder, about 10% of all union workers enrolled in multiemployer pension plans could be affected by the problem.

Currently, the PBGC’s multiemployer pension plans cover more than 10 million union workers, as well as their families and beneficiaries, in more than 1,400 plans.

In February of 2018, the bipartisan House and Senate Joint Select Committee on Solvency of Multiemployer Pension Plans was formed.

The committee was put together to create a bill and find a legislative solution to the burgeoning multiemployer pension crisis.

Senator Orin Hatch (R) and Senator Sherrod Brown (D) are the co-chairs of the bipartisan committee.

There are numerous reasons that could explain the current multiemployer pension plan crisis, according to Reeder.

Deregulation severely cut into trucking industry profits, revenues and the availability of jobs.

Reeder also notes that the financial crisis of 2008 reduced estimated plan investment returns.

Sticker shock

According to Reeder, multiemployer pension plan affiliated employers have paid low premiums for such plans for far too long.

Reeder warns that is a solution is not found then pension funds would have to be cut drastically or premiums dramatically raised.

He also warned that taxpayers could be penalized for the pension crisis.

Tax increases may become necessary to shore up social programs as pensioners and their beneficiaries drift into financial problems.

Reeder said that a proposal in President Trump’s 2019 budget set to raise premiums for employers in the multiemployer insurance plan could be a solution.

The proposal could stabilize the program for 20 years.

However, Reeder believes that employers would be hesitant to comply and that it might make the problem worse.

“There would be a sticker shock,” said Reeder.

Sen. Brown hopes the bipartisan committee will find a solution by December 2018.

Bulletproof Your Portfolio Now!

A smart investor should be prepared for anything. That’s why David Frazier created the Bulletproof Wealth Report. This comprehensive investment service is everything you will need to survive and thrive in the looming meltdown. In other words: It’s how anyone can make their portfolio bulletproof. It’s a mix of fast-growing, leading companies that are the engine of American prosperity. To that he adds a healthy dose of “insurance policies” i.e. stocks and funds that benefit when the next recession strikes. The future favors the prepared. You can be prepared. Not only that — you can profit.
Bulletproof My Portfolio!

Cryptocurrency Will Shine Through the Coming Chaos

While the U.S. spends and spends and spends its way into oblivion, the eventual result will be inflation. Serious inflation. The dollar will crash, gold will shoot higher and Bitcoin, well, it can only become more scarce and more valuable. There’s a natural ceiling to the number of Bitcoins that will exist — ever. By design, there can only be 21 million of them. Soon, the ceiling will be hit. Now is the moment to get into cryptocurrency. There’s a been a rise of late, but prices are consolidating, setting up for the next leap higher. Grab Keene Little's widely followed cryptocurrency newsletter, Crypto Wealth Protocol completely risk free.
Yes! Send Me A Free Issue


Alliance of Independent Committees to Protect Pensions @CPPensions

Leave a Reply