The spectre of pension failures haunts this election
It’s imperative that a new COVID-19 relief package — whenever it’s passed — shore up multiemployer pensions (retirement plans negotiated by a union with two or more employers), because if this piece of the retirement system is allowed to collapse, it would not only hurt current and future pensioners, it would deal an outsized blow to the employers who contribute to their plans, and to the economy. Retirees spend their pension money keeping businesses alive, maintaining jobs and keeping tax revenue flowing.
Many of these plans are hurtling toward insolvency, while others are deteriorating from the economic fallout of the pandemic. The stakes are so high in some states that the issue could swing the election.
There are 1,400 multiemployer plans covering nearly 10.8 million Americans. Right now, 124 of them are projected to become insolvent, some in the next few years, pulling the rug out from under 1.4 million workers and retirees. Many of these troubled plans are very large. One, the huge Central States Pension Fund, covers hundreds of thousands of workers and retirees in the Midwest and Southeast. The pandemic and the current recession threaten still more plans covering another 2.5 million workers and retirees.
The people who depend on these plans are healthcare workers, grocery store clerks, ironworkers and truck drivers, and others we now recognize and lionize as “essential workers.” Many are single-issue voters who say they will back candidates that support saving their pensions, regardless of party.
The number of multiemployer plan members eligible to vote in battleground states such as Florida, Michigan, Minnesota, Ohio, Pennsylvania, and Wisconsin is greater than the margin of victory in each of those states in the 2016 presidential election, according to research from the National Coordinating Committee on Multiemployer Pensions.
There are also enough multiemployer plan members voting in North Carolina, Georgia, and Iowa to make a significant difference in those states. Former presidential campaign managers for Bob Dole and Mitt Romney have sounded the alarm that these single-issue voters could determine which party controls the Senate.
A misguided 2014 law allowed certain financially distressed multiemployer pension plans to cut retiree benefits as a way of “saving” the plans. Tens of thousands of workers and retirees have already had their benefits reduced, leaving many unable to pay for their housing, healthcare and other necessities. That’s only a small taste of what could happen if multiemployer plans aren’t fixed. For the past six years, those affected repeatedly trekked to Washington to demand protections for their benefits. Since the pandemic hit, they’ve continued making their demands from home, and with the election looming, they’re more committed than ever.
As critical as the issue is for retirees, it’s existential for many employers, some of whom will face bankruptcy if it’s not resolved.
Congress may now have a chance to fix the problem. On October 1, the House passed the Emergency Pension Plan Relief Act as part of its new COVID-19 relief package. It would provide federal funds to enable the Pension Benefit Guaranty Corporation (PBGC), the federal private pension insurance agency, to assist troubled plans financially so they don’t fail.
Speaker Nancy Pelosi has reportedly been negotiating with Republican Senate leaders Charles Grassley and Lamar Alexander, who developed their own multiemployer reform proposal which would also let the PBGC help ailing plans.
The two sides must come up with a fair compromise. These negotiations should yield a comprehensive solution that preserves multiemployer pension benefits for workers and retirees, restores the ones cut by the 2014 law, and strengthens the PBGC. Congress, however, should reject a separate measure inserted into the House-passed COVID package called the GROW Act, which would authorize new, inferior composite plan types that could weaken the whole multiemployer system.
Retirees and workers are looking to their elected officials and candidates for leadership on this issue. So should we all. What Congress does — or fails to do — to fix multiemployer pensions will have far-reaching consequences for our country’s political and economic future.
Karen Friedman is the executive vice president and policy director of the Pension Rights Center, a Washington DC-based consumer organization.
Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.