As a result of a misguided law passed in 2014 to ostensibly “save” pension plans, the Treasury Department announced last week that it has provisionally approved an eighth application from a multiemployer pension plan seeking to slash the benefits of vulnerable retirees as a way of balancing its books. The Teamsters Local 805 plan headquartered in New York – covering more than 2,000 truck drivers and others – received a thumbs up from the government to severely cut the promised benefits of its retirees, endangering their financial security at a time of life when they have little or no ability to add to their income.
This news comes as tens of thousands of voters throughout the country are paying close attention to an under-the-radar special congressional committee tasked by the end of November with finding a solution to stop their pensions from being cut by as much as 70 percent. Many say they will be choosing candidates based largely on who they believe will improve their economic lot and save their pensions.
These retired truck drivers, mineworkers, iron workers and others – many from New York, Wisconsin , Ohio, Michigan, North Carolina, North Dakota, and other key states – are imploring the members of the Joint Select Committee on Solvency of Multiemployer Plans to develop a comprehensive legislative solution that saves underfunded pension plans, protects their benefits and helps keep solvent the federal private multiemployer pension insurance program run by the Pension Benefit Guaranty Corporation (PBGC).
In a letter to the Joint Select Committee, the Pension Rights Center (PRC), a national consumer organization, forcefully echoed the sentiment of retirees, and urged the Committee to develop a bipartisan, bicameral solution by its November 30th deadline.
“How this issue is resolved, and whether the Committee addresses the retirees’ concerns and fears, will determine whether they have faith in or give up on America’s promise…and this will have repercussions for our nation for years to come,” Karen Friedman, the Center’s Executive Vice President and the letter’s co-author, stated. “These workers and retirees have been counting on this income to fund their retirement years and to avoid poverty in old age. If their promised pensions are cut, it will not only upend the lives of the pensioners themselves, but wreak havoc on their spouses, children, grandchildren and other family members,” she said.
If the Committee fails to act, the PRC letter also said that this would have severe economic repercussions for local, state, and regional economies that will lose businesses, jobs and tax revenue, and see community social and medical services strained to their limits.
It’s imperative, the PRC said in its commentary, that a solution adhere to the following principles:
First, legislation should result in the financial stabilization of plans so that a robust multiemployer system will continue into the future.
Second, the majority of multiemployer plans are financially sound and legislation should not harm those plans.
Third, the financial cost of repairing the multiemployer system should not be borne primarily by retired participants in these plans, as has occurred under current pension law known as the Multiemployer Pension Reform Act, which must be repealed and replaced with a workable solution that balances the interests of all stakeholders and protects the earned benefits of workers and retirees.
Fourth, federal financial assistance is appropriate given that the economic and human costs of not fixing the system vastly exceed the costs of repairing it.
Fifth, the Pension Benefit Guaranty Corporation’s multiemployer program must be improved and put on a sound fiscal basis.
Sixth, shoring up the ability of currently financially-troubled plans to meet their benefit obligations should be the Committee’s sole concern rather than also authorizing new types of arrangements for adequately funded plans that would sap financial resources from existing plans.
Read the Center’s full statement here.