By Paula Aven Gladych
Underfunded multiemployer pension plans
could negatively impact the Pension Benefit Guaranty Corporation’s multiemployer insurance fund.
A report by the Government Accountability Office in March 2013 found that while the most severely distressed multiemployer plans have taken significant steps to address their funding problems and most expected improved financial health, some did not.
The majority of underfunded plans took steps to alleviate the financial concerns of their plans, like asking employees to contribute more to their plans or reducing or eliminating benefits like disability.
The New York Times said in a page one article yesterday that some large multiemployer plans
, like the Teamsters, are facing increased difficulties. The failure of such a large plan could completely drain the PBGC’s multiemployer pension fund, the article stated.
In the March 2013 report, the GAO said that the present value of PBGC’s liability for plans that are insolvent or expected to become insolvent over the next decade increased from $1.8 billion to $7 billion between fiscal years 2008 and 2012. Yet PBGC’s multiemployer insurance fund only had $1.8 billion in total assets in 2012.
PBGC officials said at the time that financial assistance to these plans would likely exhaust the fund in about 2023. If that happens, many retirees would see their pension benefits reduced to a small fraction of their original value or see them go away altogether.
“Unless Congress acts — and acts very soon — many plans will fail; more than one million people will lose their pensions, and thousands of small businesses will be handed bills they can’t pay,” said Joshua Gotbaum, executive director of the Pension Benefit Guaranty Corporation.
“If Congress allows the PBGC
to get the money and the authority it needs to do its job, then these plans can be preserved,” he told the New York Times. “If not, the PBGC will run out of money, too, and multiemployer pensioners will get virtually nothing. This is not something that can wait a few years. If people kick the can down the road, they’ll find it went off a cliff.”
Originally published on BenefitsPro.com