Category: Multiemployer pensions

Democrats saved union pensions after Hoffa’s long campaign

Mary Pat Campbell

Link: https://www.nbcnews.com/politics/joe-biden/democrats-saved-union-pensions-after-hoffa-s-long-campaign-n1261125

Excerpt:

This account of the Teamsters’ drive to save retirement plans for millions of pensioners is drawn from interviews with several of the union’s officials, congressional sources and the public record. It begins with one Hoffa, the late Teamsters chief James R. Hoffa, and the Central States pension fund he started. And it ends with a yearslong campaign by his son, James P. Hoffa, to work the levers of influence in Washington to salvage the retirement money of union members.

Every Republican voted against the Covid-19 relief measure, and many of them specifically targeted the pension legislation for derision because they said it was an expensive gift from Democratic leaders to labor allies that would be funded by taxpayers.

“Americans know this bill will benefit states and unions that have been poorly mismanaged,” Rep. Lauren Boebert, R-Colo., said on the House floor.

Author(s): Jonathan Allen

Publication Date: 16 March 2021

Publication Site: NBC News

Keeping promises to pensioners

Mary Pat Campbell

Link: https://www.post-gazette.com/opinion/editorials/2021/03/20/Keeping-promises-to-pensioners/stories/202103050023

Excerpt:

In 2018, administrators of the Western Pennsylvania Teamsters and Employers Pension Fund announced it would cut benefits by 30% for 17,000 Pittsburgh-area retirees or their beneficiary survivors. The cut was needed to avoid insolvency and an accompanying collapse of the pension structure. Now, it is expected that those cuts will be restored.

Pension protection is critical, both for its morality and for its necessity. Pensions are a lifeline for older citizens. They should not lose their retirement money at the time they are depending on it — when they are no longer able or intending to work. The alternative reasonably could be poverty.

Were it not for the language in the new federal law, many people who spent decades toiling in union jobs would be in jeopardy of losing their benefits through no wrongdoing on their part. Forces conspired to put their retirement plans at risk. These are plans that were negotiated. These are plans that were promised. Nonetheless, many of the employers have gone out of business and have left their pension liabilities inadequately funded.

Author(s): Editorial board

Publication Date: 20 March 2021

Publication Site: Pittsburgh Post-Gazette

The Pension Bailouts Begin

Mary Pat Campbell

Link: https://www.wsj.com/articles/the-pension-bailouts-begin-11616107042

Excerpt:

It was perhaps inevitable that Congress would bail out multi-employer pensions for the Teamsters and other private unions after doing so for coal miners in 2019. But the Democrats’ spending bill does nothing to fix the structural problems that have made these union pensions funds so sick.

….

Unions like the plans because workers continue to accrue benefits if they switch employers. If one business goes bankrupt, others must pick up the cost for worker benefits. Workers also don’t lose benefits—at least not immediately—if union-driven costs contribute to putting employers out of business.

But the plans are riddled with perverse incentives that make them risky. Employers award generous benefits and make paltry contributions so they can pay higher wages. Pension funds invest in riskier assets to achieve higher returns to support generous benefits and low contributions, but their investments often underperform. As a result, 430 or so multi-employer plans are now at risk of failing.

Author(s): Editorial Board

Publication Date: 18 March 2021

Publication Site: Wall Street Journal

Who Needs MPRA?

Mary Pat Campbell
Who Needs MPRA?

Excerpt:

A scant week after the multiemployer pension bailout was enacted one large plan reversed course towards that pot of gold.

Their application withdrawal letter just popped up on the MPRA website.

Plan Name: American Federation of Musicians and Employers’ Pension Fund and Subsidiary

EIN/PN: 51-6120204/001

Total participants @ 3/31/20: 51,295 including:

Retirees: 17,116

Separated but entitled to benefits: 13,777

Still working: 20,402

Author(s): John Bury

Publication Date: 18 March 2021

Publication Site: Burypensions

Will American Rescue Plan Act Multiemployer Pension Provisions Bring Relief to Employers?

Mary Pat Campbell

Link: https://www.natlawreview.com/article/will-american-rescue-plan-act-multiemployer-pension-provisions-bring-relief-to

Excerpt:

Further, under EPPRA, the interest rate used to calculate withdrawal liability for plans receiving assistance is limited. The interest rate used to calculate withdrawal liability would be capped, in part, by subsections of ERISA, plus 2%, which would currently be approximately 5%. Of course, the lower the interest rate used by a plan for this purpose, the higher the resulting employer withdrawal liability.

Importantly, less than 15% of the 1,400 multiemployer pension plans will receive financial assistance. Accordingly, the bulk of employer obligations to multiemployer plans, even those that are significantly underfunded, will be unaffected by EPPRA. With respect to employers who contribute to plans that receive EPPRA assistance, PBGC is expected to issue guidance that would limit (in whole or in part) the benefit of such assistance to employers.

The impact of EPPRA’s special financial assistance on contributing employers will largely depend on PBGC regulations and guidance. Employers who are currently confronted with an immediate decision regarding withdrawal from a multiemployer pension plan (for example, employers in the middle of labor negotiations) likely will need to exercise patience pending the issuance of PBGC guidance.

Author(s): Paul A. Friedman, Robert R. Perry, David M. Pixley

Publication Date: 15 March 2021

Publication Site: National Law Review

What Is The Pension Provision In The Stimulus Package?: An Explainer

Mary Pat Campbell

Link: https://www.forbes.com/sites/teresaghilarducci/2021/03/15/what-is-the-pension-provision-in-the-stimulus-package-an-explainer/?sh=411b24f957d1

Excerpt:

The multiemployer pension crisis was not caused by poor decisions by the pension funds. Factors out of their control: recessions, government decisions, industry deregulation (trucking for example) and quirks in the pension regulation law, ERISA are responsible. Some, including the New York Times blame the pension actuaries for high rates of return assumptions, but for most of their existence, the plans were much more conservatively run than high-flying single corporate plans.

Because of deregulation, bankruptcies of major carriers, and the 8-year policy of the George W. Bush administration to avoid contracting with union carriers, the Central States pension fund did not have enough money to pay Jack. The 2007 financial crash, caused by inadequate government regulation, and the Pandemic recession, further accelerated the expenses in Jack’s pension fund, one of the largest multiemployer plans.

Government regulation also did not move fast enough. Unlike single employer plans where ERISA encourages the PBGC to step in and take over the plans before the sponsors end up in bankruptcy there is no pre-crises help from the government agency, the PBGC, for multiemployer plans. Not acting quickly the aid needed soared. If the aid came 12 years ago the expense would have been much smaller about $10 billion.

Author(s): Teresa Ghilarducci

Publication Date: 15 March 2021

Publication Site: Forbes

American Rescue Plan Act of 2021 (4) 9704

Mary Pat Campbell
American Rescue Plan Act of 2021 (4) 9704

Graphic:

Excerpt:

Going through the text of the stimulus bill, section 9704 is the meat of the bailout but those 10 pages might be a little hard going so I have added my emphasis.

What struck me on initial reading is that there does not seem to be any cap on those one-time lump sum assistance payments and applicants may be able to value future benefits too. That is, a union with the foresight to sponsor a pension that is almost broke could entice employers to enter their union with the offer of providing their employees with a good pension at a cost that taxpayers will subsidize. Sounds too stupid to be real except if the law were entirely drafted by lawyers for the unions.

Author(s): John Bury

Publication Date: 15 March 2021

Publication Site: Burypensions

Wisconsin Teamsters happy with pension funds in virus bill

Mary Pat Campbell
Wisconsin Teamsters happy with pension funds in virus bill

Excerpt:

Thousands of Wisconsin Teamsters are celebrating after President Joe Biden signed the coronavirus relief bill into law.

That’s because the move ensures that the workers no longer have to worry about their pensions being cut in half.

The American Rescue Plan includes the Butch Lewis Emergency Pension Plan Relief Act of 2021. The act directs the Pension Guaranty Benefit Corp. to allocate billions of dollars to avoid the drastic cuts.

Author(s): Associated Press

Publication Date: 14 March 2021

Publication Site: KBJR6

How The American Rescue Plan Act Will Help More Than A Million Retirees And Workers

Mary Pat Campbell

Link: https://www.forbes.com/sites/nextavenue/2021/03/12/how-the-american-rescue-plan-act-will-help-more-than-a-million-retirees-and-workers/

Excerpt:

Good news on the retirement-income front. Some 1.5 million workers and retirees faced the real risk that their pension incomes would be slashed over the next 20 years or significantly sooner. But the American Rescue Plan Act just signed by President Joe Biden will prevent that from happening.

That’s because the massive legislative package includes the Butch Lewis Emergency Pension Plan Relief Act of 2021. It restores to financial health more than 100 failing pension plans known as multiemployer plans (they covered more than one company’s employees) for union workers. Most notably, the Teamster’s storied Central States, Southeast & Southwest CSWC +0.3% pension, covering some 400,000 workers and their families.

Author(s): Next Avenue

Publication Date: 12 March 2021

Publication Site: Forbes

American Rescue Plan Act of 2021 (3) 9703 + Miscellany

Mary Pat Campbell
American Rescue Plan Act of 2021 (3) 9703 + Miscellany

Excerpt:

Going through the text of the stimulus bill, section 9703 continues allowing those who run multiemployer plans and their actuaries to make up their own rules as long as such calculations do not overly embarrass the regulators and they do not sneak in any benefit increases.

Author(s): John Bury

Publication Date: 14 March 2021

Publication Site: burypensions

American Rescue Plan Act of 2021 (2) 9702

Mary Pat Campbell
American Rescue Plan Act of 2021 (2) 9702

Excerpt:

Going through the text of the stimulus bill we come to section 9702 which says that for multiemployer plans self-designated as being in Critical and Endangered status, who had to come up with a plan to dig out, will have their funding improvement or rehabilitation period extended by 5 years.

I wonder if any of these funding improvement plans filed before ARPA included a line like:

Waiting for union-controlled democrats to take over the federal government so 100% of all unfunded liabilities get covered by taxpayers.

Author(s): John Bury

Publication Date: 12 March 2021

Publication Site: burypensions