The ERISA Industry Committee (ERIC) is a committee of large employers sponsoring benefit plans for their workforce through their multiemployer pension plan, and in association with the Retirement Security Coalition, containing a group of employers, political leaders, and labor unions to request Congress to fix the multiemployer pension plan crisis. The efforts of working with Congress have been redoubled to fix the problem as early as possible this year to get to a bipartisan compromise and repair the broken chain.
The scope of this (multiemployer pension crisis) is enormous and will leave everyone, including workers, retirees, employers, state and federal governments, and every day the situation is getting worse. There are over 6 million retirees and 4 million Americans who depend on multiemployer pension plans, and many of them have run out of money. 33% of workers participating in this plan are on the path of insolvency. The crisis worsens when the federal backstop financially supporting dropping plans (the Pension Benefit Guaranty Corporation or PBGC) is also expected to drop by 2025. According to a report from the PBGC, the expected loss to the economy of the U.S. could be somewhere around $66 million.
Hundreds of thousands of people have been forced to cut down their retirement benefits, and thousands may soon see a similar situation. For example, some retired workers and working individuals have already started receiving less than 50% of their monthly pension benefit in New York City. A similar situation is seen in Tennessee, New Jersey, Michigan, Pennsylvania, Oregon, etc. The money that these employers need to pay for their withdraw from these plans is increasing, and they are asked to pay more than the actual value in most of the business.
If Congress cannot compromise with the bipartisan this year, the workers, employers, retirees, and the economy’s risks will continue to grow exponentially. Even though the Central States Pension Fund is the most massive multiemployer pension plan, this fund is about to collapse. With participants’ strength of more than 400,000, this plan is expected to collapse in the next five years. Fifteen states will face the worst effect of this phase. The entire country will be impacted by the so-called domino effect that includes losses of jobs in all 50 states, an increase in unemployment, and the billions of dollars losses in tax revenue.
PBGC Director Gordon Hartogensis recently gave a statement and asked Congress to act fast and said only a bipartisan compromise could provide us with a chance to succeed, and this is the perfect time to renew bipartisan efforts like these in such a serious situation. Hopefully, all of us will agree to this.
Americans are shouting out for a bipartisan compromise. The Retirement Security Coalition created a poll and found that 9 out of 10 voters favored protecting America’s retirees in the hour of crisis. All of them understand the impact of pension failure on retirees and their ability to survive. The poll results supported a comprehensive, compromise proposal and some changes that may help protect retirees, employers, and workers in the long term.
Fortunately, we have paths ahead to get a bipartisan compromise that can fix the financial crisis for all participants of the multiemployer pension plans. Senate Finance Chairman Chuck Grassley and Senate Health, Education, Labor, and Pensions Chairman Lamar Alexander proposed a comprehensive plan to empower the entire multiemployer pension system. In 2019, the House implemented its legislative solution to the crisis. The right legislative solution will protect retirees, current workers, and communities from the effects of this financial crisis for future generations, maintain the PBGC’s solvency, and add more tools to loosen liabilities. Now everyone is expected to come together and support people who are suffering during the crisis.
The support system should be robust, even in politically divided surroundings. Both parties must agree that the multiemployer pension crisis should be fixed for retirees and achieve the global economy’s long-term success. Americans may not be able to bear the burden of recession. Congress must take the opportunity to use its new legislative developments as a platform for compromise to protect millions of Americans depending on the plan in the hour of crisis.
