Since I created this pension blog over nine years ago, I have been surprised and puzzled as to why retirement plan issues have been given short shrift by politicians. I understand that rescinding benefits is likely to lose votes but there comes a time when reality intrudes and it becomes impossible to ignore that the emperor has no clothes.
With the passage of the Multiemployer Pension Reform Act of 2014, the tide appears to be slowly turning. Lawmakers worked with union plan trustees to craft an arrangement that allows for a reduction of pension benefits as a way to avoid disaster. According to "Congress passes major change to law on union pensions," the executive director of the National Coordinating Committee for Multiemployer Plans ("NCCMP") praised the new legislation as a "tourniquet on a gigantic gaping wound." A quick look at the U.S. Department of Labor website reveals a large number of multiemployer pension plans that are considered "critical" or "endangered." In its February 2015 assessment of "high-risk areas," the U.S. Government Accountability Office listed the Pension Benefit Guaranty Corporation ("PBGC") as having an "uncertain" future. Although it has one of the biggest federal portfolios in excess of $89 billion, "exposure to future losses for underfunded plans" is $184 billion with "the deficit in the multiemployer program, composed of about 1,400 plans" showing a rise of more than four hundred percent. In contrast, single-employe programs covered by the PBGC had improved although "still accounted for $19.3 billion of PBGC's overall deficit."
Despite an urging from U.S. presidential candidate Bernie Sanders (I-Vermont) to repeal the Multiemployer Pension Reform Act of 2004, at least one union plan is forging ahead to cut benefits. See "Teamsters plan moves to cut retiree benefits" (Benefits Pro, April 10, 2015).
Let's see how the campaigns unfold in the months leading up to the 2016 elections. How will candidates tackle union pensions as well as public retirement plan economics, Social Security, Medicare and corporate retirement plans with gaps in their funding?