Tags: bailout | pensions | lawmakers | billion

WashPost: Lawmakers Eye Multibillion-Dollar Bailout for Collapsing Pensions

depressed man lying on table. pension savings in jar in front.
(Vchalup/Dreamstime)

Wednesday, 21 November 2018 12:28 PM

Top lawmakers reportedly are considering a taxpayer-funded bailout for retirees who are members of specific collapsing pension plans in a mad dash to avoid a retirement crisis that threatens more than 1 million Americans.

A draft of the plan, obtained by The Washington Post, would direct the Treasury Department to spend up to $3 billion annually to subsidize payments for retirees from certain underfunded pensions.

The proposal "would also require benefit cuts, higher premiums and new fees levied against companies and union members in an attempt to make the pensions as financially solvent as possible," the Post explained. The plan would force all parties to make significant concessions and caps taxpayer contributions, the Post explained.

The programs in question collect money from workers at more than one and company and put those funds toward the same retirement benefit program. However, many of the plans do not have enough funding to cover some of the promised benefits.

The Post reported that the companies the pensioners used to work no longer exist or stopped participating in the pension programs.

To be sure, Newsmax Finance Insider Peter Reagan recently warned that public pensions could turn into a retirement crisis for everyone.

"Worldwide, pensions are set to reach a shortfall of $400 trillion. This is a larger amount than 20 of the world’s largest economies," he recently warned.

"It was even reported that Congress is planning for pension fund failure in the U.S. Not to mention, Philadelphia has considered tapping public utility payments to cover their shortfall," he said.

"Add it all up, and the situation doesn’t look good for public pension plan payees. Many police, fire, public education, and municipal personnel are (or will be) directly affected. But even if you’re not drawing a public pension — the majority of us do not — don’t think you’re safe. You might think failure of a state public pension wouldn’t affect you. It’s a reasonable thought, and partly correct. That’s because it likely wouldn’t affect you directly," he warned.

"But the indirect effects may prove to be a burden for anyone in or entering retirement."

Pensions seemingly spark doom and gloom headlines on a daily basis.

To be sure, a recent report from Fitch Ratings cited a “lackluster performance” by pension assets, combined with increases in the present value of future benefits, has pushed net pension liabilities beyond $1 trillion in fiscal 2017, from $892 billion the previous year.

The report also identified seven states with “long-term liability burdens” that are more than 20% of personal income, led by Illinois, which had liabilities that are 29% of personal income, the Chief Investment Officer reported.

“States like Illinois, Kentucky, and New Jersey are feeling the effect of insufficient contributions in the form of severely underfunded pensions and rising budgetary demands for pension contributions,” Douglas Offerman, a senior director at Fitch Ratings, said in a release, CIO reported.

Related Stories:

© 2020 Newsmax Finance. All rights reserved.


   
1Like our page
2Share
Personal-Finance
Top lawmakers reportedly are considering a taxpayer-funded bailout for retirees who are members of certain failing pension plans, scrambling to solve a retirement crisis that threatens more than 1 million Americans.
bailout, pensions, lawmakers, billion
500
2018-28-21
Wednesday, 21 November 2018 12:28 PM
Newsmax Media, Inc.
 
Newsmax TV Live

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved