Multiemployer pension plans, now running a $62 billion deficit, are expected to go bankrupt within the next decade, The Wall Street Journal
reported, citing discouraging data from the federal government's Pension Benefit Guaranty Corp.
More than 1 million people would be impacted in the fallout of such a bankruptcy, including those who work in the transportation, manufacturing and construction industries, the Journal said.
Many see as the problem as the next looming financial crisis after 2008's devastating recession, which has left many cities continuing to struggle.
Members of the Senate Finance Committee are working to fix issues with the federal program, also known as the PBGC, which was set up to protect such pensions.
"We owe it to American workers to do everything feasible to ensure that retirees receive the promised pension benefits they worked hard to achieve," Democratic Sen. Ron Wyden of Oregon, who chairs the committee, said in a joint statement with Republican Orrin Hatch.
Hatch will take over Wyden's post when the new GOP-led Congress returns in January.
While bankruptcy is not imminent, concerns continue to mount that the PBGC fund will quickly come up empty without reforms, the Journal noted.
Agency officials said they believe they have enough money to continue financial assistance to insolvent multiemployer plans for several more years, but that over time the risk of the PBGC fund running dry is increasing.
The PBGC runs two plans, one a multiemployee program and another for single employers, where finances are much healthier, the Journal reported.
"Although the vast majority of the 1,400 multiemployer plans are healthy, more than one in 10 workers covered by them are enrolled in ones that are on shaky financial ground — adding another layer to what many advocates call the nation’s growing retirement security problem," said The Washington Post
in describing the emerging crisis.
Labor Secretary Thomas Perez outlined the tough projections ahead for such plans, the Post reported.
“Some multiemployer plans that are critically underfunded have taken the steps that they can to avoid insolvency," Perez wrote in announcing the findings of the government's annual progress report.
"But the steps that these plans can take on their own are not enough," he wrote.
“Congress and stakeholders need to work together to provide solutions and additional tools to help preserve these critically important multiemployer plans," he said.
Unions across the country have expressed concerns about the federal pension program and have called for congressional intervention, the Journal noted.
A study from The Center for Retirement Research
at Boston College, using Teamster pensions as a data set, found that by cutting pension benefits by 30 percent, the union's pension plan could "remain solvent indefinitely and increase the aggregate welfare of plan participants," the Journal noted.
The center's analysis was titled: "A Proposal to Spread the Pain."
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