Congress Must Solve the Multi-employer Pension Crisis: Every American Worker Who Earned a Pension Through Hard Work Should Keep It, Without a Dollar in Benefit Cuts

In the decades after World War II, “multi-employer” pension plans such as the Graphic Arts Industry Pension Trust (JPT) were sponsored and administered by joint boards of trustees consisting of an equal number of both union and company management trustees usually within the same or related industries and a labor union. These funds are often referred to as “Taft-Hartley funds.”
The Taft-Hartley name refers to the Taft-Hartley Act of 1947, also known as the Labor-Management Relations Act. The Act was passed by Congress to regulate organized labor practices and define standards for union pension and benefit funds. Taft-Hartley funds were typically the only way a small employer could provide comprehensive benefits to their employees in a cost effective manner, since such funds create cost-savings due to centralized administration and pooling of resources.
Printers, truck drivers, coal miners, carpenters, ironworkers, bakers, steelworkers, sheet metal workers, roofers, bricklayers, painters, musicians and many other American workers agreed to lower wages in return for their employer paying contributions into these plans and delayed immediate financial gain for the promise of a safe and secure retirement for themselves and their families. For decades, these plans offered working-class Americans a nest egg in their retirement.
But today, everything has changed. Many unionized industries have seen significant transformations over time. In some industries like the printing industry, the technological advances have resulted in a significant decrease in the number of workers needed to operate modern equipment and produce printed materials. Other industries have seen declines in the number of workers needed due to global competition, automation, or broad declines in the industry. In addition, much of the workforce has shifted to more non-union employees as a result of restructurings or regulatory changes. Such declines in the active workforce have resulted in a diminished economic base for collectively bargained employer contributions into these pension plans. Furthermore, the financial markets crash of 2008 dealt these pension plans a devastating financial blow.
Now, with pension plans in every state in the country in jeopardy, millions of retired workers are facing a financial nightmare – cuts to the hard-earned retirement savings they depend on to survive. If the pension plans are allowed to fail, not only will they no longer be able to pay promised benefits, but taxpayers could be at risk of having to pay billions when the Pension Benefit Guaranty Corporation (PBGC) collapses. The PBGC is the arm of the federal government that insures pension plans.
Workers and their families who rely on these plans would lose benefits earned over a lifetime of work through no fault of their own. The result is that the pensions of these workers could be cut down to the bone—putting their families’ financial security and future at risk.
A Better Deal to Save Our Pensions would:
1. Provide financing to put failing pension plans back on solid ground to ensure they can meet their commitments to retirees today and workers for decades to come.
2. Prevent a single dollar of cuts to benefits retirees have earned.
3. Put safeguards in place so pension plans remain strong in order to be there for today’s workers when they retire.
The Problem:
Some of the nation’s largest multiemployer pension plans are on the verge of collapse because they don’t have enough money to pay promised pensions to retirees and workers for the reasons set forth above. These multi-employer plans are paying out more money each year in pensions than they are receiving through employer contributions and investment earnings.
The biggest of these financially troubled pension funds is the Central States Southeast and Southwest Areas Pension Plan (Central States) which covers approximately 400,000 active and retired Teamsters. It expects to run out of money in 2025. The Graphic Arts Industry Joint Pension Trust is projected to go insolvent sometime between July 1, 2022 and June 30, 2023. Therefore, a fix is needed much sooner in order to bring these pension plans back to solid footing. These troubled pension funds are considered to be in either a “Critical and Declining” or “Critical” condition by the U.S. Department of Labor. That means that these plans are on a path to insolvency over the next 20 years.
All told, between 100 and 200 multiemployer plans could fail, many within the next 10 years. The retirement benefits of up to 1.6 million plan participants could be at risk. These workers, retirees, families and communities are at risk through no fault of their own. And the result of significant cuts to these pensions would be economically devastating. In 2015, multiemployer participants were paid $241 billion in wages and pension benefits and those participants paid over $35 billion in federal taxes and an additional $8.4 billion in state and local taxes.
The devastation would not stop there. The PBGC has an exposure of $59 billion and is itself projected to become insolvent by 2025. The Congressional Budget Office estimates that the cost of backstopping the PBGC should it fail will be $101 billion dollars over 20 years.
The Solution – A Better Deal to Save Our Pensions
​On May 15, 2020, the House of Representatives passed the Health and Economic Recovery Omnibus Emergency Solutions Act, better known as the “HEROES Act”. The HEROES Act contains the Emergency Pension Protection Act (“EPPRA”). The bill now goes to the Senate. While Senate Majority Leader Mitch McConnell described the bill as “dead on arrival,” it likely gives direction on a potential bipartisan compromise rescue of the multi-employer pension system.
Under current law, the PBGC has the right to partition certain multiemployer pension plans so that it takes on a limited portion of the liabilities of those plans and leaves the remainder to the fund and thus contributing employers. EPPRA would expand the group of plans eligible for such partitioning to include:
+ Plans in critical and declining status,
+ Poorly funded plans with high ratios of retirees to active participants,
+ Plans that have already suspended benefits, or
+ Certain plans that have already become insolvent
Under the HEROES Act and EPPRA, the special partition program would be available to plans meeting one of the above criteria through 2024. Plans that are partitioned would need to restore any benefits previously cut or suspended.
Under this legislation, the system will remain solvent. 

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