Multiemployer Pensions Insolvent by 2025, Agency Says

By Higgins, Sean | Examiner (Washington, D.C.), The, August 4, 2017 | Go to article overview

Multiemployer Pensions Insolvent by 2025, Agency Says


Higgins, Sean, Examiner (Washington, D.C.), The


The Pension Benefit Guaranty Corporation, the federally chartered agency that protects private-sector pension plans for an estimated 10 million people, said in a new report that the insurance program that covers multiemployer pension programs likely will run out of money by 2025.

Should their plans falter, those millions of former workers would receive only a small percent of their current guarantees.

"Absent changes in law or additional resources, this year's report projects that the Multiemployer Program's [fiscal] 2016 deficit of $59 billion will increase, with the average projected deficit (looking across multiple economic scenarios) rising to almost $80 billion (in nominal dollars) for FY 2026," the PBGC reported.

The cause of the problem is "the increasing demand for financial assistance from insolvent plans" -- i.e., plans are going belly-up at a rate rapidly depleting the money needed to cover those losses.

"Most of the risk of the program running out of money falls during the years 2024 to 2026. It is more likely than not that the Multiemployer Program will deplete its assets by the end of fiscal 2025. The risk of program insolvency grows rapidly after 2025, exceeding 99 percent by 2036," the report noted.

Multiemployer plans involve several companies and unions jointly managing a pension fund for all of the workers. The plans are favored by unions because they remain with the workers even if they switch jobs. However, they are risky for businesses because if one employer goes bankrupt the others are legally obligated to cover its contribution. …

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