Some 400,000 current and future retirees of the Teamsters’ Central States Pension Plan are facing deep cuts to their pensions.
Many are, understandbly, upset and campaigning to stop the cuts.
However, even without the Teamsters’ cuts, there are murkier waters out there for all those covered by defined benefit plans—most notably, multi-employer pension plans.
via the Washington Post:
An estimated 1 million people, including many retirees, are in multi-employer pension plans that federal officials say are in danger of running out of money in the near future. Multi-employer plans are formed by businesses and unions that join forces to provide pension coverage for working-class Americans, including truck drivers, grocery store clerks and construction workers.
If some of the larger multi-employer plans are allowed to collapse, the federal insurance fund that protects them could also collapse. Given that, a coalition of plan trustees and unions said the only way to salvage the most distressed pension plans is to allow them to cut retirement benefits before they run out of money. [Emphasis added.]
At the end of fiscal year 2014, PBGC’s net accumulated financial deficit was $61.8 billion—an increase of over $26 billion from the end of fiscal year 2013—and PBGC estimated that its exposure to future losses for underfunded plans was $184 billion. This dramatic increase in PBGC’s deficit was attributable to a crisis in the multiemployer program, the smaller of its two programs: Since 2013, the deficit in the multiemployer program, composed of about 1,400 plans, had increased by over 400 percent. Meanwhile, the financial position of the larger single-employer program, composed of about 22,300 plans, had improved in recent years, but still accounted for $19.3 billion of PBGC’s overall deficit (see figure 11). We designated the single-employer program as high risk in July 2003, and added the multiemployer program in January 2009. [Emphasis added.]
If the PBGC fails, it will not be long after that a tax-payer funded bailout will be sought (again).