In an article that appeared on Wednesday, March 1st in the NY Daily News, writer Ginger Adams Otis presented a frightening update on the current landscape for the Pension Benefit Guaranty Corporation (PBGC). According to Otis, the PBGC’s “limited liquidity is part of the spiraling U.S. pension crisis that threatens to wipe out the retirement savings of more than a million Americans”.
The PBGC addressed its funding issues, as it announced that it is now officially making pension payouts for Teamsters Local 707, which joins a growing list of 70 bankrupt union pension plans and a host of private companies.
With only $2 billion in assets, the PBGC is expected to run out of funds in the next 8-10 years. The company makes its money through premiums charged to unionized multi-employer pension funds. Premiums have grown substantially during the last several decades.
DB pension payouts provide significant economic stimulus to the local economies of the recipient. Without these monthly checks, participants will have to rely solely on Social Security payouts that barely keep an individual above the poverty line.
Infrastructure “investment” seems to be on everyone’s radar screen, and for good reason, but protecting the benefits from multi-employer plans should be a priority, too. There is no way that premium increases can support the financial needs of the PBGC in coming years. We should further deficit spend to sure up the finances of this important organization before millions of Americans lose benefits that they worked very hard to earn.