The Pension Benefit Guaranty Corporation (PBGC) has issued a report detailing its financial health, and unfortunately, the agency may need life support. According to the release, the average expected deficit for the multiemployer backstop is $90 billion by 2028. Worse, however, is the fact that there is a 90% probability that the agency will be bankrupt by 2025.
If Congress fails to put in place a funding solution quickly, there’s a very high likelihood that benefit guarantees will have to be drastically slashed. As a reminder, multiemployer benefits are only protected at a small percentage of those in the private sector. For instance, a 30-year employee would only receive an annual benefit of $12,870, while the same private sector pension recipient would have there benefit protected to $65,000.
Given the projected insolvency for this agency in a relatively short period of time and you can see why tackling the multiemployer pension crisis is of utmost urgency given that we have 1.4 million American workers in plans that are currently designated as Critical and Declining and another 9 million workers who would no longer have the safety net available to them should their plans ultimately falter.
The House recently passed legislation (H.R. 397) to enact a loan program to provide a lifeline to those plans that are deemed Critical and Declining. Let’s hope that the Senate can support this legislation, too. However, I am afraid that they will seek alternatives to the Butch Lewis Act and in the process, mucking up currently healthy plans, while also subjecting participants to steep cuts. Let’s hope that I am wrong!