Time Is Running Out

One of the true positives for me in getting involved in the Butch Lewis Act legislation (H.R. 397) has been meeting (through social media) passionate advocates for pension reform such as John C. Anderson, a retired member of the teamsters, who constantly provides important updates on their legislative initiatives. John has recently posted this update:

Actually there are THREE Newly Applied Funds seeking Reductions that are “In Review”…

#1..ROOFERS Local #42…https://www.treasury.gov/…/Composition-Roofers-Local-42-Pen…

#2..IBEW Local # 237…https://www.treasury.gov/…/IBEW-Local-237-Pension-Fund-Seco… (Has Applied Twice Now)

#3..SHEET METAL LOCAL FUND Troy MI…https://www.treasury.gov/…/Sheet-Metal-Workers-Local-Pension… (Had applied previously a year ago March, then ‘Withdrew’)

It is truly unfortunate that these struggling plans are filing for benefit relief at this time.  I realize that the legislative process has moved at a snail’s pace, but I remain hopeful that Congress finally understands the severity of their inaction. Let’s hope that the above referenced plans can hold off a little longer. Although the proposed legislation calls for reinstituting the benefits previously cut through MPRA, there is significant cost associated with going through the process, and these plans, the employees, and employers cannot afford any more cost that further impacts their funded status.

Despite my comment regarding the Senate’s acknowledgment that something needs to be done, I still believe that ideological differences among the parties will lead to proposed legislation that has the potential to do more harm than good, while costing more than the implementation of H.R. 397.

5 thoughts on “Time Is Running Out

  1. Amazing how “intelligent” people with different agendas or on different sides of the fence can have such different viewpoints, and how the “math” can be “skewed” to favor the argument!

  2. The math is the math. There is no question in my mind that the loan program would work to preserve these plans. It is the ideology that is getting in the way of creating a path forward. The Republican proposals would actually cost more money than the BLA legislation.

    • Russ, “in your mind” doesn’t not make things an absolute truth! Take a look at the CBO estimates, both short and long term. Why is there just a disparity if the math is so clear cut?

      • I don’t know what their estimates were based on, but I do know how Cheiron calculated theirs. They used very modest assumptions for returns that are significantly lower than those currently being used by most pension plans. There are no guarantees in our industry, but I respect Cheiron and the work that they did.

  3. Hi Tom – It’s not just my mind. I have faith in the actuarial process and I believe the numbers that were used by Cheiron. Furthermore, pension plans were originally designed to be run like lottery systems where known benefits in the future were converted into present value $s and immunized. This is how the BLA treats the Retired Lives liability. Managing a DB plan to the ROA is wrong, and it has lead to greater risk and an explosion in the contribution expense. Asking healthy plans to change their discount rate and increasing PBGC fees makes no sense. The PBGC has had their chance and they failed.

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