For those of you who are perhaps wondering why I’ve become so passionate about pension reform, there is a social and economic crisis impacting American retirees within the multiemployer universe of Critical and Declining plans (roughly 125) that is about to get even worse, as many of the plans once deemed Critical are likely to have fallen in status with the recent market action.
In 2014, Congress passed legislation (MPRA) that allowed for struggling multiemployer pension plans to file for benefit reductions. To date, there are roughly 15 funds that have been granted permission to “renegotiate” the benefits. These funds have about 75,000 retirees who have seen their benefits reduced. When my friend, John (a retired Teamster) first did his analysis on the impact from these CUTS, there were 43,000 retirees that were in funds that had seen benefit reductions. Their benefit reductions amounted to nearly $34,000,000 / month. What he discovered through his polling and outreach was shocking! Here are just some of the highlights:
95% were not able to work
72% were providing primary care for an ailing loved one
65% were not able to maintain healthcare insurance
60% had lost their home
55% were forced to file for bankruptcy
80% were living benefit check to benefit check
100% of the PBGC maximum benefit payout was inadequate ($12,870 of a retiree with 30-years of work)
50% of the retirees were U.S. service veterans
How could you not be shocked by these numbers? It is wonderful that we have seen action to help American families and businesses negatively impacted by the Coronavirus, but these American workers have been left behind and their fate won’t improve once the virus has subsided. Furthermore, there are 1.3 million American workers/retirees in failing plans that are right behind them in line! Are we truly okay with dooming them to a similar fate as those original 43,000 who have suffered so much? I am not! It bothers me to no end that our industry has failed to protect these pensioners. How is it that so many of us have prospered so greatly from our participation in this industry, yet the people who counted on us have not?