The Joint Select Committee on the Solvency of Multiemployer Pension Plans held a public hearing on May 17, this time focusing on the Pension Benefit Guaranty Corporation (PBGC) and its funding problems. Dr. Thomas Reeder, the outgoing PBGC Director, was the only witness at the hearing.
The PBGC was established by Congress in the 1970s to act as a backstop if pension plans were to become insolvent. Beneficiaries in plans that do become insolvent are supposed to receive a reduced benefit from the PBGC. Beneficiaries in some plans that have been taken over by the PBGC have seen their pensions cut by as much as 70%, although those are extreme cases.
Reeder testified that the PBGC’s Multiemployer Pension program is significantly underfunded and does not have the resources to survive if large pension funds like the UMWA 1974 Pension Plan or the Teamsters Central States plan would become insolvent and become the responsibility of the PBGC. There are some proposals under consideration by Congress that would provide additional funding to the PBGC, but those proposals alone will not preserve the UMWA 1974 Pension Plan.
“The solution to this crisis can’t be just propping up the PBGC without taking any action to insure the solvency of pension plans like the 1974 Plan,” President Roberts said. “The only way to preserve those plans is to put money into them in the form of direct payments or loans. That is what the Joint Select Committee needs to be concentrating on, not a half-way solution that will lead to cuts in benefits our retirees have earned.”