Lawmakers debate pension gov’t aid
TEXT OF STORY
Bob Moon: As some retirees know all too well, pension plan investments have been hurt by the financial crisis. It hasn’t helped that high unemployment has cut contributions from employers. There’s one type of pension plan — favored by truckers and construction workers — that’s been hit particularly hard. Lawmakers in Washington are considering limited government help.
But Marketplace’s John Dimsdale reports it could create a precedent for taxpayer bailouts of struggling pension plans.
John Dimsdale: Multi-employer pension plans pool contributions from several employers, allowing contract workers to carry their pension benefits with them as they move from job to job.
ELI GREENBLUM: Many of the industries in which multi-employer plans are prevalent are hurting.
Eli Greenblum works on multi-employer plans for the American Academy of Actuaries. He says construction company bankruptcies — and trucking industry deregulation — have brought several multi-employer plans to edge of insolvency.
GREENBLUM: Multi-employer plans do have limitations in terms of the way they are funded. They’re funded through collective bargaining agreements.
Multi-employer plans that go bankrupt have limited insurance from the federal Pension Benefit Guaranty Corporation. Pennsylvania Senator Bob Casey, a Democrat, is proposing to make the corporation more responsible for the hardest-hit multi-employer plans. He says the cost to taxpayers would be limited to $8 billion.
SEN. BOB CASEY: Our bill is really focused on providing some short-term relief that will help — in this case one plan in particular that covers 2,000 employers and hundreds of thousands of workers.
But at a hearing on the Casey plan yesterday, Wyoming Republican Senator Michael Enzi said it sets a bad precedent.
SEN. MICHAEL ENZI: This is extremely dangerous and I strongly believe that if this provision passes, then it will be the taxpayer who will eventually be bailing out the PBGC.
This debate is only tinkering at the edges of a much larger problem. A study last year found the long-term shortfall in multi-employer pension plans will be around $165 billion.
In Washington, I’m John Dimsdale for Marketplace.
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