Covid relief bill grants $ 86 billion bailout to failing union pension plans
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The $ 1.9 trillion Covid relief package adopted by the Senate on Saturday provides $ 86 billion in funding to failing pension plans.
The US bailout, which is now heading to the House, would allow some pensions to seek federal funding, which would be used to help pay workers’ retirement benefits.
The provision applies to multi-employer pensions. These plans pay benefits to unionized workers in industries such as construction, manufacturing, mining, retail transportation and entertainment.
There are approximately 1,400 such plans in the United States, covering 10 million people.
However, 124 multi-employer pensions are in “critical and declining” status, according to the Pension Benefit Guaranty Corporation. It is predicted that they will not have sufficient funds to pay full retirement benefits over the next 20 years.
About 1 million workers are in such plans, according to at the American Academy of Actuaries.
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So far, the PBGC, a government-funded entity, has been able to step in to pay at least partial benefits if the pension scheme fails.
But the agency’s multi-employer program is in bad shape. Its probability of insolvency is “very high” in 2026 and “near certainty” by the end of 2027 due to additional pension defaults, according to the latest PBGC report. projections.
At that time, it will not be able to guarantee workers’ retirement benefits, absent legislative changes, the agency said.
The grants offered by the American Rescue Plan would cover the full retirement benefits of troubled plan workers over the next three decades. The relief measure would also restore any benefits that had been suspended for beneficiaries.
Sponsors of multi-employer plans can apply for assistance until 2025. The PBGC cannot make assistance conditional on pension plan changes, such as benefit reductions or new funding requirements.
The funds must be invested in quality bonds. They, along with all investment income, should be segregated from other plan assets.
Senator Sherrod Brown, D-Ohio, said the Covid pandemic has made the plans’ financial situation worse.
“It comes down to the fact that these workers didn’t do anything wrong,” Brown said. Recount The New York Times Thursday. “They earned these pensions.
Senator Chuck Grassley, R-Iowa, criticized the measure as an unconditional bailout.
“It’s just a blank check, with no action to hold poorly managed plans accountable,” he said. noted.
The Democratic-led House is should vote on Tuesday’s $ 1.9 trillion relief package so President Joe Biden can sign it earlier this week.