WASHINGTON — Senate Republicans are seeking to solve the increasingly expensive problem of struggling pensions that protect retired Teamsters drivers and other workers in many states.
Sens. Chuck Grassley, R-Iowa, and Lamar Alexander, R-Tenn., have introduced a proposal meant to avert the collapse of what are called multi-employer pension plans jointly run by employers and unions.
Most of the 1,400 such plans in the U.S. are in decent shape.
But about 130 covering more than 1 million truck drivers, iron workers, bakers, miners and others are in big trouble, according to the Pension Rights Center. Without action, workers covered by those plans are looking at pension cuts of up to 70%.
“This crisis is severe and gets worse every day. Around 125 multi-employer plans have said they’ll become insolvent over the next two decades,” Grassley said in a statement.
Among the plans getting the most attention in Congress is the Central States Pension Fund, which is on track to go broke in 2025.
The fund, which provides pension benefits primarily for retired Teamsters truck drivers, is among the biggest in the country, covering nearly 400,000 retirees and people hoping to collect a pension from the fund. More than 40,000 of those people are in Ohio.
Earlier this year, the House passed its version, which includes a federal loan program that struggling funds could tap to get back on solid footing. The estimated cost of the program from 2020 through 2029 is $64 billion, according to the Congressional Budget Office.
The version that Grassley and Alexander have introduced would do a combination of things meant to stabilize the funds and the Pension Benefit Guarantee Corp., which serves as the federal backup when plans fail.
The Pension Benefit fund has its own set of troubles and currently is running a $65.2 billion deficit.
The Grassley-Alexander proposal would require retirees to pay a “co-payment” to the Pension Benefit fund of up 10% of their pension benefits, an amount Grassley says is less than the cuts retirees would face if their plan failed. Older retirees and those with disabilities would be protected.
It also would allow troubled funds to shift a portion of their liabilities to the Pension Benefit fund.
Employer premiums to the fund would be increased as well while retirees whose funds do fail would get a bigger maximum monthly guarantee than the current $1,073.
Finally, the federal government would put an unspecified amount of tax dollars into the Pension Benefit fund. That would be paired by reforms meant to protect taxpayers, Grassley said.
The National United Committee to Protect Pensions, led by Ohioan Mike Walden, a retired truck driver who has been working on this issue for seven years, welcomed the proposal.
“We were waiting for something to come from the Republicans,” Walden said.
Walden is urging quick hearings on the legislation to get everyone involved up to speed on the proposal, saying that the cost to fix the funds gets larger as more time passes without action.
“This is going to affect taxpayers whether they like it or not,” he said.
While the group believes the plan has the framework to address the problems, Walden believes the government may have to provide more help to current retirees.
“As much in the proposed plan does address needed change, which has been overlooked for too long, our concern is for those that are on pensions,” the group said in a statement.
“Retirees need more consideration due to the fact that many could not go back to work, and they do not get increases or cost of living on their fixed income, which is being rapidly diminished by inflation alone.”
Walden remains hopeful that something can be done, but fears any action likely won’t happen now until 2020.
Ohio Sens. Sherrod Brown and Rob Portman, who have both been working on the issue, also welcomed the introduction of the Grassley-Alexander plan.
“This shared responsibility framework represents the type of comprehensive and permanent solution that will help protect earned pensions, save taxpayers money, prevent the insolvency of the Pension Benefit Guaranty Corporation, and alleviate pressure on our economy,” Portman said.
Brown said he has concerns with provisions in the bill, but is looking forward to working with Portman and Grassley on a solution.
“These workers, retirees and small businesses did everything right,” Brown said. “Congress has a responsibility to protect the pensions they worked hard for and earned. We need to act now, before it is too late. Failure is not an option for millions of Americans.”
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