The federal agency that insures pension plans says that its program to assist ailing multiemployer plans will turn insolvent at the end of the 2025 fiscal year unless Congress comes up with a remedy.
In a report issued on Aug. 6, the Pension Benefit Guaranty Corp. said its average projected deficit for its multiemployer program would be $90 billion for fiscal 2028. That compares with a projected deficit of $90.6 billion in PBGC’s 2017 report.
The 2017 study also said there was a 90% likelihood that the PBGC's multiemployer program would run out of funds in fiscal 2025
Multiemployer plans are important in the unionized portion of the construction industry, with about 57% of the 1,350 multiemployer plans in the PBGC program, according to Ben Ablin, a consulting actuary with Horizon Actuarial Services LLC.
Ablin says those construction plans cover about 4.2 million people, or about 40% of the total covered by all 10.6 million multiemployer plan members.
If Congress cannot put a rescue plan in place for the multiemployer problem, PBGC says that, under current federal law, it would have to cut the guaranteed amount it can pay pension plan members, to “a fraction of current values.”
At present, for someone with 30 years’ service, PBGC’s maximum guaranteed payment is $12,870 per year. The guarantee is less than that amount for those who have less then 30 years on the job.
PBGC says its multiemployer program covers about 10.6 million workers, retirees and other members.
Of that total, it says about 125 multiemployer plans, covering about 1.4 million people, are in the worst shape, categorized as being in “critical and declining” condition. They are expected to exhaust their resources over the next 20 years.
Horizon Actuarial Services’ Ablin recently told ENR that about 35 of the critical and declining plans are in the construction industry. The construction plans have about 30,000 participants, he said.
The House on July 24 took action aimed at assisting multiemployer plans, approving legislation that would establish a federal loan fund for those plans that are in financial trouble. Sen. Sherrod Brown (D-Ohio) introduced a companion bill, also on July 24.
But the outlook for the House-passed bill is murky in the Senate. Brown and Sen. Rob Portman (R-Ohio) are working to try to produce a bipartisan proposal to remedy the multiemployer pension problem, according to Portman and a Brown aide.