The legislation states that its objective is “to pay all benefits due” up until 2051. However, experts with whom I spoke explained that this is not intended as a complete funding of all benefits due during the period, but only meant to fill in the gaps so that, added together with their current assets and future contributions, there will be enough funds to pay benefits for the next 30 years.
The bad news:
The text of the legislation, as written at the moment, does not spell out any of these mechanics. Is the plan to require contributions at the same level as these troubled plans are currently paying in, or more, or less? To what extent would those contributions be used to build assets for future accruals, vs. being “spent” on already-accrued benefits by being included in the calculations of federal bailout funds, as offsetting money? My expert friends did not know, and, to be honest, this is the sort of detail that, in any prior pension funding legislation, is spelled out in the law itself rather than left for the PBGC (Pension Benefit Guaranty Corporation) to sort out as regulation. This is concerning, because it risks the whole program going south very quickly.
Author(s): Elizabeth Bauer
Publication Date: 16 February 2021
Publication Site: Forbes