MoneyPalooza Monstrosity — The Return: Multiemployer Bailout

Link: https://marypatcampbell.substack.com/p/moneypalooza-monstrosity-the-return

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Excerpt:

Now, you can say that they are just about to add $2 trillion to the federal debt, so what’s $2 trillion more? (and yes, people will be saying that – we shall see how much that money printer can go BRRRRRR)

In my own opinion, the standard measures for DB pension shortfalls greatly underestimate the cash flows needed, given this time of extremely low interest rates. But still, let’s pretend.

The public pension bailout would be at least 20 times the amount of a MEP bailout. Just because you bailout a set of pensions that would have pulled down a federal guarantee fund (the PBGC) does not mean you’re going to bailout other pensions that are much bigger and that you never guaranteed in the first place.

Author(s): Mary Pat Campbell

Publication Date: 3 March 2021

Publication Site: STUMP on Substack

Multiemployer pension measures cleared for relief bill vote

Link: https://www.pionline.com/legislation/multiemployer-pension-measures-cleared-relief-bill-vote

Excerpt:

Legislation to help struggling multiemployer pension funds is to remain in the COVID-19 relief measure headed for a Senate vote this week.

The package also calls for some funding relief for single-employer plans, through extended amortization periods and pension interest rate smoothing changes.

The pandemic relief package was approved by the House along party lines Feb. 27. Its pension provisions were at risk of being stripped until the Senate parliamentarian ruled late Monday that they fit the rules for a budget reconciliation process that allows Democrats to prevail under a simple majority.

Author(s): Hazel Bradford

Publication Date: 2 March 2021

Publication Site: Pensions & Investments

Teamsters Laud House Committee For Including Pension Reform In Stimulus Bill

Link: https://www.prnewswire.com/news-releases/teamsters-laud-house-committee-for-including-pension-reform-in-stimulus-bill-301225317.html

Excerpt:

 The Teamsters are applauding the House Ways & Means Committee’s inclusion of a multiemployer pension reform measure in a broader stimulus package introduced by the panel yesterday.

In unveiling language included in the Butch Lewis Emergency Pension Plan Relief Act of 2021, the House panel took the first step towards ensuring that millions of retirees and active workers who have played by the rules will receive the pension benefits they earned through years of hard work.

“The financial distress many of these plans are facing is beyond the control of retirees and workers,” Teamsters General President Jim Hoffa said. “While multiemployer pension plans have been buffeted by economic turbulence over the decades, the situation has been seriously exacerbated by the current pandemic.”

Author(s): International Brotherhood of Teamsters

Publication Date: 9 February 2021

Publication Site: PR Newswire

Senate Rules-Keeper OKs Pension, Health Items: Stimulus Update

Link: https://finance.yahoo.com/news/senate-rules-keeper-oks-pension-014128087.html

Excerpt:

The Senate parliamentarian approved provisions in Joe Biden’s $1.9 trillion pandemic-relief bill aiding multi-employer pensions and providing laid-off workers with health-care premium subsidies.

….

Senate parliamentarian Elizabeth MacDonough has found that provisions bailing out multi-employer pensions and providing laid-off workers with health-care premium subsidies are eligible for the simple-majority process Democrats are using to pass the pandemic-relief bill.

“This economic crisis has hit already struggling pension plans like a wrecking ball, and the retirement security of millions of American workers depends on getting this package across the finish line,” Senate Finance Chair Ron Wyden said in a statement after his office said the parliamentarian made the two approvals.

Author(s): Bloomberg News

Publication Date: 1 March 2021

Publication Site: Yahoo Finance

Pension Crisis Is Challenge DOL Nominee Is Positioned to Handle

Link: https://news.bloomberglaw.com/daily-labor-report/pension-crisis-is-challenge-dol-nominee-is-positioned-to-handle

Excerpt:

Boston Mayor Marty Walsh has vowed to work with both parties as Labor Department secretary to address the hundreds of underfunded multiemployer pension plans in the U.S. that are now in danger of collapsing.

The big problem standing in his way? Congress has that power, not the U.S. Labor Department, according to labor attorneys and industry insiders. Which means that if Walsh is confirmed by the full Senate for the Cabinet spot, the two-term mayor will have to rely on his organized-labor background and a unique propensity to bridge divides and broker deals outside DOL’s scope to help rescue the tapped-out plans.

“The thing that is going to be pretty neat about going in to see Secretary Walsh is you’re not going to spend the first 20 minutes trying to explain what the heck a multiemployer pension plan is,” said Timothy Lynch, a senior director at Morgan Lewis in Washington who testified in 2018 before the now-defunct Joint Select Committee on the Solvency of Multiemployer Pension Plans.

Author(s): Austin R. Ramsey

Publication Date: 1 March 2021

Publication Site: Bloomberg Law

Pension Relief Plan in COVID-19 Stimulus Bill

Excerpt:

How much of a single lump sum? Would this be a forgiven loan? Would it be a reward for the worst funders? Could NFL players share in the bailout if they rejigger some assumptions?

Only clues I could find were form the Congressional Research Service (with my emphasis):

Section 9704 would establish a fund within the PBGC and appropriate amounts as necessary to provide special financial assistance to certain multiemployer DB plans. The special financial assistance would not have to be repaid.

Author(s): John Bury

Publication Date: 1 March 2021

Publication Site: Burypensions

Pension Relief Plan in COVID-19 Stimulus Bill That Passes House

Link: https://www.ai-cio.com/news/pension-relief-plan-covid-19-stimulus-bill-passes-house/

Excerpt:

On Saturday, a measure to give troubled multiemployer pension plans assistance from the Pension Benefit Guaranty Corporation (PBGC) passed the House of Representatives, as part of a larger $1.9 trillion coronavirus relief package from President Joe Biden. 

The federal stimulus package, which includes $1,400 checks for many Americans and increased funding for vaccines, also holds the Emergency Pension Plan Relief Act of 2021 (EPPRA), an update to the Butch Lewis Act. It’s a bill that lawmakers expect will help stabilize the multiemployer pension plans that are in danger of insolvency. 

Of the more than 10 million multiemployer plan participants, about 1.3 million are in plans that will soon run out of money. 

Author(s): Sarah Min

Publication Date: 1 March 2021

Publication Site: ai-CIO

Prelude to a State Pension Bailout

Link: https://www.wsj.com/articles/prelude-to-a-state-pension-bailout-11614547953

Excerpt:

Ordinarily, insolvency means pension freezes and benefit reductions, but multiemployer pensions are run by labor unions, a key Democratic constituency. And so the House Covid bill plans to dole out an estimated $86 billion from 2022 to 2024 to 186 pensions, enabling these plans to pay full benefits through 2051. With no incentive to cut costs, there’s little reason to think the pensions will be solvent after 2051. Look forward to more spending down the road.

Bailout supporters argue they’re helping impoverished workers make ends meet, but that doesn’t add up. The average monthly benefit from a plan like Central States is a seemingly modest $1,400. But that average is skewed downward by large numbers of employees who retired after only a few years of service. The one-third of Central States retirees who receive more than $2,000 a month — plus Social Security benefits — make a bailout expensive. No one in this group is even close to being in poverty.

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The larger worry is that Congressional Democrats’ willingness to bail out private-sector multiemployer pensions signals they would do the same for state and local employee plans. Public-employee pensions operate under the same loose funding rules as multiemployer pensions, and public plans in Illinois, Kentucky, New Jersey, Texas and other states are no better funded than the worst multiemployer plans.

Author(s): Andrew Biggs

Publication Date: 28 February 2021

Publication Site: Wall Street Journal

Opinion: Pension plans — and the people they support — are in danger

Link: https://www.washingtonpost.com/opinions/letters-to-the-editor/pension-plans–and-the-people-they-support–are-in-danger/2021/02/28/3b1282fe-777c-11eb-9489-8f7dacd51e75_story.html

Excerpt:

Contrary to the Feb. 18 editorial “Congress needs to focus its covid relief bill — on covid relief,” multiemployer pension plans have faced significant additional challenges caused by the ongoing global pandemic. It has jeopardized these plans’ ability to deliver hard-earned benefits to more than 1 million enrolled retirees and workers and must be addressed by lawmakers now. The shutdown of the U.S. economy has greatly amplified the financial struggle of these plans. Hundreds of employers are facing bankruptcy and cannot contribute to multiemployer pension funds; employees have lost their jobs; and the sharp drop in interest rates hit plans hard. Senior citizens and essential workers are disproportionately impacted by both the effects of the coronavirus and the multiemployer pension crisis.

As the United States looks to reopen and rebuild, maintaining the solvency of the multiemployer pension system will be key to economic recovery. The National Institute on Retirement Security concluded that the $44.2 billion in private pension benefit payments paid to retirees of multiemployer plans in 2018 supported $96.6 billion in overall economic output in the national economy and an estimated $14.7 billion in total tax revenue. The country can ill-afford a reduction in these revenue streams during the recovery period.

Author(s): James Hoffa

Publication Date: 28 February 2021

Publication Site: Washington Post

Multiemployer Pensions Reach Highest Funding Levels in 13 Years

Link: https://www.ai-cio.com/news/multiemployer-pensions-reach-highest-funding-levels-13-years/?

Excerpt:

Robust investment returns helped boost the aggregate funded percentage of all US multiemployer pension plans to 88% at the end of 2020, from 85% a year earlier—the highest since before the global financial crisis at the end of 2007—according to consulting and actuarial firm Milliman.  

The strong performance came despite a turbulent year of market volatility due to the impact of the COVID-19 pandemic. The volatility caused those same plans’ funded ratio to plunge to 72% during the first quarter of the year, which was the largest quarterly drop in funded percentage since 2007. That was followed by a rebound to 82% in the second quarter, which was the largest quarterly increase in funded percentage since 2007.

Author(s): Michael Katz

Publication Date: 22 February 2021

Publication Site: ai-CIO

The good and bad in Biden’s giant relief bill

Link: https://finance.yahoo.com/news/the-good-and-bad-in-bidens-giant-relief-bill-210546323.html

Excerpt:

Aid to states and cities. Cost: $350 billion. This money would offset lost tax revenue and help mayors and governors “mitigate the fiscal effects stemming from the public health emergency,” according to draft legislation. it’s clearly related to the pandemic, so it counts as relief, but it might also be more than states and cities need, since government revenue has held up better than expected during the last 12 months. 

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Pension reliefCost: $74 billion. This money would address longstanding problems at roughly 1,400 underfunded pensions covering 10 million workers and retirees, most of them belonging to unions. A government agency called the PBGC is supposed to backstop pensions that run short of money, but it, too, is drastically underfunded and poised to collapse in coming years. The money in the House bill would bail out the riskiest pensions, but it’s controversial because it’s not paired with needed reforms—and it’s not specifically related to problems caused by the pandemic. This could be one provision that doesn’t survive the Senate.

Author(s): Rick Newman

Publication Date: 22 February 2021

Publication Site: Yahoo Finance

The $1.9 trillion Biden stimulus plan is moving forward — here are the biggest parts of it

Link: https://www.marketwatch.com/story/the-biden-stimulus-plan-moved-forward-today-here-are-the-biggest-parts-of-it-11614032251

Excerpt:

The House Budget Committee approved on Monday a $1.92 trillion bill to carry out President Joe Biden’s coronavirus relief plan, the first step toward likely House passage by the end of the week.

The vote was 19-16. Texas Democrat Rep. Lloyd Doggett voted with Republicans in opposition to the bill but a spokeswoman for him later said he had cast his vote in error and supported the legislation.

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Aid to state, local and tribal governments: This would provide money for states and local governments, as well as tribal governments, to offset tax-collection losses and increased spending resulting from the coronavirus pandemic. Price tag: $350 billion.

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Multiemployer pension plan aid: The Pension Benefit Guaranty Program would be able to give grants to underfunded pension plans guaranteed by the PBGC. The PBGC revolving fund to help pay full benefits when pensions fall short is set to be exhausted in 2027 under current law. Price tag: $81.5 billion.

Author(s): Jonathan Nicholson

Publication Date: 23 February 2021

Publication Site: MarketWatch