Wisconsin Teamsters happy with pension funds in virus bill

Excerpt:

Thousands of Wisconsin Teamsters are celebrating after President Joe Biden signed the coronavirus relief bill into law.

That’s because the move ensures that the workers no longer have to worry about their pensions being cut in half.

The American Rescue Plan includes the Butch Lewis Emergency Pension Plan Relief Act of 2021. The act directs the Pension Guaranty Benefit Corp. to allocate billions of dollars to avoid the drastic cuts.

Author(s): Associated Press

Publication Date: 14 March 2021

Publication Site: KBJR6

How The American Rescue Plan Act Will Help More Than A Million Retirees And Workers

Link: https://www.forbes.com/sites/nextavenue/2021/03/12/how-the-american-rescue-plan-act-will-help-more-than-a-million-retirees-and-workers/

Excerpt:

Good news on the retirement-income front. Some 1.5 million workers and retirees faced the real risk that their pension incomes would be slashed over the next 20 years or significantly sooner. But the American Rescue Plan Act just signed by President Joe Biden will prevent that from happening.

That’s because the massive legislative package includes the Butch Lewis Emergency Pension Plan Relief Act of 2021. It restores to financial health more than 100 failing pension plans known as multiemployer plans (they covered more than one company’s employees) for union workers. Most notably, the Teamster’s storied Central States, Southeast & Southwest CSWC +0.3% pension, covering some 400,000 workers and their families.

Author(s): Next Avenue

Publication Date: 12 March 2021

Publication Site: Forbes

American Rescue Plan Act of 2021 (3) 9703 + Miscellany

Excerpt:

Going through the text of the stimulus bill, section 9703 continues allowing those who run multiemployer plans and their actuaries to make up their own rules as long as such calculations do not overly embarrass the regulators and they do not sneak in any benefit increases.

Author(s): John Bury

Publication Date: 14 March 2021

Publication Site: burypensions

American Rescue Plan Act of 2021 (2) 9702

Excerpt:

Going through the text of the stimulus bill we come to section 9702 which says that for multiemployer plans self-designated as being in Critical and Endangered status, who had to come up with a plan to dig out, will have their funding improvement or rehabilitation period extended by 5 years.

I wonder if any of these funding improvement plans filed before ARPA included a line like:

Waiting for union-controlled democrats to take over the federal government so 100% of all unfunded liabilities get covered by taxpayers.

Author(s): John Bury

Publication Date: 12 March 2021

Publication Site: burypensions

American Rescue Plan Act of 2021 (1) 9701

Excerpt:

We start with a provision that keeps multiemployer plans who did not have the foresight to designate their plans in bad shape from rushing for the increments.

Option number one for getting the bailout money is to have a multiemployer plan in Critical and Declining status. To avoid having 1,400 plans in Critical and Declining status all at once this provision seems to freeze a plan’s status to what was claimed for the plan year that began on or after March 1, 2019.

Here is the wording. Tell me if you see anything different.

Author(s): John Bury

Publication Date: 11 March 2021

Publication Site: Burypensions

COVID rescue package gives failing pension plans a $86 billion bailout, stirring hope and criticisms

Link: https://www.bostonglobe.com/2021/03/13/nation/covid-rescue-package-gives-failing-pension-plans-86-billion-bailout-stirring-hope-criticisms/

Excerpt:

In the shadow of stimulus checks and extra unemployment aid, Democratic lawmakers extended another hand in the $1.9 trillion pandemic relief package: a long-sought bailout for failing private pension plans.

The union-backed provision, touted for years by Representative Richard E. Neal, was signed into law Thursday by President Biden as part of the larger COVID-19 stimulus bill. It promises to set aside an estimated $86 billion — and some say possibly far more — in grants for multi-employer retirement plans that were careening toward insolvency even before the pandemic hit.

Without it, the multi-employer pension plans for more than a million truckers, warehouse and retail workers, and others could collapse, unions and congressional Democrats warn. In New England alone, the measure could help preserve the promised retirements of at least 70,000 Teamster members, union officials said.

Author(s): Matt Stout

Publication Date: 13 March 2021

Publication Site: Boston Globe

Multiemployer Pension Relief Expected by March 14

Link: https://www.morganlewis.com/blogs/mlbenebits/2021/03/multiemployer-pension-relief-expected-by-march-14

Excerpt:

EPPRA takes a far more direct approach to the problem than prior proposals. Under EPPRA, eligible plans can receive financial assistance from a new Treasury-backed PBGC fund. The available financial assistance will be sufficient for eligible plans to pay all benefits for 30 years. This includes any benefits previously suspended under the Multiemployer Pension Reform Act of 2014 (MPRA), which must be restored by plans that apply for assistance under EPPRA. EPPRA’s special financial assistance will not, however, cover adjustable benefits that have been cut under a rehabilitation plan.

The assistance is payable in a single lump sum without any repayment obligation. To qualify for assistance, a multiemployer pension plan must meet one of four conditions:

1. Be in critical and declining status

2. Have previously imposed a benefit suspension under MPRA

3. Be in critical status, have a modified funded percentage of less than 40% on a current liability basis, and have a ratio of active to inactive participants of less than 2 to 3

4. Be insolvent

The PBGC may prioritize plans that are insolvent, that require more than $1 billion of assistance, or that have suspended benefits under MPRA.

Author(s): Timothy P. Lynch, Daniel R. Salemi, Benjamin T. Kelly

Publication Date: 9 March 2021

Publication Site: Morgan Lewis

Bailed Out Multiemployer Plans

Excerpt:

According to PBGC, 61 plans filed notices for 2020 that they were in Critical and Declining status.

There have been 32 plans that filed for benefit cuts under MPRA and it may pay off for every other multiemployer plan to rustle up a submission package prior to enactment.

Then we come to other plans who might be (or could make themselves) eligible. Of 1,220 plans who filed Schedule MBs for 2018 there were:

118 in Critical and Declining status

638 with more retired than active participants

1202 with unfunded liabilities

$685 billion in net unfunded liabilities

Author(s): John Bury

Publication Date: 9 March 2021

Publication Site: Burypensions

The Politics of Pensions

Link: https://www.nationalreview.com/the-tuesday/the-politics-of-pensions/

Excerpt:

One of the difficulties faced by some of these pensions is that most of the large employers that were expected to pay into them no longer do so, many of them having ceased to exist. As Elliot Blair Smith put it in a 2016 MarketWatch write-up of the sorry history of the Central States pension fund: “Only three of the plan’s 50 largest employers from 1980 still pay into the plan. And for each active employee, it has 5.2 retired or inactive participants.”

If corporations did nothing but grow and stack up profits, then this would be a pretty good system. But that isn’t how things actually work.

In spite of the sci-fi trope of immortal, galaxy-spanning corporations, the modern business firm is in fact a relatively vulnerable and short-lived thing. In the middle of the 20th century, a big corporation might be expected to stay in business for the better part of a century; today, the average big corporation will not live long enough to legally order a beer. McKinsey has estimated that three-fourths of the companies listed in the S&P 500 in 2017 will disappear within ten years. This is an inconvenient thing for people who expect to be taken care of for all of their adult lifetimes by a single employer, but it is the result of improved business practices rather than defective ones. As businesses become more focused on their core competencies and learn to adapt more quickly to changes in the market, they become ever more temporary partnerships among different kinds of capital: physical, financial, and human.

Author(s): Kevin Williamson

Publication Date: 9 March 2021

Publication Site: National Review

MoneyPalooza Monstrosity: It Passed! More on the Multiemployer Pension Bailout

Link: https://marypatcampbell.substack.com/p/moneypalooza-monstrosity-it-passed

Graphic:

Excerpt:

Here are the whole-number ratios if you can’t eyeball the relationships above.

The total MEP unfunded liability is 8 times that of the bailout bill amount

The total public pension unfunded liability is 22 times that of the bailout bill amount (this happens to be the same as the total American Rescue Plan Act of 2021)

The total Social Security shortfall is almost 200 times that of the MEP bailout bill

Author(s): Mary Pat Campbell

Publication Date: 8 March 2021

Publication Site: STUMP on Substack

Rescue Package Includes $86 Billion Bailout for Failing Pensions

Link: https://www.nytimes.com/2021/03/07/business/dealbook/bailout-pensions-stimulus.html

Excerpt:

Both the House and Senate stimulus measures would give the weakest plans enough money to pay hundreds of thousands of retirees — a number that will grow in the future — their full pensions for the next 30 years. The provision does not require the plans to pay back the bailout, freeze accruals or to end the practices that led to their current distress, which means their troubles could recur. Nor does it explain what will happen when the taxpayer money runs out 30 years from now.

Senator Sherrod Brown, a Democrat from Ohio who has been leading the charge to rescue the ailing pension plans, said that including the provision in the relief bill is a “really big deal” for both the retirees who depend on the money and the employers now being crushed by promises they cannot afford to keep.

Author(s): Mary Williams Walsh and Alan Rappeport

Publication Date: 7 March 2021

Publication Site: New York Times

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