Some multiemployer pension plans are at a heightened risk of insolvency because of the downturn in the economy and the loss of employers contributing to the plans, according to a GAO report Wednesday.
“Plans in the worst condition may find that the options of increasing employer contributions or reducing benefits are insufficient to address their underfunding and demographic challenges,” said the report, “Private Pensions: Changes Need to Better Protect Multiemployer Pension Benefits.”
“Without additional options to address plan underfunding or to attract new employers to contribute to plans, plans may be more likely to require financial assistance from PBGC,” the report continued. “Additional claims would further strain PBGC’s insurance program that, already in deficit, it can ill afford.”
To better protect the plans, the Government Accountability Office report recommended that the Department of Labor, Internal Revenue Service and Pension Benefit Guaranty Corp. share data they collect about multiemployer plans, clearing the way for them to better monitor the financial health of the plans and to assist them.
“The director of the PBGC should develop a more proactive approach to monitoring multiemployer plans, such as assigning case managers to work with the plans that pose the greatest risk to the agency and provide non-financial assistance to troubled plans on an ongoing basis,” the report added.
In a response letter attached to the GAO report, Joshua Gotbaum, PBGC director, said agency officials agreed that “our multiemployer program will need more resources and a more robust infrastructure.”
“With millions of families’ retirement security dependent on these plans, it is vital that federal agencies have timely information to assess the health of multiemployer plans,” added Rep. George Miller, D-Calif., in a news release issued by his office Wednesday. Mr. Miller had requested the GAO study.