Distressed multiemployer plans show progress, but 'substantial percentage' still in peril — GAO study
By Hazel Bradford | March 5, 2013 3:40 pm
Severely distressed multiemployer plans have made progress in solving their funding problems, but “a substantial percentage” of them do not expect to return to a healthier funded status, a Government Accountability Office expert told a congressional panel Tuesday.
Those and other likely plan insolvencies could also endanger the Pension Benefit Guaranty Corp., Charles Jeszeck told the House Education and the Workforce subcommittee on health, employment, labor and pensions.
Mr. Jeszeck, the GAO's director of education, workforce and income security, discussed preliminary findings of a subcommittee-ordered GAO study, which found the funding status of multiemployer plans has improved, with the percentage of plans in critical status dropping to 24% in 2011 from 34% in 2009, and the percentage in endangered status dropping to 16% from 34%.
Despite those efforts, Mr. Jeszeck said, 40% of plans still have not been able to improve.
GAO officials also say the PBGC's multiemployer program could run out of money by 2023, with the number of plans expected to be insolvent by then needing $7 billion from a program that currently has only $1.8 billion in total assets. GAO will publish a final report with recommendations at the end of the month.
Solving both of those problems “is going to be on our shoulders,” said panel Chairman Phil Roe, R- Tenn. “It's not going to be easy, but we're very committed to making this work.” Ranking member Robert Andrews, D-N.J., said he was optimistic as well. “This is a solvable problem,” he said.