Bipartisan legislation creating an emergency loan program allowing the United Mine Workers of America 1974 Pension Plan, Washington, to avoid insolvency was introduced Tuesday in the House and Senate.
As of June 30, 2016, the pension fund had $4.1 billion in assets and $6.17 billion in liabilities, but with more than 10 times as many retirees as active participants, it is only 39.8% funded by actuarial standards.
The proposed American Miners Pension Act calls for the Treasury Department to loan the pension fund up to $600 million over 30 years, with the pension fund just paying 1% interest in the first 10 years.
The fund, which is projected to be insolvent by 2022, would have to certify each year that it is solvent and able to repay the loan.
The legislation also would allow excess funds from the Interior Department's Abandoned Mine Land Reclamation Program to be transferred to the pension fund, mirroring a similar deal approved by Congress in May that allows excess program funds to pay health benefits for the mine workers' health fund.
Sponsors of the legislation include Sen. Joe Manchin, D-W.Va., Sen. Shelley Moore Capito, R-W.Va., Rep. David McKinley, R-W.Va. and Rep. Peter Welch, D-Vt.
The mine workers pension fund was 94% funded before the recession, which caused roughly $2 billion in investment losses, said Cecil E. Roberts, United Mine Workers of America International president, on Tuesday at a press conference. The fund has also suffered from numerous coal industry bankruptcies, and contributions have dropped to $25 million from $100 million per year in recent years.
With 60% of plan beneficiaries receiving less than $1,000 per month in pension benefits, the pension fund is not eligible to reduce benefits to stay solvent.
Mr. Roberts warned that allowing the pension fund to become insolvent also poses a risk to the Pension Benefit Guaranty Corp.'s multiemployer program that is projected to be insolvent by 2025. If that happens, the PBGC would have to severely reduce the financial assistance that it provides to participants in all covered plans, or Congress would have to appropriate significantly more funds.
The proposed legislation "saves the government money," Mr. Roberts said. "If our plan collapses, then the PBGC collapses right along with."
Using funds from the Abandoned Mine Land program for the union's benefit funds was first allowed by a 1946 agreement between President Harry Truman and union President John L. Lewis, said Mr. Manchin, adding that "every day that it goes without settling the pension problem, it's going to cost more."
Mr. Roberts said in an interview that presidents of both parties have honored that agreement ever since, and he is comfortable that President Donald Trump will as well, given his support for the coal industry and communities. "There is a long history here," said Mr. Roberts.