The Pension Benefit Guaranty Corp.'s multiemployer program "is in dire straits and getting worse," Director W. Thomas Reeder Jr. told a House Education and the Workforce subcommittee Wednesday.
Mr. Reeder was the sole witness at a hearing held by the Subcommittee on Health, Employment, Labor and Pensions to examine the agency's financially strapped multiemployer program, and to consider possible solutions, including raising the premiums paid by all multiemployer plans to the PBGC. That would not avoid severe benefit cuts for participants in the 100 or more plans facing insolvency, but it would solve the PBGC's own insolvency, projected by 2025.
Panel members also discussed the pros and cons of legislation introduced Nov. 16 to help struggling multiemployer pension funds by creating a federal loan program that would avoid the need for deep benefit cuts. The bill would create a new office within the Treasury Department called the Pension Rehabilitation Administration to oversee the loan program, to be funded by the sale of Treasury-issued bonds to financial institutions. President Donald Trump would appoint the head of the new office. The pension funds could borrow for 30 years at low interest rates. One restriction for borrowers is they could not make risky investments.
Subcommittee Chairman Tim Walberg, R-Mich., said members of Congress "owe it to workers, retirees, employers and taxpayers to put politics aside and work toward finding a fiscally responsible, bipartisan solution." He noted that while multiemployer pension reforms enacted in 2014 were an important step, "regulations written by President Obama's Treasury Department implementing the law made it difficult if not impossible for trustees to use the tools the law contains. And so, the problems continue."
As of Sept. 30, the PBGC multiemployer program had assets of $2.3 billion to cover $67.3 billion in liabilities in 187 plans, Mr. Reeder said, adding that another $14 billion in underfunding is not reflected in financial statements for ongoing multiemployer plans projected to become insolvent in the next 10 to 20 years.