The dire straits faced by more than 100 struggling multiemployer pension funds are starting to draw attention in Congress, raising hopes that solutions, including a new federal loan program, are within reach.
Some of the attention comes from the Pension Benefit Guaranty Corp.'s own financial problems. Its multiemployer program is projected to run out of money by 2025 or sooner, putting at risk all the multiemployer pension benefits that it already guarantees.
The majority of multiemployer pension plans are well funded, with 65% funded at 80% or better, according to a survey by Segal Consulting. Yet as many as 114 multiemployer pension plans expect to become insolvent within the next 20 years, according to actuarial consulting firm Cheiron Inc. Those plans, with $44 billion in total assets, $80 billion in liabilities and 1.3 million participants, have declared themselves to be in "critical and declining" status, a category created by the Multiemployer Pension Reform Act of 2014 to alert regulators.
Three plans account for 63% of the underfunding: the $15.3 billion Teamsters Central States, Southeast & Southwest Areas Pension Fund, Rosemont, Ill., the $4.3 billion Bakery & Confectionery Union and Industry International Pension Fund, Kensington, Md., and the $4.1 billion United Mine Workers of America 1974 Pension Plan, Washington.
The Center for Retirement Research at Boston College estimated that critical and declining plans are in the hole for $76 billion, based on current funding levels. When combined with plans in a second, critical category, typically less than 65% funded, it represents $187 billion in underfunding.
"These plans are not plans that can turn around on their own. They are going to use up all their assets and then stop paying benefits," said Alicia Munnell, the center's director. "Any kind of organized solution is better than the outcome when the money just stops paying out. These are people's lives. I think politicians don't want this to happen on their watch."