Enactment of the $1.9 trillion American Rescue Plan offered some good news for the participants in struggling multiemployer pension funds, primarily in the form of $86 billion in assistance.
As many as 200 plans that are deemed critical and declining, less than 40% funded or have more inactive than active participants could be eligible for the financial help.
Now for the bad news: While $86 billion sounds like a big number, it's only a drop in the bucket. The biggest plan, the $12.3 billion Teamsters Central States, Southeast & Southwest Areas Pension Fund alone faces $31 billion in unfunded liabilities, its latest filings show.
But more critically, the package sidesteps action on needed structural reforms that, to date, have been impossible to enact through a bipartisan approach. In essence, the money contained in the latest stimulus bill is a fix — some call it a bailout — for troubled plans, and provides only a temporary reprieve for the Pension Benefit Guaranty Corp.
Tossing money at the problem allows Congress to sidestep any action to avert future plan insolvencies.
Last year's Heroes Act contained reform measures that called for stricter discount rates and new composite plans combining defined benefit and defined contribution features. While it passed the House, it was never taken up by the Senate.
A plan to provide federally backed loans to underfunded multiemployer pension plans, that was included in another House-passed bill in 2020, also was not included.
The problem isn't going to go away. Without reforms, Congress bought itself a modicum of time. But time isn't what's needed.