In December, we urged Congress to find a compromise to address the crisis facing the country's woefully underfunded multiemployer pension plans. It is now May. The coronavirus pandemic is only worsening the crisis.
Last week, legislation to help address the problem was introduced in the House. It is time to act.
A report from Milliman regarding multiemployer plans through 2019 estimated the aggregate funding level through the end of 2019 was 85%. However, for the 130 critical and declining plans, the aggregate funding level through the end of 2019 was 37%, half of what it was for those same plans in 2007.
Depending on the severity and duration of the impact of the COVID-19 crisis on multiemployer plans, the number of plans in critical and declining status could grow to more than 300, significantly increasing the cost of solving their problems, according to a letter to Congress from the Segal Co. in April.
As Congress considers another economic stimulus bill, pension funds and retirement are an important focus. The latest effort includes several provisions aimed at these troubled plans, and others, as part of the section of the bill titled the Emergency Pension Plan Relief Act of 2020.
The bill offers relief for the more than 1 million Americans whose pension benefits are at risk in struggling multiemployer pension plans — many of them workers on the front lines of the coronavirus crisis — for their plans and for the PBGC.
Rising unemployment related to the pandemic is exacerbating the multiemployer pension plan crisis "and threatens to bankrupt the Pension Benefit Guaranty Corporation, impose damaging liabilities on thousands of businesses, and devastate communities across the country," the bill reads.
It is time for Congress to consider proposals that would enable systemic changes and will prevent these plans from failing, while also putting systems in place for the future.
As Congress responds to the economic devastation of the pandemic, it is time to apply the same firepower to this long-standing crisis facing so many Americans.