This is another blog on our monitoring the status of defined benefit multi-employer pension funds. Since this author last wrote to you, it has been revealed that the Central States Pension Fund is scheduled to become insolvent sometime in 2025. Worse yet, it has been announced that the multi-employer fund of the Pension Benefit Guaranty Corporation (“PBGC”) which was structured to assist insolvent multi-employer pension funds is also projected to run out of money in 2025.
The future of those funds is dire. In approximately six years, almost 400,000 participants in the Central States Pension Fund will find themselves in an insolvent plan without the benefit of the PBGC safety net.
Congress’ response to the multi-employer pension fund crisis was to form a bi-partisan committee on February 16, 2018, the Joint Select Committee on Solvency of Multiemployer Pension Plans (“JSC”) which is made up of sixteen members. The chairmen of the JSC are Senator Sherrod Brown, a Democrat from Ohio and Senator Orin Hatch, Republican from Utah.
The JSC concluded its public hearings and submissions for public stakeholder input in October. Considerable time was spent by the JSC in focusing on the solvency of large distressed funds and the financial solvency of the PBGC but less time was spent examining the impact of reform changes to health plans or creating a framework for sustainable retirement plans in the future.
Among the “solutions” being considered are “composite plans,” loans for plans headed to insolvency, changes to funding rules, and premium or contribution increases.
The JSC is projected to issue a report later this month.
We will continue to you apprised of future developments.