Saving America's Pension Plans Is A Rare Chance For Bipartisan Accomplishment | Opinion

Recent studies have made news highlighting how few Americans have adequate retirement savings or pensions. But there's an additional problem bedeviling retirement: even those who have good pensions could lose them. Scores of financially troubled pension plans are at risk of collapse, which could lead to substantial benefit cuts for up to 1.5 million Americans. The House is voting today on a bill that would shore up these shaky plans and save the pensions.
The plans in question are multiemployer pension plans, run jointly by employers and unions. There are about 1,400 of them in the U.S. the vast majority of which are in sound financial shape. But some 130 of them are projected to become insolvent over the next decade due to investment losses from the financial crisis, jobs moving overseas, industry deregulation and other factors.

The 1.5 million workers and retirees in these plans are truck drivers, iron workers, musicians, warehouse workers and others, together with their spouses and widows. Some could lose as much as 70 percent of their benefits if Congress fails to act.

In 2014, Congress hurriedly passed a bill intended to solve this problem in a last-minute budget deal, but it was badly designed and in effect sold retirees down the river. The 2014 Multiemployer Pension Reform Act (MPRA) permitted underfunded plans to cut retiree benefits as a misguided way of balancing the books. This eviscerated fundamental protections granted to retirees under ERISA, the federal private pension law.

As a result of MPRA, retirees in 14 troubled plans have already had their benefits slashed. There are countless heart-breaking stories, like the retiree who worked 26 years for a New York trucking company. On the day he was diagnosed with esophageal cancer, he came home to a letter from his plan telling him his annual benefits were getting cut from $44,000 to $11,000. A 64-year-old widow from New Jersey had her benefits cut from $2,600 a month to $1,022, and now lives in fear of being forced into a homeless shelter.

There is a growing understanding that MPRA was a grave mistake and should be repealed. But until Congress enacts a real solution, even more retirees will suffer.
Congress will get a chance to vote on a real solution today. The Rehabilitation for Multiemployer Pensions Act would protect the benefits retirees have earned by providing loans and other assistance to troubled pension plans and allowing sufficient time to recover their losses and repay the loans. It would also restore benefits for retirees who have already had them cut.

Addressing threats to pension plans isn't just important for workers and their families who depend on them, it's also important for the rest of us, because slashing their benefits has multiplier effects on the wider economy. Lost retirement income will hurt communities, cut tax revenue, tank businesses, eliminate jobs, and overload social and medical services.

The American Enterprise Institute economist Alex Brill (former chief economist and policy advisor to the House Ways and Means Committee) studied the knock-on effects of the collapse of just one plan, the 400,000-member Central States, Southeast Southwest Areas Pension Fund, projected to be insolvent by 2025. He found that it would result in the loss of about 55,000 jobs, more than $5 billion in GDP, $1.2 billion in federal tax revenue and almost $450 million in state and local tax revenue.

When a natural disaster strikes, Americans don't look the other way; they stand up to help their neighbors. The retirement crisis may be a slow-motion disaster, but it's no less devastating. The House should stand up for affected retirees and the rest of us by voting up the Rehabilitation for Multiemployer Pensions Act today. Then the Senate should pass comparable legislation to save troubled pension plans.

If there was ever a bi-partisan issue that cuts across divisive politics, this is it. It directly affects hard-working Americans who toiled in factories, risked their lives climbing on scaffolding to build our skyscrapers, and delivered goods and services on the nation's highways. They are of every political stripe—Republicans, Democrats and Independents. But they all have this in common: they worked hard every day and gave up wages and vacation pay in exchange for the promise of a guaranteed pension. That's a promise we need to keep.

Karen Friedman is the executive vice president and policy director of the Pension Rights Center

The views expressed in this article are the author's own.​​​​​