The Pension Rights Center and Multiemployer Pensions
Updated: Feb 1, 2019
Two advocacy groups have recently caught the attention of AFM-EPF participants though both groups are over 40 years old. They are the Pension Rights Center (PRC) and the National Coordinating Committee for Multiemployer Plans (NCCMP). Their names and mission statements imply they are working towards the same goals but a closer look shows the PRC advocates for individuals even if it means the collective fund will fail while the NCCMP advocates for the collective funds that pay the benefits.
The financial meltdown of 2008-2009 was a disaster for all kinds of pension funds. Many people’s 401ks were decimated and many single-employer pension funds either went belly up or froze future benefit accruals. Many multiemployer funds found themselves suddenly upside down with more liability than assets. That, along with more inactive than active workers and built-up reserves disappearing overnight, created huge holes in the funds. The average loss for these funds was about 25%.
A catastrophe was fast approaching. Some very large funds led by the massive Central States Teamsters were on a path to insolvency. Their failure would bring down the already underfunded Pension Benefit Guaranty Corporation (PBGC), thus destroying the entire multiemployer pension system. Hearings were held by relevant House and Senate committees. The PRC and NCCMP were both present. The NCCMP presented detailed history and an analysis of the plight of multiemployer funds. They also suggested that bipartisan legislation proposed by Reps. Earl Pomeroy and Joe Tiberi and companion legislation put forth by Senator Bob Casey, would go a long way towards addressing the crisis. PRC was mostly there to advocate against financial assistance to single-employer plans who had frozen future accruals. The only specific mention of multiemployer plans by PRC was a statement by Karen Friedman at an October, 2009 hearing of the Senate committee on Health, Education, Labor and Pensions:
“Raise the maximum PBGC guarantee for multiemployer plan benefits to at least $20,000 for a full-career worker.” (This was part of Pomeroy-Tiberi which the NCCMP helped craft).
“Multiemployer plans in the future may find their way out of the current crisis and become over-funded by a significant amount. If so, we hope that Congress will explore ways to reinstate subsidized early retirement benefits (and subsidized survivors benefits) that may have been eliminated under the ‘‘Red Zone’’ (critical status) provisions of the PPA”
Not much of a solution there.
Pomeroy-Tiberi failed to garner enough support in the Democratic Congress to even get a hearing. It died when Republicans took over the House. But the imminent crisis loomed so the NCCMP continued to advocate for a solution to save the funds and the PBGC. In the ensuing years they attended hearings and pressed for congressional funding to help the failing funds and were told repeatedly, there would be no bailouts of the funds. PRC participated in talks about how to restructure all defined benefit funds to address new realities but didn’t seem to see the urgency of finding a solution for multiemployer funds quickly. They offered no statement at a key February 2, 2012 hearing of the House Subcommittee on Health, Education, Labor and Pensions. Meanwhile, the NCCMP finally got the message there would be no congressional funding and, because the crisis wasn’t going away, they crafted a solution that didn’t rely on such funding. That led the way to the Multiemployer Pension Reform Act (MPRA), the 2014 law that allows trustees to make controlled cuts to accrued benefits as a way to avoid insolvency.
That drew the attention of the PRC back to multiemployer pensions and because their mandate is to protect the pensions of individuals, as opposed to protecting the funds for everyone, they raised a hue and cry about MPRA, though they offered no other solution to stem the tide of impending insolvencies.
An ill-prepared Treasury Department (according to Adam Beck, who was an actuary at Treasury at the time) rejected the MPRA application of Central States. That fund is projected to be insolvent by 2024 and it will bring the whole system down if nothing is done. Senator Sherrod Brown of Ohio and Representative Richard Neal of Massachusetts proposed the Butch Lewis Act, which would offer federally backed loans to distressed plans to allow them to pay benefits while they try to earn their way out of the holes they are in. The NCCMP has been accused of trying to curtail the availability of the loans. In fact, they are concerned about a loan program being passed and implemented too late or not at all. Every delay brings the disaster of Central States and the PBGC insolvency closer.
This statement was made by Michael Scott of the NCCMP on April 12, 2018:
“Historically, regardless of administration, OMB (the Office of Management and Budget) and Treasury oppose federal credit programs. This is important, because OMB owns all aspects of federal credit. Under the Federal Credit Reform Act of 1990, or FCRA, OMB owns the scoring process, as well as the process that allows for programs to be executed and loans disbursed. The last credit program that Congress passed was in June 2014. The Water Infrastructure Finance and Innovation Act will make its first loan for $134 million later this month, and this is considered a fast implementation. The normal federal credit process will not save Central States or the Mine Workers.”
In mid-September of this year, Brown and Neal gave Butch Lewis a haircut. The Congressional Budget Office (CBO) had given it a preliminary score of over $100 billion. Knowing such a program would never pass a Republican Congress, they chopped it down to $34 billion by making the program unavailable to all but the absolute dire cases (Central States). PRC and the Teamsters were all but slapping each other on the backs because with that price tag it is much likelier to pass. So much for concern about all retirees.
Tom Lowman, an actuary affiliated with PRC and hired by an activist group to address a roomful of musicians in April, 2018, summed up the PRC focus. Without acknowledging that musicians under 50 are accumulating benefits at a much lower rate because of a lower multiplier, and without acknowledging the irony of asking them to take a hit on wages to avoid any cuts in benefits for the folks on much higher multipliers he remarked:
“I’m an actuary, I don’t do bargaining. It (the 6% a year rise in pension contributions) would be from total compensation and could very well cost you, you have to think about can you get 6% and are you willing to take less wages which gets to the issue of do you want to support the plan and the retirees or are you just in this for yourself for a higher wage and smaller contributions? It’s a choice. I’m totally aware of that, I’m saying I’d like to protect the retirees.”
What he and the PRC leave out is “supporting the plan” might include taking some cuts absent a congressional intervention so there still is a plan for the next generation. And thinking collectively and for the community might mean not asking the younger folks on the $1 multiplier to make all the sacrifices.
House Ways and Means Hearing, October 1, 2009
Senate Committee Health, Education, Labor and Pensions, October 29, 2009
Pomeroy-Tiberi and Casey bills
NCCMP Solutions Not Bailouts
Hue and cry
Michael Scott remarks