Later this year if we’re lucky, some groundwork laid in Columbus this past week could help to steady a precarious national house of cards known as multiemployer pension plans. These plans were the subject of a Statehouse rally on Thursday and an unusual congressional field hearing – the only one being held on this topic in the nation – on Friday.
If the plans can be shored up without triggering the collapse of a taxpayer-backed guarantee fund, much of the credit will go to Ohio’s U.S. senators, Democrat Sherrod Brown and Republican Rob Portman.
It is critical for them to continue giving this challenge their best efforts, not only for 66,000 Ohioans whose retirement funds are in jeopardy but also as many as 10 million people across the country who depend on multiemployer pension funds.
Brown and Portman are each to be commended for pushing the uphill challenge for solvency of these union-based pension plans this far. If Ohio’s senators can get that boulder the rest of the way to the crest, they stand to be nationally recognized for helping to engineer a rare bipartisan and bicameral legislative solution in a lethargic, partisan Congress. But we’re getting ahead of ourselves.
At issue is the critical financial status of hundreds pension plans created to allow companies with union employees to pool resources to provide pensions for their workers. They vary from small family-owned businesses such as bakeries and construction companies to larger trucking and mining companies. The biggest plan at risk of failure is the Central States Pension Funds for Teamsters plan with 50,000 Ohio participants, the most of any state.
These multiemployer funds have been around for decades, but changes in their industries complicated their ability to recover from the 2008 recession, and now many of them are poised to fail. If that happens, experts fear a “contagion effect” that could topple other plans as well, straining social-service safety nets and the economy as a whole.
The shortfall in troubled plans is pegged at about $100 billion. And the Pension Benefit Guaranty Corporation, a federal fund created in 1974 to help protect these and other pension funds, is itself projected to fail in about seven years.
Both Ohio senators deserve credit for devoting years of efforts to this issue. Portman is a recognized authority in Congress on pensions and Brown is a primary architect of the select committee, an unusual legislative vehicle created in a bipartisan budget deal earlier this year. Brown has offered a potential solution involving a federal loan fund but is open to other options.
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