WASHINGTON, DC – U.S. Senator Sherrod Brown (D-OH) today said the newly released Pension Benefit Guaranty Corporation (PBGC) report detailing the fact that the agency’s Multiemployer Insurance Program will likely reach insolvency before it was initially expected to underscores the need to find a bipartisan solution to this crisis before it is too late. The new PBGC report states that the chance of the multiemployer pension program becoming insolvent before the end of Fiscal Year 2025, which was initially projected, has risen to 90 percent. In fact, there even remains a chance it could run out of money during FY 2024.
Brown co-chairs the bipartisan, joint House-Senate committee tasked with solving the pending pension crisis threatening small businesses and 1.3 million workers and retirees nationwide alongside Senator Orrin Hatch (R-UT). More than 60,000 Ohio workers and retirees are at risk.
“There are more than 100 multiemployer pension plans on the brink of failure, more than 1.3 million workers and retirees across this country at risk of losing their retirement security after lifetime of hard work, and small businesses in jeopardy of collapsing if they end up on the hook for pension liability they can’t afford to pay,” Brown said. “News that the PBGC could run out of money and put workers, retirees, and small businesses at risk even sooner than anticipated underscores the importance of this committee’s work and the need to find a bipartisan solution now, before it is too late. Failure is not an option when millions of American are counting on Congress to act.”
Brown has been fighting to solve the pension crisis for years and has introduced his own solution, the Butch Lewis Act. Earlier this year, he secured the creation of the joint, bipartisan House-Senate Committee as part of the overall budget compromise. At Brown’s urging, the Committee will have instructions to report a bill by the last week of November, and will be required to hold at least five public meetings, including the option of field hearings outside of D.C., so members of Congress can hear directly from retirees, workers and businesses affected by the pension crisis. The solution the Committee produces will be guaranteed an expedited vote in the Senate without amendments. The Committee is made up of eight Republicans and eight Democrats from both the House and Senate.
The committee has already held three hearings as its works to reach a bipartisan solution. During the most recent hearing, Executive Director of the PBGC Thomas Reeder confirmed that congressional action is needed to prevent devastation for workers, retirees and businesses and prevent a taxpayer bailout of the PBGC. PBGC serves as the insurance company for multiemployer pension plans. Brown said that, like any insurance plan, PBGC won’t kick in until after the damage is done – after plans fail, businesses are forced to close and jobs are lost. And even then, retirees would only be covered for a tiny fraction of the retirement they earned over a lifetime of work. What’s more, Brown said, the PBGC itself is severely underfunded, so allowing just one of the major plans to fail could put enough strain on the insurance system to bring down the entire PBGC multiemployer system. And if that happens, taxpayers could be on the hook for tens of billions of dollars.
Reeder confirmed to Brown during questioning during the most recent pensions hearing that if plans are allowed to fail and PBGC insurance kicks in, the insurance could only pay about one-eighth of the minimum benefit retirees are supposed to be guaranteed. Senator Brown pointed out that minimum benefit is already much lower than the retirement these workers earned, that they bargained for and gave up pay raises for – that they budgeted for when taking out mortgages, and that they count on to pay their bills. Cutting it down to one-eighth is unsustainable and could force retirees into poverty.
Numerous Ohio pension plans, including the massive Central States Teamsters Pension Plan, the United Mine Workers Pension Plan, the Ohio Southwest Carpenters Pension Plan and the Bakers and Confectioners Pension Plan are currently on the brink of failure. The Ironworkers Local 17 plan has already had to cut benefits. If nothing is done to the plans, they will fail and retirees will face massive cuts to the benefits they earned over decades of work.