US. Federal government’s rescue plan for multiemployer pensions falls flat, critics say
Earlier this year, Congress threw a lifeline to troubled multiemployer pension plans. But the rescue effort is getting tangled in regulations that may ultimately sink many of the retirement plans, pension experts say.
The Pension Benefit Guaranty Corp., which insures defined-benefit pension plans, issued rules early this month outlining a new multiemployer-plan financial-assistance program mandated by the American Rescue Plan passed in March. The law allows certain underfunded multiemployer plans to apply for taxpayer-funded financial assistance that carries no repayment obligations and can help stabilize wobbly funding and reinstate benefits previously slashed. The new PBGC rules, however, make it highly probable that plans accepting the assistance will be insolvent within 30 years, pension consultants, lawyers and other experts say, and leave younger workers with little incentive to participate in these plans.
The PBGC was “too draconian” in its approach to calculating the amount of financial assistance, says Russell Kamp, managing director at investment management firm Ryan ALM. Generally, “it doesn’t allow for these plans to survive beyond 2051 — if they even get there.”
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