The Partnership for Multiemployer Retirement Security, an organization of business and labor interests, released a series of projections on Tuesday on an unnamed MEP that it said could fall into insolvency unless Congress passes reforms by year-end.
"We can't wait a moment longer for Congress to reform the multiemployer pension system," the partnership in a statement.
The partnership was formed last year with the release of "Solutions Not Bailouts," a proposal for reform developed by the National Coordinating Committee for Multiemployer Plans that, if enacted, would give trustees of MEPs the power to reduce retirement benefit payments by up to 10 percent.
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A chart it released Tuesday documenting the plight of one Midwest construction industry multiemployer plan lays out three scenarios: what would happen if Congress does not act by year-end; what would happen if the reforms suggested in "Solutions Not Bailouts" are implemented; and what would happen if those reforms are delayed another two years.
The unnamed MEP, which has about $85 million in plan assets, will be insolvent by 2028 if Congress continues to do nothing, the partnership said. In that case, the PBGC will step in and participants will see their monthly benefit cut by 50 percent.
If the 10 percent voluntary suspension is delayed for just two years, insolvency will be put off but only until 2043, the partnership said.
But if Congress were to implement the 10 percent benefit suspension called for in the "Solutions Not Bailouts" plan, the MEP will survive, with roughly $50 million in assets in 2028.
Beneficiaries in the MEP now get an average of $1,700 a month. An immediate voluntary 10 percent reduction will bring the average down to $1,500.
In the event of insolvency, the PBGC will guaranty an average of $750 a month. That, of course, assumes the PBGC's MEP insurance program is able to remain solvent —an assumption many analysts are not willing to make.
"Our proposal not only gives plan trustees the tools they need to survive and thrive, it also protects taxpayers by avoiding a costly bailout," the partnership said.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
