The Pension Benefit Guaranty Corp. is partially funding two more multiemployer pensions that have gone belly-up.
Two New York unions' MEPs, Teamsters Local 531, with 184 current and retired transportation workers, and Local 976 ILA plan, which covers 181 current and retired longshoremen, have been sent $284,000 in initial payments from PBGC.
PBGC doesn't assume responsibility for multiemployer plans when they fail, as it does with single-employer plans. Instead, they offer financial assistance based on years of service for each participant and the rate at which benefits were earned.
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The level of assistance PBGC gives to failed multiemployer plan participants is limited compared to single-sponsor plan beneficiaries.
A retiree with 30 years of service that had been promised $36,000 in annual pension payments will only receive a maximum of $12,870 from PBGC.
Multiemployer plans recently saw their per-participant contribution rate increase to $13 per head, up from $12 in 2014.
But advocates of the program are predicting that will hardly be enough.
PBGC's annual report said insolvencies affecting more than 1 million of the country's 10.4 million multiemployer plan beneficiaries are "more likely and more imminent."
The Partnership for Multiemployer Retirement Security, an organization of business and labor interests, is calling on Congress to amend the Pension Protection Act of 2006 to allow trustees of multiemployer plans to reduce benefit payments by up to 10 percent, an act prohibited by current law.
Provisions of the PPA affecting multiemployer plans' reporting of liabilities are set to expire by year-end.
"We can't wait a moment longer for Congress to reform the multiemployer pension system," said the partnership in a recent statement.
"Our proposal not only gives plan trustees the tools they need to survive and thrive, it also protects taxpayers by avoiding a costly bailout."
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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.
