&l;p&g;&l;img class=&q;dam-image shutterstock size-large wp-image-1092578042&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/1092578042/960×0.jpg?fit=scale&q; data-height=&q;640&q; data-width=&q;960&q;&g; Retirees covered by some troubled union pension plans could see their benefits slashed dramatically if Congress doesn&s;t provide a fix, PBGC Director Tom Reeder said today Shutterstock
Some union retirees could see their pension benefits cut by 90 percent, Pension Benefit Guaranty Corporation Director Tom Reeder warned today.
A retiree getting $8,000 annually now could be cut to less than $1,000.
That is a danger, cautioned Reeder, if Congress doesn&a;rsquo;t act soon to shore up troubled multiemployer union pension plans and the PBGC&a;rsquo;s insurance program that backs them up.
A multiemployer pension plan is typically a workplace retirement savings program created by a union and companies in an industry where people often work for more than one employer in a year like trucking or construction.
Ohio Democratic Senator Sherrod Brown, co-chair of a joint House and Senate committee focused on the issue, said he thinks the chances are high a solution will be found by the time the unit is mandated to come up with a plan in December.
He expects serious negotiations among the members will start in July.
The Senator said he doubts if prospects for the Democrats to take control of the House and/or the Senate could spur or stop a blueprint from being drafted or alter its contents.
During the joint House-Senate committee hearing, Reeder said the PBGC&a;rsquo;s multiemployer insurance fund was running a $65 billion deficit with only $2 billion in assets.
The program, which covers 10 million participants and their families in 1,400 plans, is projected to go insolvent in 2025 without a legislative fix.
It will be soon paying out more in insurance benefits than it is taking in from employers in premiums, Reeder said.
The PBGC chief said a proposal in President Trump&a;rsquo;s 2019 budget to raise premiums for companies in the multiemployer insurance plan would likely be sufficient to shore-up the program for the next 20 years.
He claimed companies in multiemployer plans have been paying very low premiums for a long time.
&a;ldquo;There would be a sticker shock,&a;rdquo; Reeder said if premiums were increased.
He added additional actions may be necessary to address all the problems facing the broader multiemployer plan system, but he did not provide a list.
Roughly about one-tenth of the workers are in plans that are considered in critical or declining shape.
If Congress doesn&a;rsquo;t provide a fix, Reeder warned the result will be catastrophic for many people&a;mdash;current and former workers and their communities.
Taxpayers could also suffer from Congressional inaction by increased demands on social programs as the beneficiaries slide into financial hardship, he said.
A handful of reasons are often cited for the descent of the plans into financial trouble.
One factor that has hit the Central States (Teamster) Pension Fund hard is deregulation which has cut trucking industry revenues, profits and jobs.
The scenario of fewer workers contribute to a pension program and the number of retirees taking money out if it grows is a recipe for breakdowns.
Fewer than four out of every participants in a multiemployer union plan are working for a company that is a member of it, Reeder pointed out.
He added the financial crisis in 2008 and the Recession also took a toll by reducing plan investment returns after years of healthy gains which inspired increased benefit promises.
Which are now in danger of not being kept.
Senator Brown said Wall Street shares the blame for union pension plan ills by &a;ldquo;squandering some of the money&a;rdquo; and the government through perverse tax incentives, insufficient premium levels along with inadequate tools and financing for the PBGC.
Single-employer plan beneficiaries have much richer guarantees if their plans fail than multiemployer pension plan beneficiaries do: $65,045 annually against $12,870 union plan worker with 30 years of service.
In addition, the single-employer pension plan benefits are indexed for inflation. Payouts to multiemployer plan beneficiaries are not.&l;/p&g;