Tens of thousands of retirees face the likelihood that the Central States pension funds they depend upon will soon become insolvent.
The chief executive officer of the Associated General Contractors of America, Stephen E. Sandherr, issued the following statement today in response to the Treasury Department's refusal to accept a rescue plan by the Central States, Southeast and Southwest Areas, Health and Welfare Pension Funds to take a voluntary steps to keep the funds solvent:
"Tens of thousands of retirees face the likelihood that the Central States pension funds they depend upon will soon become insolvent because the Obama administration has chosen politics over the need to protect retirees. The Multiemployer Pension Reform Act that President Obama signed into law in 2014 received overwhelming, bipartisan support in Congress because it wisely empowered the trustees of pension plans to take steps to prevent the draconian benefits cuts that come with insolvency.
"Among the steps the President authorized two years ago, multiemployer pension plans have the option to voluntarily reduce benefits for some retirees if they can demonstrate that those temporary reductions will ensure the long-term solvency of the plan and that the cuts will be restored once the plan returns to sound financial footing. While nobody likes the idea of asking some retirees to endure the pain and hardship that comes with a temporary cut in their benefits, members of both parties understood that denying plans the voluntary tools needed to repair their funds would guarantee far more significant and permanent cuts to retiree benefits. That is because the Pension Benefit Guarantee Corporation lacks the resources needed to withstand the insolvency of a large plan like the one operated by Central States.
"Without the protections the corporation theoretically provides, all participants in an insolvent fund would be forced to endure significant cuts to their benefits that will leave them receiving cents on the dollars they worked so hard and so long to earn in their retirement. By denying a rescue plan that responsibly but regrettably employs benefit reductions, the administration creates false hope that a better deal for affected retirees is possible. The sad truth is that this is the best deal available.
"Instead of subjecting retiree benefits to the whims of political fortune, the Obama administration could do a lot more to help keep multiemployer retirement plans vibrant. Chief among those measures is championing changes to pension laws that would allow firms and employees to voluntarily establish innovative retirement plans known as composite plans that better allocate pension risks. These plans, which are similar to plan designs in other developed nations, would make participating in multiemployer retirement plans far more attractive, helping guarantee their long-time viability.
"The Associated General Contractors of America will continue to work with its partners in the business and labor community to push for these common sense plan changes. Our goal is to craft a multiemployer pension system that never forces retirees to suffer for the political machinations of those who were ostensibly elected to protect them."