Retirees who have spent nearly a decade fighting for their promised retirement benefits celebrated a major victory on Thursday as President Joe Biden announced a $36 billion bailout for their ailing pension plan.
The bailout of the Central, Southeastern and Southwestern States Retirement Fund, an underfunded multi-employer defined benefit plan, is the largest amount ever given by the federal government to support retirement security and prevent deep benefit cuts for more than 350,000 workers and retirees, according to the White House.
Without the financial assistance to shore up the pension plan, benefits would be reduced and “some people could lose $10,000 every year they retire,” Biden said Thursday at a White House event announcing the award. “The money they earned.”
The announcement means ‘finally, retirees can plan for the rest of their lives,’ said Dana Vargo, 70, of Massillon, Ohio, who helped lead the years-long grassroots effort to avoid benefit cuts . Vargo’s husband Don, a retired trucker, was facing a more than 50% cut in his Central States retirement pension. Now, “we don’t have to keep coming to Washington to beg for what my husband worked for,” Vargo said.
Last year’s American Rescue Plan Act authorized the taxpayer-funded financial assistance program for flawed multi-employer pension plans. These plans are negotiated between unions and two or more employers and cover approximately 11 million participants in the trucking, construction, manufacturing and other industries. After many of those plans were rocked by declining union membership, participating employer withdrawals and investment losses, a 2014 law opened the door to plans to cut benefits for current retirees.
The U.S. bailout provision, named for Central States retiree and Teamsters leader Estil “Butch” Lewis, allows some underfunded multiemployer plans to apply for financial assistance and restore previously cut benefits. Prior to Thursday’s announcement, Pension Benefit Guaranty Corp., the federal agency overseeing the program, had already approved nearly $9 billion in plan assistance covering 193,000 people. The program, which is expected to ultimately distribute between $74 billion and $91 billion to more than 200 plans covering more than 3 million people, has drawn fire from some congressional Republicans, who say it leaves taxpayers to blame for mismanagement. plans.
The plight of Central States, one of the largest and most underfunded multi-employer plans, threatened to deplete the PBGC’s multi-employer reserves, which provide a safety net to guarantee certain minimum payments to participants to failing regimes. The PBGC multi-employer insurance program, which before the U.S. bailout was set to fail in 2026, is now expected to remain solvent for more than 40 years, the agency said. Financial aid to central states is not just “a huge win” for workers and retirees, “but also for the economy and for the PBGC,” said Karen Friedman, executive director of the consumer group at non-profit Pension Rights Center.
The economic benefits are clear in the northwest Ohio town of Bryan, home of Spangler Candy Co, a Central States Participating Employer, Spangler President Bill Martin said. The company has about 700 workers and retirees in the pension plan — nearly 10% of the city’s population — who were facing benefit cuts of 60% or more, Martin said, and Spangler feared for decades. years that he can be responsible for massive payments. if the plan completely failed. Now workers “can have a dignified retirement and take care of their families”, he said, while the company, freed from uncertainty over the fate of the pension plan, added nearly 100 people to its operations in Bryan over the past year.
Relentless lobbying efforts by central state pensioners over much of the past decade played a vital role in the eventual passage of the broader multiemployer pension bailout, according to those involved in the legislation. Some have made dozens of trips to Washington, organized protests, testified before Congress and met with lawmakers, elevating their cause while wearing their union gear around Capitol Hill.
Jack Palush, 73, a Central States retiree in North Royalton, Ohio, made 32 trips to Washington, he says, struggling to preserve the retirement benefits he earned after 37 years as a truck driver . In 2015, six years after retiring, he learned his benefits could be cut by more than half and feared he would have to return to work to survive.
“We all became lobbyists,” Palush said. “We had no money. We had to rely on the information we got from congressional staffers,” and learn the ins and outs of Congress along the way, he said. Anticipating the backlash surrounding a taxpayer-funded bailout, he said, “we needed to let these people know that retirees do two things with their money: we spend it and we pay taxes.”
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