Pension cuts helped keep the government open, but they hurt many retired women-By Joann Weiner

Provisions to cut certain pension benefits are part of the newly-signed spending bill. (Joshua Roberts/Bloomberg)

 

On Nov. 14, the Pension Benefit Guaranty Corp. reported that 200 of the 1,400 multi-employer plans covering 1 million participants are at risk of failing within the next decade. The PBGC is worried about this because it becomes responsible for the pension obligations of these failed plans.
And it has its own financial problems, having just projected a  $42.2 billion deficit for fiscal 2014, a threefold increase from the $8.3 billion deficit predicted just one year earlier.
On Dec. 13, Congress agreed to allow trustees in these multi-employer pension plans to cut benefits so that the plans and the fund that insures them can remain solvent.
On Dec. 15, President Obama signed the $1.1 trillion spending bill that contains this amendment.
Rep. John Kline (R-Minn.), chairman of the Education and Workforce Committee, and retiring Rep. George Miller (D-Calif.), led the bipartisan effort on these reforms, saying that they would help prevent the collapse of failing plans and better protect workers’ retirement security. Randy G. DeFrehn, executive director of the National Coordinating Committee for Multiemployer Plans, said that these reforms give pension funds the tools they need to remain solvent. The joint business-union group had proposed many of these ideas in its “Solutions not Bailouts” plan.
Not everyone agreed. Sen. Ron Wyden (D-Ore.), chairman of the Finance Committee, criticized the “last-minute scheme worked out largely in private” for producing a “lopsided solution” that will result in rolling back “a major tenet enshrined in pension law – never take away money a pensioner has already earned.”
Karen Friedman, executive vice president of the Pension Rights Center, said: “We are furious that without debate Congress has placed the burden of rescuing underfunded plans on the people who can least afford it – retirees and surviving spouses who rely on their pensions for food, medication, and other necessities.“ The International Brotherhood of Teamsters criticized the way the changes happened, saying that the legislation represents “substantial changes to policies that have protected the pensions of workers for decades. It should not be changed through procedural manipulation.”
Previous pension reforms have left these vested benefits alone. Pensions for people who had worked long enough to become vested were considered untouchable. This protection had lasted primarily because the Employee Retirement Income Security Act of 1974 established that although plan trustees could cut benefits that workers hadn’t earned, they couldn’t touch the benefits that workers had already earned. ERISA also created the Pension Benefit Guaranty Corp.

Culled from Washington post