Photo: Al Drago/Bloomberg.
A collective sigh of relief was heard yesterday from 350,000 retired union workers of the Central States Pension Fund. President Joe Biden on Thursday announced an infusion of nearly $36 billion to shore up the financially troubled union pension plan, preventing severe cuts to the retirement incomes of Teamster workers and retirees across the United States.
The money for the Central States Pension Fund is the largest amount of federal aid provided for a pension plan, the Biden administration said, and comes from the American Rescue Plan, a $1.9 trillion coronavirus relief package that he signed into law in 2021.
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"One cannot underestimate the significance of this assistance for basic economic security and dignity for union workers in their retirement years," Gene Sperling, a special adviser to President Joe Biden, told reporters on a conference call.
Without this injection of cash, many of these retirees would have had their pension benefits severely slashed if the plan had gone insolvent. The failure of the Central States Pension Fund would have also accelerated the insolvency of the Pension Benefit Guaranty Corporation's (PBGC's) own multiemployer insurance program, which prior to the pandemic was projected to become insolvent in 2026. This funding will protect pensions earned by Teamsters union members through at least 2051.
U.S. Senator Patty Murray (D-WA), Chair of the Senate Committee on Health, Education, Labor, and Pensions (HELP), who helped establish the America Rescue Plan said, "Today we averted a potential disaster for our economy and saved hundreds of thousands of workers and retirees from a financial apocalypse. I fought so hard to get this done because I know this will mean that thousands of workers and retirees across the country—including hundreds in Washington state—can rest easy knowing the pensions they rely on are secure."
About 1,400 multiemployer plans nationwide cover 11.2 million workers and retirees in a wide range of industries, including trucking and construction. Central States is one of the largest multiemployer pension plans in the nation.
"Union workers and their families are finally able to breathe a huge sigh of relief, knowing that their hard-earned retirement savings have been rescued from steep cuts," said Lisa Gomez, assistant labor secretary for employee benefits security.
Before today's announcement, the program had awarded aid to 36 troubled pension plans, but none of those had received more than about $1.2 billion. The amount going to the Central States Pension Fund represents somewhere between one-third and one-half of the total estimated cost of the federal aid program.
The retirement plan has participants in almost every state, with the largest concentration in the Midwest. There are about 40,000 participants in both Michigan and Ohio; nearly 28,000 in Missouri; 25,000 in Illinois; and about 22,000 each in Texas and Wisconsin, according to figures provided by the White House.
See also:
- The Crisis of Multiemployer Pension Plans
- Multiemployer Pension Plans' Troubles Worsening due to Covid-19
- PBGC Bails out Freight Drivers Pension Plan
From: BenefitsPRO
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