Congress must compromise, now, to save our pensions and avoid broad economic harm
Source: Des Moines Register`
Today many working-class retirees and their families are facing a looming financial crisis. These people worked hard and played by the rules while planning ahead for their retirement. Sadly, through no fault of their own, their planned retirements may be taken away from them.
For 36 years, working for United Parcel Service, I and my fellow workers helped deliver goods across Iowa and this entire great nation. We believed we had earned a secure retirement thanks to the benefits earned through my multi-employer pension plan. But like so many of my fellow hard-working Midwesterners who helped their employers achieve success and have now retired, our protected retirement funds have been cut short. This leaves us with many emotional and financial burdens to bear.
I am one of the almost 80,000 pension participants in Iowa, and one of more than 400,000 Americans, reliant on the Central States Pension Fund, the largest failing multi-employer pension plan. In fact, Central States is expected to collapse within the next five years, and the impact of its insolvency would send shock waves across the country, whether you participate in these plans or not. Now, in a time of health and economic despair due to COVID-19, these affected retirees can’t help support the local Main Street businesses. Worse, the ripple effect from our failed pension plans will quickly devastate the U.S. economy as a whole.
In Iowa alone, it is estimated that the failure of Central States would result in the loss of more than $85 million per year in retirement funds, the elimination of thousands of jobs and $50 million in annual wages, and a $7 million yearly decline in state and local tax revenue. On a national scale, its insolvency would have a domino effect on the U.S. economy and lead to a $5 billion drop in GDP, a $1.2 billion decline in federal tax revenue, and billions of dollars lost in workers’ income.
Today’s multi-employer pension crisis extends far beyond Iowa. Millions of Americans have multi-employer pension plans, and one in three participate in plans that are in trouble. To make matters worse, the Pension Benefit Guaranty Corporation, the government entity that serves as a funding backstop for multi-employer plans, is also expected to run out of money by 2025. Just last month, the corporation reported that its financial condition “will continue to worsen over the next 10 years” absent any changes in law.
This is why Congress has to do something; Midwesterners and Americans across the country cannot afford to wait. Thankfully, this issue is gaining the attention it deserves, including the efforts of former House Speaker John Boehner and former Democratic caucus chairman Joe Crowley, who joined forces last year to launch the Retirement Security Coalition to sound the alarm on the urgency for a bipartisan compromise.
The issue is also on lawmakers’ radar. Earlier in 2019, the U.S. House of Representatives passed the Rehabilitation for Multiemployer Pension Act, and a group of Democratic senators introduced different legislation in the U.S. Senate on the same day. These represent good first steps, but Congress has a lot of work to do before reaching a bipartisan agreement that will protect millions of Americans’ retirements that are increasingly evaporating.
Sen. Chuck Grassley said, “We need to act soon to protect the hard-earned pension benefits of the workers who participate in these plans.” That moment has arrived — the crisis is now. Efforts are now being made to cut retiree benefits to cover funding shortfalls of the Pension Benefit Guaranty Corporation.
This approach is unfair and morally wrong. Retirees are the most vulnerable and the least responsible for this crisis. Inaction is no longer an option, and that is why I am joining millions of Americans in asking Congress to stand up for us and protect the retirement that we deserve.
Frank Pastorino of Winterset serves as chair of the Iowa-Des Moines Committee to Protect Pensions.