Compliance May 10, 2017

Lawmakers Introduce Legislation to Stop Multiemployer Plan Benefit Cuts

The new legislation establishes a legacy fund within the Pension Benefit Guaranty Corporation.
Reported by

Senator Bernie Sanders (I-Vermont) and Representative Marcy Kaptur (D-Ohio) introduced legislation, The Keep Our Pension Promises Act, which would reverse a provision passed in 2014 that could result in deep pension cuts for millions of retirees and workers in multiemployer pension plans.

According to the Pension Rights Center, to date, 15 plans covering more than 500,000 workers and retirees have applied to cut retiree pensions and more than 60 plans covering nearly one million workers are eligible to do the same. In February, Iron Workers Local 17, based in Cleveland, Ohio, became the first plan to implement 50% to 60% cuts to retiree pensions.

Get more!  Sign up for PLANSPONSOR newsletters.

The cuts are allowed under the Multiemployer Pension Reform Act of 2014 (MPRA) for multiemployer defined benefit (DB) plans in critical and declining status.

The new legislation establishes a legacy fund within the Pension Benefit Guaranty Corporation (PBGC) to ensure that multiemployer pension plans can continue to provide pension benefits to every eligible American for decades to come. This legislation is paid for by closing two tax loopholes that allow the wealthiest Americans to avoid paying their fair share of taxes.

“We have got to send a very loud and clear message to the Republican leadership in Congress and the president of the United States. When a promise is made to the working people of this country with respect to their pensions and retiree health benefits, that promise cannot be broken,” Sanders says. “If Congress could bailout Wall Street and foreign banks throughout the world, we certainly can protect the pension benefits of American workers.”

A summary of the bill is here. Full text of the legislation is here.

Administration May 10, 2017

Public Pensions Funded Status Improves in Q1

Due to strong market performance during Q1 2017, the funded status improved for the 100 largest public DB plans in the country, Milliman finds.

Reported by

Global consulting and actuarial firm Milliman released first quarter reporting from its Public Pension Funding Index (PPFI), which tracks the country’s 100 largest public defined benefit (DB) pension plans.

During Q1 2017, the funded ratio of these plans regained ground lost at the end of last year, climbing from 70.1% at the end of December to 72.0% as of March 31, 2017. The firm says that strong investment returns, measuring 4.29% in aggregate, helped these plans’ funded status improve by $78 billion for the quarter. This led public asset growth to outpace the rise in pension liabilities.

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

“Thanks to robust market performance in Q1, the funded ratios for our Milliman 100 plans improved across the board, with five additional pensions crossing the 90% funded mark,” says Becky Sielman, author of Milliman’s PPFI. “And while quarterly investment returns dwarfed those of Q4, the wide range in performance—from a low of 2.12% to a high of 5.06%—highlights the challenge that lies ahead for many poorly funded plans.”

Fifteen of the 100 plans tracked by Milliman have funded ratios above 90%, 64 have funded ratios between 60% and 90%, and 21 have funded ratios less than 60%.

Milliman reports “the 100 PPFI total pension liability (TPL) increased from $4.659 trillion at the end of Q4 to an estimated $4.698 trillion at the end of Q1. The TPL is expected to grow modestly over time as interest on the TPL and the accrual of new benefits outpaces the benefits paid to retirees.”

To view the Milliman 100 Public Pension Funding Index, go to http://www.milliman.com/ppfi/

«