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Chances the union pension guarantee program covering 10 million participants will run out of money by 2025 have risen to over 90%, the Pension Benefit Guaranty Corporation warned today in its annual report.
At the same time, the agency said its single employer program covering about 28 million participants continues to improve and is likely to emerge from deficit sooner than previously anticipated.
“Recent increases in asset returns and decreases in expected future claims increase the likelihood that the (single employer) program will reach net surplus a few years earlier than previously projected,” the PBGC forecast.
The PBGC said the likelihood the multi-employer insurance program covering millions of union workers primarily in transportation, mining, construction and hospitality will remain solvent after 2026 has declined to 1% as the health of troubled plans has worsened.
It estimated about 130 multi-employer plans covering 1.3 million people will run out of money over the next 20 years.
About one quarter of all 1,400 multiemployer union pension plans are considered in "critical" status and will be unable to meet minimum funding requirements or remain solvent over the long term.
A special joint House-Senate Committee is charged with offering a legislative fix to the union pension plan crisis by December.
Without a fix, PBGC Director Tom Reeder has told Congress some union retirees could see their pension benefits cut by 90%.
As an example, a union retiree receiving $8,000 yearly today could see that sum drop to $1,000.
The health of multiemployer union pension plans has worsened compared to the viability of single employer programs as deregulation in some industries (notably trucking) have cost companies revenues and jobs.
Also, for many union pension plans there are fewer workers contributing to into retirement pools with a growing number of people taking money out.
Source: Forbes
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