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http://m.startribune.com/?id=250222581
The pension checks of an estimated 750,000 American retirees could be reduced if a pension reform proposal gaining traction on Capitol Hill becomes law.

The reform package, drawn up by an employer-worker coalition created by the National Coordinating Committee for Multiemployer Plans, would allow troubled multiemployer pension plans to cut benefits currently being paid to people already retired.

Slashing existing payouts isn’t legal under current pension law, except for narrow exceptions with severely stressed plans, according to the Pension Benefit Guaranty Corp., the federal agency that backstops the country’s pension plans. The traditional approach to the underfunding problem has been increasing the money employers put into plans, and shrinking future benefits, it said.


PF
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I am deeply disturbed about this situation. We have people who are relying on that pension money to survive. Now, it appears that a company/or governmental authority can just willy-nilly cut the pensions of those already receiving them, because that entity did not pay into the pension fund as they should. It appears that many of the pension funds relied on 8% return per year. This is ridiculous. If I recall, the average return for investments has stayed around 5%.

Donna
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As I recall, a few months/weeks ago, there was a proposal that the Gov was going to cut military pension cost of living hikes. After some exposure in the media, Congress reversed that decision.

Typical, Government taking care of itself.

Think companies would press the "National Coordinating Committee for Multiemployer Plans" to reverse the course of this pension reform proposal ?
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No. of Recommendations: 2
Think Detroit.

Most of us have pensions guaranteed by the Pension Benefit Guarantee Corporation, a govt agency. If the company that made the promises fails and is unable to pay, PBGC guarantees a minimum benefit. But for early retirees and people who were promised health insurance and other benefits, often PBGC is quite a bit less than promised.

I think voters everywhere support the idea that PBGC should be fully funded and continue to pay the guaranteed benefits. But what happens if there are mass business failures. Or the benefits promised were overly generous.

I don't think Detroit workers are covered by PBGC. There seems to be not enough assets to pay sums promised. So who bales them out? Feds? State? City taxes? There are no volunteers. So agreements have to be renegotiated. Otherwise, everybody loses.

Once again, govt cannot keep borrowing to pay benefits to its citizens. Those who want benefits have to pay taxes to fund them--one way or another. Some ways are more painless. Tax on manufacturer gets passed on in higher price of products sold. But someone has to pay.

We should stop crying in our beer and get out our wallets. (No Uncle Sugar or Santa Claus will not cover for us.)
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The PBGC is not a Government Agency. It is private insurance funded through premiums charged to the plans they insure. However, like FDIC, they are backed by taxpayers should the premiums they raise not be sufficient.

There were a large number of insured plans that failed 2008/2010, and PBGC did have to go to Congress for added funding.

Government plans are not ERISA plans, so they are not eligible for PBGC insurance, but instead rely on the taxing authority of their states. Unlike ERISA plans, accrued benefits may be lost, depending on state laws.

Multi-employer plans (labor union sponsored plans) are insured but not to the extent of private insured plans. From the PBGC:

Multiemployer defined benefit pension plans are insured by PBGC. When a multiemployer plan becomes insolvent, PBGC provides financial assistance to cover the cost of guaranteed benefits to participants and the plan’s administrative expenses. (Unlike single-employer plans, PBGC cannot intervene in multiemployer plans prior to insolvency, and multiemployer plans continue to pay full benefits until they run out of assets.) The statutory guarantee limit for participants in multiemployer plans is $12,870 per year for a participant with 30 years of service; this is less than the benefits many multiemployer plans provide and less than PBGC guarantees in single-employer plans.

http://www.pbgc.gov/documents/pbgc-five-year-report-on-multi...

As long as the taxpayer is ultimately backing defaults, pensions will continue to be expensive to insure.

BruceM
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No. of Recommendations: 3
Pauleckler
I owe you an apology!
The PBGC is an Independent Government Agency. You are correct.

BruceM
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