As you may know, the Central States Pension Fund, one of the nation’s largest multiemployer pension funds, is in danger of reaching insolvency within the next decade. Declining union membership, combined with deregulation of the trucking industry, has left fewer employers with unionized workers to fund the plan, with many more individuals in retirement receiving monthly benefits. To help address the growing crisis of future insolvency of several multiemployer pension funds, Congress passed the Multiemployer Pension Reform Act (MPRA) in 2014, allowing certain plans that are in critical and declining status to take dramatic action to remain solvent. Under MPRA, Central States entered negotiations with the U.S. Department of Treasury to stabilize the fund’s financial status and protect its solvency.
Under the initial negotiated plan, the individuals who contributed to the fund throughout their careers would have seen their benefits slashed up to 70 percent for circumstances that were out of their control. In February, I sent a letter to the Treasury Department urging them to reject Central States Pension Plan’s application and to return to negotiations to find a more evenhanded solution to address insolvency. The Treasury Department rejected Central States’ plan in May due to several concerns; most notably, that they believe the pension fund would still become insolvent under the plan and that any cuts under the plan would be of unequal distribution among all participants. Central States has since announced they will not submit an amended plan to avoid insolvency.
In an effort to ensure that the plan does not face solvency problems in the future, I signed on to a letter with my colleagues to the U.S. Government Accountability Office (GAO) requesting a study of the Fund’s investment and internal decisions, as well as a review of how those decisions impacted its long-term solvency. Since 1982, the fund has operated under a 1982 federal court ordered consent decree, in which all discretionary investment decisions have been made by financial firms, rather than the Fund’s Board of Trustees. I was pleased to learn that the GAO has accepted requests from me and other members of the House and Senate to review the Fund’s decision making process.
It is my sincere hope that both parties will continue the hard work necessary and come together to find a solution that is in the best interest of the fund and all of its stakeholders. The men and women who contributed to the fund over the years deserve a resolution to help them plan for their future. Please know that I will continue to closely monitor any future negotiations between Central States Pension Fund and the Treasury Department as they move forward.
Additionally, to continue to address this issue, I signed on as a cosponsor of the Pension and Budget Integrity Act. Current law allows pension insurance premiums that are paid by employers to the Pension Benefit Guaranty Corporation (PBCG) to be included in the federal budget as “on-budget,” creating the illusion that this revenue can be used for government spending despite being unable to allocate them to other government programs. The Pension and Budget Integrity Act moves premiums “off-budget,” ensuring that Congress can only raise premiums when it is appropriate and will benefit the PBGC and pension beneficiaries. I urge my colleagues to adopt this bipartisan legislation in order to give American workers certainty that their retirement earnings will continue to be safe.
Please do not hesitate to contact me regarding this or any federal issue of your concern. To stay up to date on the work I am doing in Congress please visit my website at costa.house.gov and sign up for my e-newsletter here.
Member of Congress