Posted by 09 August 2018
Many pension plans are facing an uncertain future. Senator Sherrod Brown of Ohio has a plan to help them out – federal loans.
Senator Brown has introduced S. 2147, which would create the Pension Rehabilitation Administration. This new government agency would make loans to multi-employer pension plans that are declining, in critical status, or are insolvent. These loans would be for a 30-year term. To qualify, pension plans could not increase benefits over this 30-year term or allow for a reduction in contributions to the plan.
The pension plans that would be covered by this legislation are indeed facing an insolvency crisis. Some estimates put their unfunded liabilities at as much as $68 billion. Roughly 1.5 million Americans have retirement benefits that come or could come from these pensions.
Under Sen. Brown’s bill, aid to the pension plans would be in the form of loans that are supposed to be paid back to the government. However, there is no guarantee that such loans would be repaid. The Congressional Budget Office looked at the bill’s details and concluded that it could cost as much as $100 billion in federal dollars to support these plans. That number would be less if the pension plans were able to repay their loans.
Sen. Brown says this legislation is necessary to ensure that Americans can have access to the pensions they worked for and that were promised to them. Opponents of the legislation say that is a taxpayer bailout of union pension funds that made irresponsible financial decisions with workers’ money.
While Senator Brown’s bill has 22 co-sponsors, none of them are Republicans. That means it is unlikely that his proposal will be acted upon by the Senate this year.
Do you agree with Senator Sherrod Brown that the federal government should make loans to pension plans to guarantee workers’ retirement money? Or is it wrong for taxpayers to bail out union pension plans?