KC union retirees join rally in Ohio for pension fix — or is it a bailout?
The retirees say one possible solution -- the Butch Lewis Act of 2017 -- is the best chance currently on the table to save their pension benefits.
Others say it's just a bailout.
The crowd, which numbered 10,000, according to the
Among them were about 40 members of the local Missouri Kansas City
If enough lawmakers agree on a fix, a bill would be hustled through
The Butch Lewis Act is supported by 22
Supporters say it's the only comprehensive, realistic proposal on the table currently that could fix the pension problem. Opponents say it's simply an ineffective bailout -- kicking the can down the road without solving the real problem.
The act would create a new
Then the agency would accept applications from failing pension funds, like Central States, that presented a plan to invest the loans to build wealth and avoid insolvency for 30 more years. The plans receiving loans would be required to pay 100 percent of retirees' benefits.
The pension plans would make low annual interest payments for 30 years, after which they'd pay the principal back to the agency and the agency would pay back the private investors. If the pension plans don't have the money, they'd negotiate with the agency for more time, or the loans could be forgiven.
If the pension plans invest successfully enough, it would barely cost the taxpayers a dime, proponents say.
An analysis of the 114 multiemployer pension plans that are critical and declining, and thus eligible for loans under the Butch Lewis Act, projected that all would be able to pay back their loans. The analysis was conducted by
Their analysis showed that because the loans buy so much time for the pension funds, 30 years, the funds should be able to invest carefully and still be able to pay back the government.
"Our team's analysis of the 114 plans does not forecast any plan failures! In fact, the annual projected return on asset assumption, or ROA, to ensure solvency is only 6.5% for each of these plans. Substantially lower than their current ROA objective (7.5% to 8%)," Kamp and Ryan wrote. "We need a prudent recovery/preservation strategy and not a bailout, which the Butch Lewis Act is not!"
So is the plan a bailout or not?
"The arguments that it's not a bailout are just trying to disguise it," said
"By definition, if you're giving someone money they wouldn't be able to get from the private sector, that's a bailout," she said.
Referring to a requirement that only failing pension plans would be eligible, Greszler said, "that's kind of an odd way to qualify for a loan, by basically saying you're going bankrupt and won't be able to repay the loan."
If the plan goes through, she said, it will send a message to other pension plans that they don't need to be responsible in their financial stewardship.
Plus, she said, taxpayers could be on the hook for a direct bailout down the line through a separate part of the bill if things go south again for the pension funds. And because the bill says that plans failing to pay back their loans could be eligible for forgiveness, it opens up the entire plan to just being one big bailout.
"It's a big loss," Greszler said. "It's tragic and it's unfair for those individuals, but going forward it'll hurt more people if you let the government go in and bail everyone out."
Central States tried to cut benefits in 2016 to stave off insolvency but ultimately failed to do so after intense pushback from retirees and a ruling from
Central States now has more than 400,000 members and gives out
"The taxpayers weren't the ones who made those promises," Greszler said. She compared the situation to one where someone invested all their retirement savings in a single stock that then lost all its value. In that situation, it's not a neighbor's job to give them money.
"Just because it's a big group of people, it shouldn't be any different than considering an individual who had their own retirement plan," she said.
For some, the situation is less abstract.
His wife had her second spinal fusion surgery in April and he's currently taking care of her, and when she's healthy enough he'll schedule a shoulder replacement surgery he needs and it'll be her turn to take care of him.
"If they were to cut me, I would lose everything," he said.
Anderson said he's also a good example of the kind of widespread economic devastation that could occur if plans like Central States are simply allowed to go belly-up. The loss of his pension wouldn't just affect him, he said, it would spread outward like a wave, damaging his whole family and community. That would be the case for many others who rely on their pensions.
"The
There's also a sense among union members and retirees that the federal government should be responsible for taking care of them because unions and pension funds have been federally regulated for decades, and the threat of insolvency has been obvious for some time.
"
But
"My personal feeling is that I don't know the committee is going to be able to resolve this," Epperson said. "It may come down to the election in November."
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