WASHINGTON - Top lawmakers are considering a taxpayer-funded bailout for retirees who are members of certain failing pension plans, scrambling to solve a retirement crisis that threatens more than 1 million Americans.
A draft of the plan, obtained by The Washington Post, would direct the Treasury Department to spend up to $3 billion annually to subsidize payments for retirees from certain underfunded pensions.
The retirement programs are called "multiemployer" pensions, as workers from multiple companies pay into the same retirement benefit program. But many of these pensions lack the financial assets to cover the benefits they have promised retired workers, leading to a panic from retirees who were counting on the funds. These pensions have often been plagued by mismangement, inaccurate economic projections, and in some cases corporate bankruptcies.
In many cases, the companies these pensioners used to work for no longer exist or no longer participate in the retirement plan.
The federal bailout is one of multiple proposals being considered by a special congressional committee tasked with addressing the pension crisis. The committee has a Nov. 30 deadline to submit a proposed solution, and aides cautioned that negotiations were extremely fluid and that there is a risk talks will unravel.
The aide said the plan reviewed by the Post was one option under consideration and did not represent a final deal.
Negotiators are considering a number of other potential changes to try and shore up multiemployer pension plans, including new fees paid by union members and companies as well as higher premiums levied on pensions, according to the draft reviewed by the Post.
The committee, led by Sens. Orrin Hatch, R-Utah, and Sherrod Brown, D-Ohio, was created earlier this year and charged with producing a plan by the end of this month that could be presented to the full House and Senate for passage.
"The hard-working men and women who are counting on this committee deserve a solution, and Chairman Hatch and I continue to negotiate with other members of the committee to reach a bipartisan agreement," Brown said in a statement Tuesday.
Nicole Hager, spokeswoman for Hatch, said: "Joint Select Committee members are continuing to work in good faith to reach a bipartisan agreement before their Nov. 30 deadline. Members understand that the longer the problems facing the multiemployer system are allowed to continue, the more challenging and expensive they are to solve."
White House officials have been briefed on the status of talks but they have not expressed whether they would support the deal if it is finalized. A Treasury Department spokesman didn't have an immediate comment on the plan.
Lawmakers have for years resisted using taxpayer money to backstop failing pension plans, believing that this would lead to a backlash from voters and also create an expectation that the government will intervene whenever help is needed.
But the dire financial condition of many of these multiemployer plans has forced lawmakers to consider such a move as part of a broader package of changes. A growing number of multiemployer plans are now severely underfunded, and the issue gets worse every year as more people retire and seek benefits they believe they were promised.
Lawmakers from both parties, under pressure from many retired constituents and business groups, have expressed alarm that hundreds of thousands of older Americans could soon see their retirement savings plans vanish or become severely depleted because the pensions were mismanaged or underfunded.
Many people in these pension plans, such as retired truck drivers, grocery store clerks, and delivery workers, were employed by companies that went out of business. And many of these multiemployer pensions were underfunded, meaning they anticipated higher returns and lower payouts than what occurred. As problems worsened, taxpayer assistance was seen by many experts as inevitable.
"We bailed out Wall Street in 2008 and 2009," said Kenneth Feinberg, who was appointed to a top role at the Treasury Department in 2015 working on problems with multiemployer pension plans. "Bailouts have occurred before."