In coming years, more than half of workers and retirees in terminated multiemployer plans will face a reduction in benefits under current PBGC guarantees if their plans run out of money, according to PBGC's Multiemployer Guarantee study (PDF) released earlier today.
This study takes a closer look at how the guarantee limits will impact the pension income of workers and retirees in multiemployer plans that will receive financial assistance from PBGC.
In the past, only about 20 percent of workers and retirees saw a reduction in their benefit - typically that loss represented about 10 percent of their promised benefit. This study finds that these losses are both likely to apply to more people and likely to be larger in percentage terms as more multiemployer plans run out of money and require financial assistance from the agency.
This study only looks at multiemployer plans; the guarantees for workers in single-employer plans are much larger than in multiemployer plans.
The study also does not examine the reductions in guarantee levels that would occur if the multiemployer insurance program were to run out of money. The multiemployer insurance fund is projected to exhaust its reserves within the coming decade, even with enactment of the Multiemployer Pension Reform Act of 2014, which provides certain troubled multiemployer plans with additional tools to avoid running out of money.
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