About 2 million American union members will receive the pension they worked all their lives to earn — thanks to legislation passed in the first few months of the Biden administration that rescued pensions that were headed for insolvency at the time.
The legislation was based on a bill called the Butch Lewis Act, named after an Ohio Teamsters leader who died in 2015 after devoting many years of his life to protecting pensions. For years, advocates of the Butch Lewis Act had been told it would never get majority support in Congress. But they kept pushing, and in March 2021, the proposal was added to a much larger bill, the $1.9 trillion COVID stimulus bill known as the American Rescue Plan Act. It passed into law without a single Republican vote in Congress.
The way it works, the U.S. Treasury provides grants known as “Special Financial Assistance” to restore multi-employer pension plans to solvency.
Multi-employer pension plans are jointly overseen by a union and participating employers. There are approximately 1,350 such plans in the United States, and most of them were well funded as late as the 1990s. But losses of jobs and union membership in some industries made some multi-employer pension plans acutely vulnerable to investment loss. Then their investments were hit by not one but two financial market crashes in 2001 and 2008. The crashes put about one in seven multi-employer pensions on a long-term path to insolvency because there were too few contributions coming in on behalf of active workers to make up for the losses.
In 2014, Congress passed the Multiemployer Pension Reform Act (MPRA), a law allowing some plans to stop the slide to insolvency by making painful cuts to benefits for current and future retirees. By the time the American Rescue Plan Act passed, 18 multi-employer pension plans had made benefit cuts under MPRA. The cuts had reduced benefits an average of 22% for 60,620 union retirees. Those were the first pension plans to get help under the rescue legislation, which not only halted the benefit cuts, but directed the pension plans to pay retirees back for whatever cuts they’d suffered, and they included two plans based in Oregon:
Western States Office and Professional Employees Pension Fund had been in fine financial shape as late as 2000. It was founded in 1960 for clerical employees of the trucking company Consolidated Freightways who were represented by OPEIU locals 11 and 29, and over the years several hundred smaller OPEIU employers joined, especially unions and third party benefit administrators. But then Consolidated Freightways successor company CF went bankrupt in 2002 — at the time the third largest bankruptcy in US history. And employees at trucking spinoff CNF voted to leave the union in 2003. That meant that when the 2008 financial crash hit, there were too few participating employers to make up for the losses. Retirees and vested former workers in the plan outnumbered current workers by 11 to 1. Pension trustees took action, cutting back on extras, cutting pension benefits up to 30% in 2018 under MPRA. Now those cuts have been reversed by $294.7 million in special financial assistance, restoring benefits to 7,230 union members and surviving spouses.
Plasterers Local #82 Pension Plan had a similar trajectory because it was a small plan in an industry that suffered long-term decline in membership. Yet as recently as 2008, it was considered 100 percent funded. In fact, the plan’s investments had been doing so well that it was considered “over-funded” in the late 1990s. Then the 2008 crash came, and wiped out a third of the value of the plan’s assets. The financial collapse also set off a recession, stopping construction projects cold. Plasterers were thrown out of work, and that meant their employers weren’t contributing as much to the pension plan just when the plan needed funds the most. In 2019, it too cut benefits by up to 31% for its 317 participants. In 2023, it was restored with $20.5 million in Special Financial Assistance.
Thus far, the U.S. Treasury has approved about $69.8 billion in special financial assistance to 105 plans covering about 1,233,000 workers, retirees, and beneficiaries. And according to a November report from the Department of Labor, about 200 financially distressed multi-employer pension plans covering approximately 2 million workers will ultimately benefit from the program.
