Biden pledges pension protection for millions

President Joe Biden last week announced that he would work to prevent pension cuts to millions of union workers and restore benefits to thousands of others.

Under Biden’s program, part of the American Rescue Plan, two to three million workers and retirees who have multi-employer plans that receive assistance will now have their full pension benefits for the next 30 years.

“We’ve seen the risk millions of workers face as they watch their hard-earned pensions turn into broken promises,” he said to a backdrop of cheering union workers and retirees at a local high school in Cleveland. “We saw it before the pandemic and the economic crisis that followed. Millions of retirees were at risk of losing their retirement security, through no fault of their own, based on conditions and unrelenting attacks on unions that were taking place.”

‘Don’t call it a haircut’

Richard Jordan, business manager and financial secretary for Iron Workers Local 17, welcomed Biden’s effort. In 2017, Jordan’s local slashed its members’ pension benefits by nearly 50 percent to stave off insolvency after years of declining membership and dwindling funds.

“I don't call it a haircut,” Jordan told The Chief.  “I call it a partial scalp what we did to ourselves.” 

Although the multi-employer pension plans are insured through the federal government’s Pension Benefit Guaranty Corp., the White House said that nearly 200 multi-employer pension plans would become insolvent by 2026 without the type of financial assistance envisioned by the American Rescue Plan.

The new provisions project the pension plans will remain solvent until at least 2051.

The final rule

Under the program, unions like Jordan’s can apply for financial assistance and help stave off insolvency. The White House said the plan “ensures all 18 [multi-employer] plans that were forced to cut benefits are able to restore those cuts in full, maintain full benefits into the foreseeable future, and be projected to remain indefinitely solvent going into 2051.”

Unions would also be able to use 33 percent of their financial assistance on return-seeking assets, giving them a higher rate of return. The other 67 percent, however, would be invested in investment-grade fixed-income products.

The program, implemented as an interim rule starting July 2021, was released last week as a final rule after months of feedback from various labor organizations and stakeholders, including the departments of Labor, Treasury and Commerce.

Biden left his Cleveland speaking engagement by saying he would be the most “pro-labor, pro-union, pro-worker” president in American history.

“This Fourth of July let’s remember who — who is the backbone of this country. It’s you, the American worker,” Biden said, as attendees chanted his name.

Jordan added, “It made me feel like it’s not the White House, it’s the Labor House. I’m a person for labor and I’m glad we have somebody who stood up for labor.”