The federal insurance program for multiemployer pension plans still faces a dire future and its assets are likely to be depleted by the end of 2025, the federal Pension Benefit Guaranty Corp. says.
PBGC said in a report released on Aug. 3 that its multiemployer program “remains under severe stress,” with its deficit worsening in fiscal year 2016 to $58.6 billion from 2015’s $55.5 billion. The report says the deficit will rise to at least $77.8 billion in 2026.
Multiemployer plans are common in construction’s unionized sector. There were 796 construction industry multiemployer plans as of 2013, according to a February 2016 report from the Mechanical Contractors Association of America and Horizon Actuarial Services LLC. The study said six of the plans were insolvent as of 2013.
Overall PBGC’s multiemployer program includes about 1,350 pension plans, which cover 10.5 million people.
The agency said that more than 1.2 million of those members are in about 100 plans rated as “critical and declining.”
A 2014 law, the Multiemployer Pension Reform Act, allowed ailing plans to seek Treasury Dept. approval to suspend benefits.
Since that program began, 18 multiemployer plans, including at least six in the construction industry, have requested such suspensions.
So far, Treasury has approved only two applications, including one from the Iron Workers Local 17 Pension Fund in Cleveland. That approval came in October 2016.
Treasury reports that it has denied five plans’ requests, including one from a different iron workers’ plan.
Five others, including two construction plans, have withdrawn their applications and six are being reviewed.