Biden acts to prevent pension cuts for workers

Spectrum News

BIDEN SPEAKS at a high school in Cleveland on July 6. – AP photo, Evan Vucci

Cleveland, Ohio – President Joe Biden has announced an update to a program funded by last year’s COVID-19 relief law that he expects to prevent pension cuts for two to three million workers.

Biden announced a final version of the Special Financial Assistance Program (SFA), which will help keep the pension plans above water for nearly 30 years or longer, preventing cuts from plans that were at risk of drowning in debts.

It will provide nearly $97 billion to dozens of eligible plans, according to the Pension Benefit Guaranty Corporation (PBGC), the agency that oversees the SFA program.

“People around the country wake up every day wondering whether they’ve saved enough to provide for themselves and their families before they’ve stopped working,” Biden told union workers and retirees gathered at a high school in Cleveland.

“But the reality is, for so many people, the goalposts keep moving,” he added.

The financial assistance program first began accepting applications with an interim rule last July, but Biden announced the updated version on July 6. It is designed to aid multi-employer pension plans, which are plans agreed to by a union and multiple employers, usually within the same industry.

More than 200 multi-employer plans were on pace to become insolvent in coming years, according to the White House, impacting two to three million workers. More than 80,000 workers and retirees had already had their benefits cut under a 2014 law that allowed pension plans to trim plans in order to remain financially secure.

The new assistance program will aid those workers retroactively and boost all plans at risk, in order to keep them financially sound through 2051 or longer.

“With today’s actions, millions of workers will have the dignified retirement they earned and they deserve,” Biden said.

Secretary of Labor Marty Walsh, whose department oversees the updated program, joined the president in Ohio.

Multi-employer plans are insured by the PBGC, which will also get a boost through the SFA program. Originally expected to be underwater by 2026, new funding will keep its insurance program afloat until 2055.

Biden criticized Republicans who have said investing taxpayer money in these pension plans was a waste. He specifically called out the lead Republican on the House Education and Labor Committee, Virginia Foxx of North Carolina, who said the investment was like “pouring money down a rat hole.”

Foxx and Rick Allen of Georgia – the top Republican on the Health, Employment, Labor, and Pensions Subcommittee – released a statement once again criticizing the financial assistance program.

They called for “long-term structural reforms to the management of multi-employer pension plans.

“Democrats instead chose a deeply flawed bailout of a select group of privately managed retirement plans,” they said.

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