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Congress bails out troubled pension plans for teamsters, Acme, carpenters, electricians, and others in Philly area

Democrats tucked into the $1.9 trillion stimulus bill some $86 billion in funding to rescue financially troubled pension plans.

Congressman Richard E. Neal (D., Mass), shown here after winning a primary last year, was a key figure in pushing for a bailout of troubled pension funds.  Neal is the Democratic chairman of the U.S. House Ways and Means Committee.
Congressman Richard E. Neal (D., Mass), shown here after winning a primary last year, was a key figure in pushing for a bailout of troubled pension funds. Neal is the Democratic chairman of the U.S. House Ways and Means Committee.Read moreDon Treeger / AP

The sweeping stimulus bill awaiting expected final passage by Congress sets aside $86 billion to rescue nearly 200 failing pension plans nationwide, guaranteeing full pensions for more than a million retirees and workers, including many in the Philadelphia area.

The influx of money should, in particular, help protect pensions of 100,000 supermarket workers and retirees in the region affiliated with the United Food and Commercial Workers union, according to Wendell Young 4th, president of its Local 1776.

“This is good news,” said Young, whose union represents workers at Acme and other markets.

Nationally, the biggest plan in need of a bailout is the massive Teamsters Central States plan, which represents 400,000 participants in Ohio, Michigan and other Midwestern states and is projected to go broke in 2025. It alone faces a deficit of more than $20 billion.

The bill passed the U.S. House and Senate on strictly partisan lines last week — no Republican voted for the stimulus package in the Senate or initially in the House. It is to go back before the House on Tuesday so legislators can iron out some differences. Supporters say House passage and President Joe Biden’s signature are assured.

After years of deadlock due to GOP opposition, the new Democratic majority in the Senate paved the way for the inclusion of the bailout in the $1.9 trillion stimulus package that would spend $442 billion to send a $1,400 stimulus check to many Americans, among a host of other newly funded programs.

Under the pension bailout, money to assist eligible plans would come directly from the U.S. Treasury Department as grants, not as loans, as originally proposed. Plan participants would receive 100% of their earned pension benefits.

U.S. Rep. Richard E. Neal, the Massachusetts Democrat who chairs the House Ways and Means Committee, was a crucial player in the last-minute scramble to enact what Democrats called “the American Rescue Plan.”

“We are helping workers and retirees who have done everything right, saved year after year, and now, thanks to the American Rescue Plan, they won’t lose their hard-earned savings,” Neal said in a statement.

On Friday, the day before the Senate approved the stimulus bill, U.S. Sen. Charles Grassley (R., Iowa) proposed a rival pension rescue. Grassley and other Republicans complained that the Democratic proposal was, in Grassley’s words, “a blank check,” had nothing to do with COVID-19, and contained no measures to fix the mistakes that led plans to fail.

The plan is especially targeted at what are called “multi-employer” funds, many of which are for working-class jobholders. Of the more than 10 million participants in such funds, about 1.3 million are in plans that will soon run out of money.

In all, the U.S. Labor Department has officially designated 61 pension plans in “critical and declining” status, its most serious designation. It lists 112 more in “critical” status, a somewhat less serious category. Both groups would receive money.

In a controversial revision of pension law, Congress in 2014 permitted troubled pension plans to cut benefits to current retirees to save money for future ones. Only about 20 plans have chosen to do that. Under the pending legislation, full benefits would be restored for all such retirees and they would be made whole for past losses, according to Neal’s staff.

John Murphy, a Teamster union international vice president at-large and key lobbyist for the bailout, hailed it in an interview, saying the money would remove an “incredible amount of stress” burdening many retirees.

“For active workers, this means the pensions they have earned are guaranteed,” Murphy added, “and they can start planning for retirement.”

Young said the underfunding in the plans for supermarket clerks, meatcutters and others in the food trade reflected the harsh business climate facing market owners. He ticked off a litany of chains that are now gone: A&P, Food Fair, Pantry Pride, Pathmark, Penn Fruit and SuperFresh.

Other area plans that should receive assistance include those of 2,300-member Philadelphia-based Teamsters Local 115, the Carpenters Industrial Council of Eastern Pa. Pension Fund, and the IBEW Eastern States Pension Plan. Leaders of the plans didn’t return calls.

The bailout should also rescue the pension plan of the NewsGuild, the leading union for staff at The Inquirer and Philadelphia Daily News.

In the case of the Guild, nearly 1,400 retired reporters, advertising salespeople, and others are collecting pensions, while 1,200 more are waiting to reach retirement age and collect.

However, the plan is to run out of money in about 2025. In a report last year, the fund said it was short about $100 million.

The plan was badly battered by the 2008 recession and the bankruptcy of the newspapers’ parent company the following year. The pension plan was frozen in 2009 — benefits stopped accumulating and enrollment was closed to new hires.

Unless this legislation becomes law, retirees in 2025 or so would see their pensions picked up by the federal Pension Benefit Guaranty Corp., a federal bailout agency. It pays multiemployer-plan retirees only about 25 cents on the dollar.

The Benefit Corp. has been assisting so many bankrupt plans that it itself is to run out of money in about five years. The pending law would extend its solvency for 25 years, aides to Neal said.

Staff writer Juliana Reyes contributed to this article.