No present for pensioners

CONGRESS HAS played the Grinch this holiday season for some retirees.

Tucked into the federal spending bill were provisions that will allow certain struggling multiemployer pension plans to reduce benefits already being received by retirees.

The move was a result of an alarm from the Pension Benefit Guaranty Corp. that multiemployer plans covering more than 1 million participants are substantially underfunded and, without legislative changes, would likely fail. The deficit for PBGC's multiemployer insurance program has jumped to $42.4 billion, up from $8.3 billion last year.

Multiemployer plans provide benefits to more than 10 million workers and retirees in industries such as building and construction, retail, manufacturing, trucking and transportation. The PBGC said it has enough assets to meet the needs of plans currently in trouble, but there are insufficient funds to cover benefits for plans expected to run out of money in coming years.

Now those troubled multiemployer plans that estimate they won't have enough money to pay 100 percent of benefits within 15 or 20 years can cut benefits, according to the Pension Rights Center. Benefits can't be reduced for retirees who are 80 or older or who receive a disability pension. For retirees 75 to 79, the cuts will be smaller than those who are under 75.

"It's heartbreaking," said Karen Friedman, the executive vice president for the Pension Rights Center. "We are getting calls and letters from people who are scared. They are the most vulnerable. They can't go and get another job. They were told they would have a pension for the rest of their life."

But there are many retirees who don't even know they are affected by the change, she said. The Department of Labor keeps a list of multiemployer plans that are in "critical" and "endangered" status, Friedman said. You can find the list by going to dol.gov and search for "2014 Critical Status Notices." The direct link is www.dol.gov/ebsa/criticalstatusnotices.html.

"But just because a pension plan is on the list doesn't mean there will be cuts to benefits," Friedman said. "It's going to take a while for all of this to get settled."

The Pension Rights Center has a good summary of the pension provisions on its website at pensionrights.org. There is also a calculator to help you figure out how much your benefits could be cut.

Plans that are considered in critical status will be authorized to cut retiree benefits provided they satisfy other criteria specified in the law, according to the summary. Workers and retirees should have received a notice that their plan is severely underfunded, but it's not unusual for people to overlook it, the center says.

There are certain limits to how much plan trustees can cut. Trustees also have to notify all plan members, the center points out, and those plans with 10,000 or more participants must appoint a retiree to represent the interest of pensioners. One part of the law that should be fixed is the fact that there presently isn't a provision to restore lost benefits if a plan's financial situation improves.

Even if you are not affected by the legislation, its passage is historic - it signals a crack in a door that so many felt couldn't be opened. It sets a precedent.

You might not even know the name of the law that was written to give people with private pensions a sense of security. It's the Employee Retirement Income Security Act of 1974, or ERISA. As part of the law, Congress created the PBGC to see that pensions are protected. It now oversees the benefits of more than 41 million Americans in private-sector pension plans. The agency says it is directly responsible for paying the benefits of about 1.5 million people in failed plans.

I know that for many of those impacted by the change it is hard to imagine living on less. Retirees worked for so long, sticking with the same company and counting on their work history and dedication to translate into a pension check that would last to the end of their lives. Many outside factors led to the current state of the troubled plans. Nonetheless, plan participants should feel betrayed.

The rest of us should share their pain because a sacrosanct promise that has stood for the last 40 years - that once you earn benefits and retire, your pension is set in stone - has been broken.