By Representative Wiemann (District 103)
Thousands of Missourians are at risk of potentially losing all or a portion of their retirement benefits if Congress does not take urgent action. As a member of the House of Representatives I’ve heard from hundreds of retirees who are concerned about losing everything they’ve worked for because of government has been slow to enact necessary reforms. I’ve seen good practices and I’ve seen areas for improvement. Congress must act to protect Missouri retirees.
Following passage of the Multi-Employer Pension Reform Act in 2014, in order to avoid bankruptcy, pension plans at the federal level were allowed to make benefit adjustments. Unfortunately, even with this reform many public and private pensions are still financially unprepared.
Multi-employer Pension Plans (MEPPs), commonly referred to as Taft-Hartley plans, are collectively bargained employee plans maintained by more than one employer; to which more than one employer contributes. The design was intended to pool risk and allow for cost-savings within the plans. However, many of these plans are unraveling, no longer sustainable and facing insolvency.
Making matters worse, the Federal Government’s Pension Benefit Guaranty Corporation (PBGC) has for years been facing an inability to pay. Congress established the PBGC in the 1970’s as part of the Employee Retirement Income Security Act (ERISA). According to a report from the PBGC, the already large deficit of $59 billion will likely balloon to $80 billion by FY2026 as a result of increasing demand for financial assistance from the growing number of insolvent Multi-Employer Pension Plans. The report states that without action, the PBGC could run out of money in less than ten years.
There are nearly 1.2 million Americans who face this financial insecurity in retirement as a result of this situation. In many states, including Missouri, plans will be forced to make reductions in their monthly benefits in order to avoid the complete bankruptcy of the pensions.
As a member of the Board of Trustees for the Missouri State Employers’ Retirement System (MOSERS), we are beginning to address our current unfunded liability, but more changes will be necessary in the near future to address the financial stability of the MOSERS pension plan. Missouri’s obligation to properly fund the existing defined benefit state pensions will continue to increase significantly over the next ten years leaving less money for other state priorities like education and transportation. Pension reform at the federal and state level is necessary in order to avoid a financial crisis for current and future retirees and most importantly, taxpayers.
The solution for the looming MEPP crisis lies at the Federal level. I’m confident that our leaders in Congress, who are already making bold moves forward with a host of issues will address this issue as well.
John Wiemann is the Missouri State Representative of District 103, Vice Chair House Insu