Over the past few years, the federal Government has been giving tax dollars to failing union pension funds. We have written on this in the past, and the practice is continuing up through today (Failing Union Pension Funds Getting Huge Influx of Money from the PBGC. EPTW 2/7/2023). Last Friday the Pension Benefit Guaranty Corporation (PBGC) announced four more union pension funds that will receive upwards of $811.6 million. This latest tranche of money is going to four unions that for various reasons cannot maintain their once lucrative pension funds. These four unions pension funds are:

• • Teamsters (IBT), Local 111 out of Brooklyn, New York - $17.1million
  • Marine Carpenters union out of Pleasanton, California - $34.6 million
  • International Brotherhood of Electricians (IBEW Pacific Coast Fund) Tacoma, Washington - $75.5 million
  • United Food and Commercial Workers (UFCW) Plymouth Meeting, Pennsylvania - $684.4 million!

The PBGC stated in its press release last Friday that these monies are “special financial assistance for financially troubled multiemployer plans [and] is financed by general taxpayer monies.”

Normally the PBGC gets its funding from extra fees charged to employers for the protection of their pensions in the event of bankruptcy, assets held by pensions the PBGC has to take over, and investment income from the funds. However, the monies now are coming from taxpayer dollars the Biden Administration has redirected from the $1.5 trillion American Rescue Plan originally intended to support the economy’s recovery efforts from the COVID pandemic.

Bailouts are not how the PBGC was intended to work. Its purpose was to protect single employer plans by taking them over far in advance of their failure and then use the existing assets along with reserve funds from employer fees to defray future costs.

The bailout funds currently being used are aimed at saving multi-employer pension plans that are at risk of failing for several reasons. First, there are fewer union members today, which reduces contributions to these plans. Second, many employers are reluctant to join multi-employer plans because they could become liable for any funding shortfalls if they withdraw from the plan. Lastly, poor investment decisions made by these pension funds in the past, such as risky loans, have further weakened their financial stability. Imagine something out of a Martin Scorsese mob movie like Casino.

To date (11/1/2024) union pension funds around the country have received $69.5 billion (yes that is “billion”) in bailout funds from the Biden Administration.

Source: Labor Union News Friday News Dump: PBGC Announces Bailout of Four More Failing Union Pension. (11/1/2024)