Congress Sends Millions of Retirees a Holiday Present: An Historic Pension Cut

2018-05-15T15:07:05+00:00December 15th, 2014|Aging Issues, Max Richtman, pensions, Retirement, Social Security|

Tucked into the massive spending bill Congress passed this weekend was legislation that reversed 40 years of federal law protecting retirees’ pensions.  The change will allow benefit cuts for more than 1.5 million workers, many of them part of a shrinking middle-class workforce in businesses such as construction and trucking. There wasn’t a single Congressional hearing on the plan before it was slipped into the spending bill, outraging senior’s advocates…including NCPSSM.

“Allowing plans to break the fundamental ERISA promise – that pensions paid to retirees and their surviving spouses will not be reduced – represents an extreme response to a problem that can be addressed through other means by strengthening the funding of the Pension Benefit Guaranty Corporation.

Additionally, the National Committee is deeply concerned that this provision could set a dangerous precedent for other defined benefit programs, such as single employer plans, public sector plans and Social Security. We believe a change this fundamental to the retirement security of Americans should be subject to a Congressional hearing and should be considered by the appropriate committees, with legislative language reviewed by Congress and the public, particularly those who will be affected by these reductions.”  Letter to Congress –  Max Richtman, NCPSSM President/CEO

Senate Finance Committee Chairman, Sen. Ron Wyden (D-OR), shares our concerns as he described to the Wall Street Journal:

“Some Democrats in particular were uneasy with the solution, saying it is being rushed through Congress and could create a dangerous precedent encouraging other retiree benefit cuts.

‘This is unprecedented and I worry about the impact on retirees and the slippery slope we’re about to head down,’ said Sen. Ron Wyden (D., Ore.), the Finance Committee chairman, in a statement. ‘I am working hard to protect retirees’ pensions, and jamming this bill through Congress virtually sight unseen is no way to solve this issue.’ “

In fact, some House Republicans see this pension cut strategy as an example of how Congress should handle Social Security in the new GOP controlled Congress.  Make no mistake about it, Congress needed to come up with a long-term solution to the multi-employer pension shortfall; however, there was no urgency plus there were other options beyond a cuts-only solution hitting current retirees with no way to prepare for a cut in their income.

“Wall Street banks, automakers and insurance giants got bailouts during the economic meltdown that started in 2008. But when it comes to the pensions of retired truck drivers, construction workers and mine workers, it seems that enough is enough.” Time.com

‘It bothers me no end that we have Congress and legislators that think that the proper way to correct problems that banks and corporations made is to take it out on the workers,’ said Dave Cook, president of Local 655 of the United Food and Commercial Workers.”  St. Louis Post Dispatch

The Pension Rights Center has a calculator on its website that lets retirees under age 75 see how much their pensions might be reduced under the bill.