Explainer: How Biden’s Rescue Plan Protects Union Members’ Pensions

President Joe Biden speaks at Max S. Hayes High School in Cleveland on, Wednesday, July 6. The speech showcased a final rule tied to his $1.9 trillion coronavirus relief package from last year. The rule allows troubled multi-company pensions to be made financially whole, ensuring full benefits for 2 million to 3 million workers and retirees. (AP Photo/David Dermer)

During a stop in Cleveland on Wednesday, President Joe Biden delivered remarks on an aspect of the American Rescue Plan Act (ARPA) specifically tailored to protect union pensions.

ARPA’s Special Financial Assistance program is a provision that bolsters protections for multiemployer pensions, which are pension plans created by unions and employers in related industries.

The news was wel-

What are you talking about?

Oh, hey! I’m talking about the American Rescue Plan and how it helps out unions.

First of all, what is the American Rescue Plan?

So the American Rescue Plan Act is a $1.9 trillion economic stimulus bill that was one of the crowning achievements of President Biden’s first year in office. ARPA provides funding for a number of programs and initiatives at the federal, state, and even local levels of government.

Heck, a number of new Iowa projects announced by Gov. Kim Reynolds are directly funded by ARPA, although she previously labeled it as a “blue-state bailout” and tends to bury the lead in her office’s press releases.

Got it. But what does that have to do with unions?  

OK, ARPA is a big bill—243 pages if you want to read it—that covers a lot of areas, right?

Right. 

Well, while it hasn’t gotten the same amount of attention as other aspects of the bill, the Special Financial Assistance program allocates $86 billion for struggling multiemployer pensions to bolster their funds. They can apply for these funds through the Pension Benefit Guaranty Corporation (PBGC), a federal agency that insures pension funds.

So what?

Without the boost from the rescue plan, the PBGC was projected to be insolvent—a technical word for broke—by 2026. That’s bad since there are more than 200 multiemployer pension plans across the country that are considered critical and declining, critical, or endangered.

I’m sorry, did you mean to say both critical and declining, and critical?

Yes. It’s how the US Department of Labor classifies them. I have no idea why the government decided to use critical twice. Maybe they could use some of those ARPA funds on a thesaurus, am I right?

My bad. Anyway, nearly 11 million American workers and retirees—10,000 of whom are Iowans—are part of multiemployer pension plans, so keeping those solvent is a good thing. In Iowa alone, those pension payments come out to about $70 million annually.

Were the PBGC to fail, those pensions—an earned retirement benefit—could be slashed to pennies on the dollar, according to US Sen. Chuck Grassley (R-Iowa).

Whoa, Grassley supports this idea too?

Yes and no. Grassley talked about protecting multiemployer pensions in a 2019 Senate floor speech and has introduced legislation to address the issue. But, he voted against the American Rescue Plan and wanted the section that addresses multiemployer pensions stripped from the plan in lieu of his bill.

What was wrong with Grassley’s bill?

Well, the unions didn’t like it.

Gotcha. So what else does the Special Financial Assistance program do?

According to the White House, this ensures the PGBC is solvent until 2051, guarantees millions of workers and retirees their full pension benefits for the next three decades, and reverses previous pension cuts for more than 80,000 workers and retirees.

Last question: How do the unions feel about this?

Liz Shuler, president of the AFL-CIO, which represents about 12.5 million workers across 57 unions, celebrated the news on Twitter:

“Today millions of union members & retirees can breathe a sigh of relief. 

“Thanks to the @WhiteHouse  implementation of the American Rescue Plan’s Special Financial Assistance Program, their earned retirement benefits aren’t going anywhere.”

 

by Ty Rushing
07/08/022

To contact Senior Editor Ty Rushing for tips or story ideas, email him at ty@iowastartingline.com or find him on Twitter @Rushthewriter 

​​Iowa Starting Line is part of an independent news network and focuses on how state and national decisions impact Iowans’ daily lives. We rely on your financial support to keep our stories free for all to read. You can contribute to us here. Also follow us on Facebook and Twitter.

Leave a Reply

Your email address will not be published.

*

*

*