Peters Announces Legislation to Protect Pensions for Thousands of Michigan Retirees
WASHINGTON, D.C. – U.S. Senator Gary Peters (MI) today announced new legislation that will ensure thousands of Michigan retirees can keep the pensions they have earned. The bill would give financially troubled multi-employer pension plans, such as the Central States Plan, an opportunity to get back on solid footing and ensure they can meet their obligations to current retirees and workers for decades to come, without any cuts to pension benefits.
“Michiganders who worked day-in and day-out and played by the rules are counting on their pensions to retire with dignity,” said Senator Peters. “It is not right to rip away the financial security that retirees earned through years of hard work, and I will keep fighting to make sure Michigan workers get the retirement they were promised.”
If no action is taken to assist the severely troubled Central States Pension Fund plans, over 400,000 people nationally and 47,000 people in Michigan will face massive cuts to the benefits they earned over decades of work. If large troubled pension plans like Central States are simply allowed to fail, workers and retirees could face the loss of nearly all their benefits, as the Pension Benefit Guaranty Corporation, which steps in to pay a minimum level of guaranteed benefits when plans fail, would not have the resources to do so.
The legislation introduced by Senator Sherrod Brown (D-OH) and cosponsored by Senator Peters would create a new office within the Department of Treasury, known as the Pension Rehabilitation Administration. The Administration would allow pension plans to borrow the money they need to remain solvent and continue providing retirement security for retirees and workers for decades to come. The money for the loans would come from the sale of Treasury-issued bonds to financial institutions.
To ensure that the pension plans can afford to repay the loans, the Administration would lend them money for 30 years at low interest rates. The 30-year loans would buy time for the pension plans to make smart long-term investments for the future, while continuing to pay benefits owed to current retirees.
The bill would not allow any plan to borrow more than it can pay back to taxpayers. It would also prohibit any borrowed funds from being used to make risky investments. And it requires plans that borrow money to submit reports every three years to demonstrate that the plans are on track to getting back on solid footing.
In 2016, Senator Peters joined Senator Debbie Stabenow in introducing the Pension Fund Integrity Act that would cut pay and prevent raises and bonuses for top pension fund executives if retirees’ benefits are cut. The top executive of the Central States Pension Fund earned nearly $700,000 in 2014.
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