Congress Weighs a Pension Bailout

[Omaha Steve]

http://online.wsj.com/article/SB10001424052748703630304575270913130734270.html?mod=WSJ_WSJ_US_PoliticsNCampaign

By JOHN D. MCKINNON

WASHINGTON—U.S. lawmakers are laying the groundwork for a possible federal bailout of some faltering pension plans that are jointly run by companies and unions.

The effort reflects a worrisome new problem in the nation's troubled retirement-savings system: the grim financial condition of such pension plans, known as multi-employer plans. They are common in the hotel, construction, trucking and other industries, and cover about 10 million workers, or almost one in four workers who have a private pension.

Many multi-employer plans are struggling after years of financial hits and relatively light regulation. In the past two years, almost 400 plans have announced they are in bad condition, according to lawmakers.

In response, some lawmakers are pushing a plan that would provide federal aid to a few of the ailing pension funds. But some conservatives and anti-union groups oppose the aid effort, arguing it could lead to a broader taxpayer bailout of the whole class of pensions, costing tens of billions of dollars.

A 2009 study from ratings firm Moody's Investors Service estimated that the country's largest multi-employer plans have long-term deficits of about $165 billion. Some employer groups that are supporting efforts to help the plans question whether that estimate accurately reflects the government's potential exposure, however.

At a Senate hearing Thursday on the matter, Sen. Mike Enzi (R., Wyo.) termed the possibility of a broader taxpayer bailout "extremely dangerous." While expressing concern for workers, Mr. Enzi added: "We have to ensure the taxpayer is not on the hook."

Legislation sponsored by Sen. Bob Casey (D., Pa.) would provide federal financial assistance to a few of the more troubled multi-employer plans, including a Teamsters Central States fund and another Teamsters pension plan in western Pennsylvania. Labor officials said another 10 to 20 smaller plans also could benefit, though they would add relatively little to the proposal's cost.

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