The American Rescue Plan's union pension bailout will cost taxpayers more than anticipated—but it's just a drop in the bucket.
The American Rescue Plan's union pension bailout will cost taxpayers more than anticipated—but it's just a drop in the bucket.
A decades old problem that has only gotten worse is about to get much worse.
QUICK FACTS:
The 2021 American Rescue Plan’s $86 billion bailout of underfunded union pensions is anticipated to cost $4.5 billion more than expected.
However, the multi-employer underfunding issue is a decades-old problem that has only gotten worse over time
Risky investments and the pandemic lockdowns have made the problem much worse
The actual problem may run taxpayer bailouts into the trillions
DETAILS:
Unless they were among the more than one million active and retired union members with an underfunded pension plan, most Americans taxpayers may not have realized that, packed into the $1.9 trillion American Rescue Plan (ARP) that was passed last year, there was included an $86 billion taxpayer-funded bailout of underfunded “multi-employer” (union) pension plans.
However, the $86 billion bailout was not the end of pouring taxpayer moneys into underfunded union pension plans. In fact, it’s just a drop in the bucket of the looming pension crisis.
Heading Into Recession. As the New York Times noted last year, “the trend predated the pandemic and is a result of fading unions, serial bankruptcies and the misplaced hope that investment income would foot most of the bill so that employers and workers wouldn’t have to.” [Emphasis added.]
“Over the past several years, we have seen pension investments shift from relatively safe holdings toward riskier assets,” wrote the Morning Consult’s Kevin O’Connor last year. “Although investing in assets such as hedge funds, private equity and ‘alternative’ investments can increase returns, these investments are also hit especially hard during economic recessions.” [Emphasis added.]