When the Covid relief bill was passed earlier this month, multiemployer pensions received their long-sought $86 billion bailout, to the relief of some and the consternation of others. But, it turns out, they weren’t the only type of pension plan that has been seeking federal help. Consider these cases:
From the Albany Times Union, on March 18, “With retirements ruined, St. Clare’s pensioners hope for pandemic funds.”
“Former employees of St. Clare’s Hospital, which the state forced to close in 2008, are hoping that some of the $1.9 trillion federal coronavius relief bill can be used to fund their broke pension plan.
“The St. Clare’s pension plan was terminated in 2018 amid a $50 million shortfall that led to a majority of the 1,100 beneficiaries — former nurses, lab techs, housekeepers and office staff, having their expected retirement benefits canceled.
“A group of the pensioners has been appealing to state Sen. Jim Tedisco of Glenville to intervene on their behalf. . . .
“’I find it a serious omission to not include a miniscule fraction of that stimulus relief to help our dedicated former St. Clare’s Hospital workers who have had the rug pulled out from under them,’ Tedisco said.”
Readers with very long memories and attention to detail will recall that back nearly a year ago, I flagged church plans, and this plan in particular, as a type of plan potentially in need of a bailout. For “separation of church and state” reasons, plans sponsored by churches or by religious entities in general (in this case, hospitals sponsored by religious orders) are not covered by ERISA’s requirements for pension funding and do not pay into the PBGC system, although, generally speaking, these plans do strive to be well-funded. Nonetheless, there have been some very visible cases of plans which have failed and left retirees without pensions.
Delphi Salaried Retirees
I’ve repeatedly told readers that the PBGC protects workers against pension cuts in the case of termination, an important consideration in particular when evaluating whether to take an employer’s pension lump sum offer. But there are limits, especially in cases where employers had offered generous pensions and, in particular, generous early-retirement benefits as an incentive to reduce workforce. This is what happened at Delphi, in the aftermath of the GM bankruptcy in 2009. Here’s a report from this past fall, at Pensions & Investments:
“The White House has ordered a review of how the Obama administration handled the Delphi Salaried Pension Plan in 2009, when Delphi spun off from General Motors Corp. during bankruptcy. The salaried employees pension plan was transferred to the Pension Benefit Guaranty Corp. as part of a bailout of the auto industry.
“At the time, GM agreed to “top up” pension benefits to original levels for workers covered by three union agreements, which Treasury Department officials said at the time was a necessary step to help GM emerge from bankruptcy.
“Salaried and other workers without union contracts got diminished pension benefits due to PBGC benefit caps. . . .
“In an executive order signed Thursday, President Donald Trump directed the secretaries of Labor, Commerce and Treasury to review whether the PBGC can restore the full pension benefits of 20,000 Delphi participants and review the decision to terminate the pension plan. The order gives 90 days for the review to see what actions can be taken to restore the full pension benefits.
“’A group of salaried and non-unionized Delphi retirees who did not benefit from their unionized colleagues’ deal with General Motors have spent the last decade in legal and financial limbo as they challenged the termination of their pension plan in the federal courts. That litigation remains ongoing, and the Court of Appeals for the Sixth Circuit recently affirmed the District Court’s grant of summary judgment against the retirees,’ the White House order said.”
Not surprisingly, nothing came of this Executive Order, and, despite President Biden’s statement, as a candidate that he would “do everything I can to see how they can be brought in,” there was no provision made for these retirees in the Covid bill. The rationale?
“The most recent rescue package includes help for 100,000 Ohio workers’ union pensions, but [Senator Sherrod] Brown says the Delphi case is more complicated, and getting help for them is going to require a separate bipartisan effort; one he said he hopes to introduce soon.”
Do these retirees, too, deserve bailouts?
In ordinary circumstances we’d say, “we can’t give everyone a bailout.” But it will be harder to justify the “no” when others have been given their “yes.” And how do we decide the winners and losers?
As always, you’re invited to comment at JaneTheActuary.com!