The White House is sending $36 billion to buttress the Central States Pension Fund, one of the biggest and most troubled funds that manages the pensions of over 350,000 union workers and retirees.
The pending announcement on Tuesday comes about 21 months after President Biden promised $86 billion to troubled multi-employer pension funds via a controversial provision tucked inside the American Rescue Plan.
The check from Washington is a note of finality in the decades-long push to shore up these troubled plans, which had fallen on hard times as the blue-collar industries they represent shrank. Critics also charged that mismanagement played an important role in their decline.
"One cannot underestimate the significance of this assistance for basic economic security and dignity for union workers in their retirement years," Gene Sperling, the Biden aide who oversees the enactment of the American Rescue Plan, reportedly told Midwestern reporters Thursday on a conference call.
President Biden is set to make the formal announcement Thursday afternoon at the White House while flanked by figures like Teamster President Sean O’Brien, AFL-CIO President Liz Shuler, and Secretary of Labor Marty Walsh. The effort has long been championed on Capitol Hill by figures like Sen. Sherrod Brown (D-OH) and Rep. Marcy Kaptur (D-OH).
The program is set to ensure solvency for the funds through 2051, but critics say there is no plan beyond that and the fund will likely need another bailout down the road. Sen. Chuck Grassley (R-IA) blasted the program when it was passed, calling it “just a blank check, with no measures to hold mismanaged plans accountable.”
Plans that were 'critical and declining'
A 2017 report found that there were 1,400 multi-employer pension plans in the U.S., covering 10 million people, with around 100 of the plans in "critical and declining" status.
To try to stave off a collapse in those plans, Biden signed the law to send money via a government agency called the Pension Benefit Guaranty Corporation (PBGC), which partially insures the nation’s pensions but had been projected to become insolvent itself.
In total, the Biden administration program is set to provide varying levels of assistance to more than 200 distressed pension plans and, according to the White House, help ensure that 2 million to 3 million workers don't suffer benefit losses. A tracker updated by Democrats on Capitol Hill estimates that the program has already doled out money to save over 193,000 pensions.
As for Central States, the PBGC had spent the last year and a half calculating the best award for that large fund, which represents workers primarily in Midwestern states like Michigan, Ohio, and Missouri.
These funds were set up decades ago by both unions and employers with the idea that these unified retirement plans would follow workers from job to job within their industry
But the shortfalls quickly piled up and retirees at the Central States Pension fund — who are mostly Teamsters who held jobs like truck driving, construction, and food processing — had been facing possible benefits cuts of 60% or more.
Ben Werschkul is a Washington correspondent for Yahoo Finance.