Cathy Green has never paid much attention to what goes on in Congress. But when she learned that a federal law would allow her pension to be cut by as much as 30 percent, she became alarmed.
Ms. Green, of Lake Stevens, Wash., had claimed her benefit in 2015 after people in the plan were alerted that it might become insolvent. Earned from 20 years of work as an office manager for an insurance company, her pension was part of the Western States multiemployer plan — a type of defined benefit plan created under collective bargaining agreements and funded by groups of employers.
There are roughly 1,400 of these plans nationwide, covering 10.7 million active and retired workers. But a significant number of them had been headed toward insolvency in recent decades, the result of changes in some industries, inadequate funding and the decline in participants as work forces contracted.
To address the problem, Western States cut participants’ benefits in 2018 by 25 percent, on average, under the terms of the Multiemployer Pension Reform Act of 2014. The law aimed to keep plans alive without taxpayer assistance — but it stirred controversy and criticism.
The cuts reduced Ms. Green’s monthly $1,265 benefit by $380, or about 30 percent. “It might not sound like much, but it was a lot for me,” she said.
Three years ago this month, Congress changed course on these plans. As part of a $1.9 trillion Covid stimulus bill, lawmakers approved an $86 billion package for multiemployer plans facing insolvency to apply for one-time federal grants that would keep them viable until at least 2051. The aid was a response to organized pushback against the cuts from union members. But it drew fire from critics, who opposed using taxpayer dollars to bail out private-sector pensions and said the legislation fell short on needed reforms that would prevent future problems. They also said some of the plans were mismanaged.
The pension legislation underscored partisan disagreement that flares to this day about what is the best way to assure secure retirement for American workers — an issue that the presidential campaign is bringing into sharp focus. Verbal sparring over the future of Social Security began earlier this month between President Biden and former President Donald J. Trump, the presumptive Republican nominee, in a sign that reform of the program could be an important talking point this year.
Even by conservative estimates, about two-fifths of today’s households will not have enough retirement income to maintain their preretirement standard of living.
Progressives continue to support pension plans and Social Security, which reduce risk in retirement by paying guaranteed monthly lifetime benefits. Both programs, they argue, counter rising wealth inequality in retirement. Conservatives prefer shifting more of the U.S. retirement system toward individual savings options like 401(k)-style plans.
The multiemployer aid package rescued the pensions and restored the benefits of current and future retirees, even retroactively. Last year, Western States received $294.7 million in assistance. Ms. Green’s benefit was restored, and she received a one-time retroactive payment of $18,597.
“With most legislation, you never feel it, but this was very real for me,” Ms. Green, 65, said.
The aid program has paid out $53.6 billion in grants to 70 plans, restoring benefits for more than 775,000 workers, retirees and beneficiaries, according to the Pension Benefit Guaranty Corporation, or P.B.G.C., the federal agency that insures private-sector pensions. The agency, which administers the aid, projects that a total of $79.7 billion will be distributed to 211 plans. The White House estimates that the aid will ultimately protect the benefits of two to three million workers.
The P.B.G.C. has separate insurance programs for single-employer and multiemployer plans; both are funded through premiums paid by employers. The single-employer program is well funded, but the troubled multiemployer plans were pushing its insurance program toward insolvency before the Covid relief bill passed. Premiums paid into the multiemployer fund are lower, and so are the benefit guarantees.
The legislation that created the aid package, known as the Butch Lewis Act, was named for the late president of an International Brotherhood of Teamsters local in Cincinnati who became an activist against the law that led to the cuts, known as the M.P.R.A.
Teamster retirees played a key role in fighting the M.P.R.A. The Central States Pension Fund, which provides benefits to about 350,000 workers — mostly Teamster truck drivers — applied for permission to slash benefits under the M.P.R.A. in September 2015. Hundreds attended rallies at the U.S. Capitol, wrote letters and met with lawmakers.
“There was a hailstorm of outrage from retirees across the country, most notably from retirees in the Central States plan,” said John Murphy, an official with a Teamsters local in Boston who was the senior vice president of the national union during the multiemployer plan battle.
Kenneth Stribling, a retired truck driver and dock worker in Milwaukee, joined the fight after learning that his benefits, part of the Central States plan, would be cut by 55 percent. Mr. Stribling, 72, worked for 30 years and retired in 2010. “I worked long, 12- to 14-hour days, but it was a good career, and I was able to raise my family and give them a good quality of life,” he said.
“It’s hard to describe what it’s like to be retired on a fixed income and suddenly be told your monthly check will be cut in half,” Mr. Stribling added.
After the Butch Lewis Act was passed in 2021, Central States received about $35.8 billion.
Mr. Stribling joined a Wisconsin committee of retirees formed to protect pensions, and is now president of the National United Committee to Protect Pensions. Along with his restored pension, he receives a $2,700 monthly widow’s benefit from Social Security that was earned by his late wife, a schoolteacher.
The restoration of his benefits has allowed him to maintain his standard of living and to help family members when they need it. “We have five children and six grandchildren, so this has meant so much to me,” he said.
Pension advocates argue that the positive impact of the legislation extends beyond the peace of mind it gives retirees. “If retirees aren’t receiving those benefits, those are dollars that aren’t spent in local communities,” said Dan Doonan, executive director of the National Institute on Retirement Security, a research and advocacy group. “A regular pension check gives people the confidence to spend, and that multiplies throughout the economy.”
The Butch Lewis Act averted a potential meltdown of the P.B.G.C. multiemployer insurance fund, which was facing a $65 billion shortfall and insolvency as early as 2025. That would have left all participants in the plans without insurance.
“It’s worked out mostly as intended,” said Norman Stein, an expert on pension law who advises the Pension Rights Center, an advocacy and consumer rights organization. “It gave plans that were in trouble, often for no fault of their own, the ability to pay their benefits for the next 30 years.”
When the bill was passed, Republican critics described it as a handout to unions that lacked broader reform.
Plans that receive assistance don’t need to repay the grants, but they are required to invest their funds more conservatively, and they are forbidden from increasing benefits or reducing contributions. However, some critics point to the practice of using too-optimistic assumptions about future investment returns that can make funds look healthier than they are.
“I do agree that the problem became almost impossible to fix without some federal funding,” said Charles Blahous, a researcher at George Mason University who specializes in retirement security issues. “But they should have also reformed the funding rules.”
Rachel Greszler, senior research fellow at the Heritage Foundation, argues that the M.P.R.A. was a reasonable step toward further reforms, because even the reduced benefits were higher than amounts retirees would have received from the P.B.G.C. insurance program had their plans become insolvent.
“I have deep sympathy for retirees who were facing cuts, but as long as the benefits were higher than what they would have received from the P.B.G.C., M.P.R.A. was a better approach than just kicking the can down the road, because many of these plans are still going to be insolvent in the future,” Ms. Greszler said. “If you’re digging yourself into a hole, stop digging.”
The legislation remains under fire. At a Senate hearing convened last month to discuss an array of retirement security issues, Republican lawmakers pointed to disclosures that the government had overpaid Central States by $127 million because the plan included nearly 3,500 deceased beneficiaries in its application.
An audit of the assistance by the P.B.G.C.’s inspector general turned up the overpayment last year. The agency has since tightened its review process by crosschecking its records with the Social Security Administration’s database of U.S. death records. Earlier this month, the U.S. Department of Labor resolved legal questions that set the stage for Central States to return the excess funds.
Ms. Green, the retired office manager, says she is happy to rely mainly on guaranteed income sources. She is living on her Western States benefit, along with Social Security and pension benefits earned at two other jobs. Her monthly income is about $5,600. These days, her main worry is the rising cost of health care.
“I’m doing all right now — I’m not broke,” she said. “But every little bit helps. If you look at what inflation can do to you over 15 or 20 years, it’s brutal.”