WASHINGTON – The government is preparing to cut benefits over the next few years for hundreds of thousands of retirees covered by underfunded multi-employer private pension plans.
The Obama administration announced on Wednesday that well-known mediator Kenneth Feinberg review applications from pension plans under a law passed last year. The law would cut benefits as a last ditch means to stave off insolvency of troubled plans such as the huge Teamsters Central State Fund.
The new law earned mixed reviews from the unions whose members are covered by such defined benefit plans, including construction workers, Teamster truckers and food service workers.
The Teamsters and AARP opposed the law when it passed last year as part of a governmentwide spending bill. But other unions saw it as a solution that was preferable to plans becoming insolvent and getting a federal bailout.
Treasury Secretary Jacob Lew named Feinberg, an attorney, to review applications for fairness. Feinberg has administered the compensation funds for claims from the Deepwater Horizon oil spill and from families of victims of the 9-11 terrorist attacks.
Feinberg said the job is a “very, very difficult, challenging assignment” and said he won’t accept compensation for the task.
More than 10 million people are covered by 1,400 or so multi-employer plans, but about 1 million of those are covered by plans expected to run out of money in coming years. They would be eligible under the new system that would cut benefits to people already in retirement.
People 80 years old and over are protected from any upcoming cuts, while those over 75 are partially protected.