Central States Won’t Create New Pension Rescue Plan, Appeals to Congress for Help
The Fund’s Executive Director, Thomas Nyhan, announced the decision in a statement, about two weeks after the Treasury Department rejected the Fund’s proposal that would have required cuts of about 50% for retirees under age 75 and required cutbacks for all active members.
The Fund, which has said it could run out of money in less than 10 years, was required by a 2014 law to submit a rescue plan that covers about 270,000 retirees.
“A significant number of Members of Congress were vocal in calling for Treasury to reject our pension rescue plan,” Nyhan said. “It is now time for those and others who suggested that there is a better way to fix this critical problem to deliver on real solutions that will protect the retirement benefits of Central States participants. With each passing month, this crisis becomes more difficult — and costly — to solve.”
“In the coming months, we will do everything in our power to support a legislative solution that protects the pension benefits of the more than 400,000 Central States participants and beneficiaries, who should not have to bear the emotional trauma of waiting until the Fund is at the doorstep of insolvency before Congress acts,” his statement said.
The union and the AARP trade group that represents retirees are among those who called on Treasury to reject the Central States’ plan submitted in September.
Nyhan said the decision not to submit a new plan was made after Fund Trustees met with financial and legal advisors.
“Based on those discussions, it was concluded that due to the passage of time, Central States can no longer develop and implement a new plan that complies with the final MPRA regulations issued by Treasury on April 26.”
He also raised the spectre of Fund retirees’ future benefits being reduced to “virtually nothing” since the federal government’s Pension Benefit Guaranty Corp. also could run out of funds in the future.
