Under the American Rescue Plan Act of 2021 (ARPA), tax payers will pick up the tab for underfunded multiemployer pension (MEP) plans for the next 30 years. APRA is the $1.9 trillion stimulus package signed into law by President Biden on March 11th. The key provisions are a $300/week supplement to unemployment benefits, paid emergency leave for 100 million individuals, and $1400 in direct payments to many Americans. But among other provisions, this law also includes a $86 billion bailout of Taft Hartley multiemployer pension plans.
The Pension Benefit Guaranty Corporation (PBGC) is a government agency that guarantees payment of benefits under private defined benefit pension plans when the sponsor of a pension plan goes into bankruptcy. The PBGC currently pays benefits to almost a million participants covered by 4800 failed pension plans and is responsible for future payments to another half a million individuals. It is funded by premiums assessed against all pension plans; however, PBGC’s liabilities far exceed its assets. Its program for Taft Hartley multiemployer plans is in especially bad shape with liabilities for benefits exceeding assets by $65 billion. This program was on track to run out of cash in 2025, which meant that without legislative action many plan participants would no longer receive their pension payments. Under the ARPA, underfunded multiemployer plans will receive a cash infusion of federal tax dollars sufficient to keep them solvent through 2051