Congress Can Help Pensioners, But Not Through a Bailout
Some lawmakers want to bail out a select group of coal workers’ pensions by tapping a fund designated for environmental cleanup. The Abandoned Mine Land Reclamation Fund (AML) is needed for cleanup of abandoned coal mines and should not be used to fund the pension and retiree health benefits of one particular coal miners’ union—the United Mine Workers of America (UMWA).
Many public and private pensions funds have overpromised benefits and underfunded contributions. Forcing taxpayers and these companies’ competitors to bail out the irresponsible choices of pension administrators would be unfair and could set the expectation for a multi-trillion-dollar bailout of private and public pensions across America.
Instead of a bailout, Congress should do what it can to protect pension benefits through its regulation of private plans and its administration of the private pension backstop—the PBGC. Congress should eliminate the preferential treatment it gives to multiemployer pension plans, such as allowing them to set their own unrealistic assumptions that lead to underfunding. Additionally, Congress should reform the PBGC so that it can provide its promised protection against complete pension losses. The federal government should not give a single dollar to pay private pension benefits when its own insurance agent, the PBCG, cannot afford to keep its own promises.
A federal bailout of private pensions would send a dangerous message to underfunded pension systems that they need not reform because the federal government will force taxpayers to keep the promises that they cannot. Congress can protect pensioners and taxpayers by requiring sound administration of multiemployer pension plans and ensuring the solvency of the PBGC.