Who Were the Winners And Losers In Central States’ Pension-Slashing Plan?

Back in 2014, the Central States Pension Fund was the first multiemployer pension fund to submit a rescue proposal to the U.S. Treasury.

The pension-slashing measure was rejected last month; but Bloomberg took a look at which pensioners would have been most affected by the plan.

Some pensioners famously claimed they would be better of if the fund went insolvent. Is that true?

Bloomberg analyzed the data:

When they learned of the fund’s proposal to cut their pensions, some of the fund’s retirees said they didn’t expect to live long enough to benefit if the fund managed to avoid insolvency 10 years down the road, as projected by the fund. Instead, they said they preferred to get their full benefits now and worry about the fund’s collapse later.

[…]

Examination of the numbers reveals that retirees between the ages of 60 and 79 who were slated to have their benefits slashed by 30 percent or more stood to gain the least under the fund’s ill-fated proposal. It would logically follow that members of this group mounted the greatest opposition to the rescue proposal.

More specifically, nearly 42,000 retirees, a little more than 10 percent of the fund’s 400,000 participants, were better off financially by getting full payments until the fund’s projected insolvency in 10 years than if they had received reduced benefits under the rescue plan until their projected life expectancy.

[…]

In total, it appears that nearly 42,000 retirees knew what they were talking about when they said they preferred to get their full benefits now even if the fund became insolvent in 10 years.

For the full analysis, including scores of charts, check out the full piece here.

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