Biden-Harris and Congressional Democrats save 1.4 million in union pensions

The Biden-Harris administration and congressional Democrats have preserved the pensions of more than a million union members, many of whom were at risk of becoming insolvent next year, according to a new report from U.S. Sen. Elizabeth Warren’s office.

The report, entitled “Promises Made, Promises Kept,” explains how systemic turmoil beginning with the 2008 financial crisis has been exacerbated by corporate bankruptcies, congressional inaction and poor fund management and has put several employer pension plans at risk of steep benefit cuts.

“The workers covered by these plans were not at fault, but if the plans had failed, the benefits of 1.3 million union members could have been cut by 98%,” the report said.

According to the report, the problem became apparent in 2017, but will not be resolved until 2021 – after former President Donald Trump left office and the Democratic Party gained a majority in the US Senate.

“After giant hedge funds and big banks destroyed our economy and threatened our pension funds, Democrats stepped up to protect our union workers,” Warren told the Herald. “I have fought hard with the Biden-Harris Administration to ensure that Massachusetts Teamsters and other union workers can continue to rely on the pension funds they have earned.”

According to the report, the problem actually began with the housing market crash of 2008, when many pension funds invested heavily in “junk and mortgage bonds.”

One such plan, the Central States Retirement Fund, which managed the pension funds of more than 600,000 Teamsters members, lost more than $11 billion in the financial crisis, falling 42% in just 15 months.

By 2018, more than 15% of multiemployer pension plans are “likely to become insolvent by 2037 and run out of funds to pay benefits owed to participants.”

“Workers with insolvent MPPs will likely face significant reductions in pension benefits. As a result, approximately 2 million union workers in more than 200 MPPs are at risk of not receiving all the benefits they need to support themselves and their families in retirement,” the report said.

US Senator Sherrod Brown from Ohio introduced the bill, Butch Lewis Act of 2017which was aimed at maintaining these funds, but it stalled in committee.

Meanwhile, the problem remained, and by 2021, amid the fallout from the COVID-19 pandemic, “the threat to workers’ pensions has increased. At the time, about 1.3 million MPP participants were on the verge of insolvency, putting up to 98% of their retirement income at risk” by 2025.

The problem was resolved, the Warren report said, with the passage of the American Rescue Plan Act, which included the Brown bill of 2017 and which only came about thanks to the actions of Democratic lawmakers in Congress and the Biden-Harris administration.

“The Union Pension Preservation Act passed despite the opposition of all Republican members of Congress, with Vice President Harris casting the deciding vote,” the report said.

Thanks to ARPA, the Pension Benefit Guaranty Corporation that insured those plans was secured for “at least 20 years,” and potentially insolvent pensions are now covered until 2051, the report said.

This includes pensions covering “640,332 participants in the transport industry, 61,474 participants
construction industry, 50,238 from the entertainment industry, 445 from the fishing industry, 5,248 from the hospitality industry, 245,897 from the manufacturing industry, 163,414 from the printing industry and 204,170 from the service industry”, and “more than 35,000 union workers and retirees living in Massachusetts.”

A spokesman for Republican John Deaton, who is running against Warren in the 2024 election, said Warren’s report did not mention families she did not help.