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Cypen & Cypen
December 20, 2018

Stephen H. Cypen, Esq., Editor

In light of Amazon announcing its two new headquarters on the East Coast, along with the incredible tax incentives provided by Virginia and New York, we’d like to repost a blog from last year about corporate giveaways. In many states, the amount given away in subsidies and tax breaks to big corporations exceeds the amount needed to fund public pensions each year. That is the conclusion of a report from Good Jobs First, a nonpartisan economic development watchdog group. When states make harmful cuts to public pensions, legislators often say the cost of public pensions is too high. The reality is that pensions are the most cost-effective retirement plan for working families and states are losing billions of dollars each year in corporate giveaways. In Kentucky the state gives away over $580 million a year in corporate subsidies and tax breaks. Meanwhile, the annual cost of funding public pensions in Kentucky represents only 69 percent of the money given away to corporations. When billions of dollars are lost each year through corporate subsidies and tax loopholes, this represents a significant cost to the state. Often these costs are significantly higher than the cost of meeting the state’s commitment to fully fund its public pensions. Legislators should closely examine all of the state’s annual expenses and not buy into a false narrative regarding funding pensions. You can read the full report on Editor’s Note (In a 2014 report, it is estimated that Florida provides more than $3.8 trillion in tax breaks and incentives to corporations.) Margaret Rogers, National Public Pension Coalition, FPPTA, November 18, 2018.
The Illinois Supreme Court ruled as unconstitutional a portion of a pension reform act enacted in 2012 that prevented participants in three Chicago pension funds from receiving credit for union activities. The ruling overturns a bill passed by the Illinois General Assembly and signed into law by then-Gov. Pat Quinn, which was meant to curb what were seen by some as abuses by union leaders who were basing their annuities on their larger union salaries. The Nov. 28, 2018 ruling affects the $10.8 billion Chicago Public School Teachers' Pension & Retirement Fund, the $4.3 billion Chicago Municipal Employees' Annuity & Benefit Fund and the $1.2 billion Chicago Laborers Employees' Annuity & Benefit Fund. Before the passage of that 2012 act, while the specific rules for participants in the teachers' fund and the other two funds differed, primarily it meant participants could take a leave of absence from their primary responsibilities to work for union organizations and receive credit for both. The unanimous ruling by the court cited the Illinois Constitution provision that states "membership in any pension or retirement system of the state, any unit of local government, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired." The new ruling echoes the March 2016 ruling by the Illinois Supreme Court citing the provision regarding the larger pension reform signed by Mr. Quinn in June 2014, and which took effect Jan. 1, 2015, raising employee and employer contributions and reduced retiree cost-of-living adjustments for participants in the Chicago Municipal Employees' Annuity & Benefit Fund and Chicago Laborers Employees' Annuity & Benefit Fund. Rob Kozlowski, Pensions & Investments, December 3, 2018.
U.S. corporate pension funding is actually in pretty good shape—and that includesGeneral Electric’s (GE) plan. But that doesn’t mean pension plans don’t generate anxiety for investors and for retirees. One reason that investors worry about a pension plan is because it’s large and it’s large relative to the size of a company. Another reason is when asset prices fall, and if the plan is large, a corporate pension plan can become a significant additional drain on company cash flow. What about General Electric? GE discloses about $100 billion in obligations for all of its defined-benefit pension plans around the world. Its plan is large because the company is 126 years old, and $100 billion is a big number. There are only a handful of U.S. industrial companies with a market value that exceeds $100 billion. And GE revenues are about $120 billion, so GE generates about $1.20 dollars in revenue for every dollar in pension obligations. There is no magic in that ratio, it’s just a way to contextualize pension size. Ford Motor (F) was founded in 1903 and its pension promises total $80 billion. Ford’s revenue is about $160 billion. Boeing(BA) was founded in 1916 and the plane-maker has also made large aerospace and defense acquisitions—like McDonnell Douglas in 1997. It has about $80 billion in accumulated pension promises too. By contrast, Google, now known as Alphabet(GOOGL), was founded in 1998 and has no defined benefit plan. That’s why pensions come up most often when discussing old, industrial companies. It’s also why most millennial workers think that fixed retirement benefits were something for their parent’s or perhaps their grandparent’s generation. Today, millennials are concerned with company matching for money they set aside in a 401(k) plan or an IRA (individual retirement account). The average funded status of pension plans for an industrial company in the S&P 500 is around 86%. But why does only 86% fully funded qualify as “in good shape?” That’s because the pension funding reported in the financial statements include all plans in the U.S. and overseas. Overseas plans usually don’t have to be pre-funded. Therefore, U.S. plans, in aggregate, are closer to fully funded. Consider that according to the Federal Reserve, there are about $3.4 trillion of assets in private defined benefit pension plans. The Federal Reserve also indicates that there are about $350 billion of future claims on plan sponsors, Fed-speak for underfunding. That means that corporate pensions across America are over 90% funded. Companies aren’t necessarily being altruistic when they set aside money early. That includes this year when companies seemed to be adding cash to corporate pension plans earlier than normal. Those pension friendly moves were likely driven by tax law changes. Funding pensions in the U.S. is a special case because of a federal law that requires companies to set aside money ahead of time for pensioners. Back in the 1970s, the government apparently didn’t like the idea of a company paying retirees out of current cash flows. If that was the case there may be trouble paying former workers if a company went bankrupt. This is the basis of the Employee Retirement Income Security Act (ERISA) act of 1974. That act also created the Pension Benefit Guaranty Corporation, or PGBC. You may have never heard of it, but it’s like the FDIC for pensions. The FDIC guarantees deposits if a bank fails. The PBGC makes payments to pensioners if a pension plan fails. In fact, the PGBC made payments to 861,000 people in failed single-employer plans during its fiscal 2018. That’s 861,000 out of 37 million people covered by qualified defined benefit pension plans. The PGBC gets funds by collecting insurance premiums paid by defined benefit pension plan sponsors. The PBGC tells Barron’s in an email that they administer two separate insurance programs, one for single-employer plans, and one for multi-employer plans. Money set aside to pay retirees doesn’t belong to the company. They reside in separate legal entities, and a company can’t access those funds just because the pension may have the name of the company on its door. When public companies work to fix their pensions that doesn’t mean that they are looking to take assets out of a plan or cut benefits once promised to former employees. Most often it means putting cash into the plan so pensions won’t become a cash call on the corporate entity in the near future. That’s a good thing from retirees’ perspective, but not for company shareholders. Companies can also “deal” with pension plan funding by shifting the liability off their books. That’s accomplished by, essentially, purchasing an annuity contract from an insurer. Bristol-Myers Squibb (BMY) just announced that it would transfer $3.8 billion of its pension obligations to Athene Holding (ATH). Bristol actually used the term “full termination” in its press release, but nothing happened to its pension plan and retirees don’t need to fret. Bristol simply paid an insurer enough money to take a portion of its pension obligations off the books entirely. The company “terminated” its obligation ever to add cash in the future. And defined benefit pensions are like many other contracts—they can’t be cut by fiat. Pension contracts don’t usually change outside of bankruptcy. Some plans get terminated when companies fail, and that’s when the PBGC steps in. Surprisingly, state pensions aren’t covered by ERISA. They are subject to regulations of the states. Not surprisingly, state plans aren’t as well funded as corporate plans. That’s one indication the ERISA law worked as intended. The Pew Charitable Trusts reports that states owe workers and retirees about $4 trillion dollars and $2.6 trillion in assets have been set aside. That’s means state plans are 65% funded. Not close to the corporate level. So when pensioners read that companies have a pension funding problem, more often than not it is a problem for shareholders and not for the retirees. Al Root, Barron’s, December 4, 2018.
The Supreme Court cast doubt on laws in at least 30 states that require lawyers to pay dues to bar associations. In most states, the bar association regulates the legal profession by licensing lawyers and disciplining those who violate the rules. Lawyers in turn are required to pay dues to cover the cost. But the more conservative high court may be on verge of upsetting this longstanding system on the grounds that forcing lawyers to subsidize a private organization violates the 1st Amendment. Justice Samuel A. Alito in a recent opinion called it a “bedrock principle” that “no person in this country may be compelled to subsidize speech by a third party that he or she does not wish to support.” In June, Alito spoke for a 5-4 majority that struck down state laws in California and elsewhere that required teachers and other public employees to pay fees to support a union. In Janus vs. AFSCME, the court said that requirement violated the free-speech rights of employees who did not support the union. That case proved helpful to lawyers challenging mandatory bar association fees based on the same principle. In a brief order, the court overturned a ruling last year by the U.S. 8th Circuit Court of Appeals that had upheld mandatory bar dues in North Dakota and sent the case back “for further consideration in light of Janus.” Although the decision is a not a final ruling, it suggests the court’s majority now doubts the constitutionality of requiring lawyers to support a private bar association. But it is not clear such a ruling would have a major impact in California, New York, Illinois or other states that regulate lawyers through a state agency that includes a state bar. Lawyers for the Goldwater Institute in Phoenix who appealed the issue to the high court said their constitutional challenge was aimed at forced subsidies of private bar associations, not forced payments to cover the cost of state regulation. But they are also challenging mandatory bar dues in states like California that make it hard for lawyers to “opt out” of subsidizing activities involving politics and lobbying. The case began when Arnold Fleck, a North Dakota lawyer, sued his state bar association after he learned it had contributed $50,000 to oppose a state ballot measure. Fleck had contributed $1,000 to support the same measure. He objected to being compelled by state law to pay $380 a year to support the bar association. A federal judge and the 8th Circuit, based in St. Louis, rejected his constitutional challenge to the forced dues, citing a 1990 high court ruling in Keller vs. State Bar of California that had upheld mandatory dues while also freeing lawyers from subsidizing political donations. With the help of the Goldwater Institute, Fleck filed an appeal petition with the high court in Fleck vs. Wetch and argued that the mandatory state bar “involves compelled association and compelled speech,” as in the union fees case. After considering the appeal over nine weeks, the justices opted to vacate the ruling of the lower court and told its judges to give the free-speech question a second look. “This is a major victory, not just for Arnold Fleck but attorneys like him across the nation who have been forced to fund speech that they don’t agree with,” said Timothy Sandefur, a lawyer at the Goldwater Institute. His appeal noted that 19 states, including New York, New Jersey, Colorado, Illinois and Pennsylvania, regulate lawyers without requiring them to support the bar association. The State Bar of California has set an annual fee of $430 for active lawyers. A public information officer said the state bar “has no comment on this topic at this time.” David G. Savage, Los Angeles Times, December 3, 2018.
People spend billions of dollars a year on health products that are unproven and often useless. Case in point: The FTC has sued the sellers of “Nobetes” about their advertising claims for a pill that would supposedly treat diabetes — and maybe even replace the need for prescription diabetes medication, like insulin. According to the FTC, these claims were false or misleading, and the sellers had no reliable, scientific evidence to back them up. As part of a proposed settlement, the sellers (the Nobetes Corporation and two of its officers) will be banned from selling Nobetes and other diabetes products and will pay $182,000. Are you — or someone you know — thinking about using a non-prescription product to treat diabetes?

  • Be skeptical about amazing health claims. According to the American Diabetes Association, there is no clear proof that any dietary supplement — such as a vitamin or a pill with herbs or minerals — will treat diabetes and high blood sugar.
  • These supplements can be dangerous if they cause people to delay or stop effective, proven treatments for diabetes.
  • If you’ve been using Nobetes to treat your diabetes, contact your health care provider as soon as possible.
  • If you’re tempted to use a non-prescription product to treat diabetes or high blood sugar, or any other serious health condition, the FTC says to talk with your health care provider first. 

To learn more, check out our Dietary Supplement Ads infographic and video, and visit please let the FTC know about any health product you believe is falsely advertised. Colleen Tressler, Federal Trade Commission, December 4, 2018.
“Public Pension Return Assumptions Fall to All-Time Low,” reads a recent headline in the trade journal Chief Investment Officer, which caters to state and local government pension advisers. In fact, nearly the precise opposite is the case: never before have public sector pensions assumed such high investment returns, and they have done so through actuarial sleight-of-hand that few outside observers would notice. All of this in service of minimizing government pension costs, a goal that potentially violates pension trustees’ fiduciary obligation to work on behalf of public employees and retirees. Following the Great Recession’s dramatic stock market decline, state and local government pensions were criticized for seemingly rosy investment return assumptions. The near-8% returns assumed by many public plans seemed excessive as independent financial advisers argued that 7% or even 6% returns were more likely. In response, plans such as the California Public Employees Retirement System (CalPERS) called it a “myth” that its assumed investment returns could not be achieved. That so-called “myth” notwithstanding, CalPERS itself shifted from an 8.25% assumed return in 2002 to a 7.5% return assumption in 2011 and, beginning in 2018, a 7.0% assumed return. CalPERS was joined by the vast majority of public plans, who cut the average assumed investment return from 8.1% in 2002 to 7.6% in 2016. Indeed, the National Association of State Retirement Administrators, which represents public pension plans, reports that three-quarters of public pensions have reduced their investment return assumptions since 2010 alone. Even if pension return assumptions remain too high, as many independent experts believe, pension plans seemingly have been responsive to financial reality. CalPER’s 125 basis point lower assumed investment returns would, all else equal, have raised the annual pension contributions of participating California governments by a crushing 62%. Even the smaller 0.5 percentage point reduction in assumed investment returns nationwide would have raised government contributions by roughly one-quarter at a time many governments already were hard pressed to pay their bills. And yet those crippling pension contributions didn’t happen. The reason? While news headlines focused on reduced investment return assumptions, pensions quietly also cut their assumed rates of inflation. Because nearly all public pension benefits receive annual inflation adjustments, what matters for pension financing is the real rate of return net of inflation. And public pensions’ assumed real rates of investment return are at record levels. For CalPERS, a 1 percentage point cut in assumed inflation offset 80% of its much-publicized 1.25 percentage point lower assumed investment return. Other public pensions have gone even further, with the average assumed real investment return nationwide rising from 4.2% in 2002 to 4.6% by 2016. Public pensions’ 0.4% increase in assumed real returns came in the face of declining yields available on Treasury inflation-protected securities over the same time period. As a result, the risk premium pensions assume they’ll earn over safe investments skyrocketed from 0.7 percentage points in 2001 to 3.8 percentage points in 2017. Andrew BiggsForbes, December 4, 2018.
The Social Security Disability Insurance (SSDI) program pays cash benefits to non-elderly workers and their dependents provided that the workers have paid into the Social Security system for a sufficient number of years and are determined to be unable to continue performing substantial work because of a qualifying disability. The total number of disabled-worker beneficiaries was approximately 2.7 million in 1985, peaked at approximately 9.0 million in 2014, and then declined over the last three years by nearly 0.3 million. In December 2017, 8.7 million disabled workers received SSDI benefits. Multiple factors have contributed to the growth in the SSDI enrollment between 1985 and 2014. Some of the main factors are (1) the increased eligibility and rising disability incidence among women, (2) the attainment of peak disability-claiming years (between age 50 and full retirement age) among baby boomers (people born between 1946 and 1964), (3) the increase in full retirement age (FRA) from 65 to 66, (4) fewer job opportunities during economic recessions, and (5) the legislative reform that expanded the eligibility standard in SSDI. Some factors may have prolonged effects on SSDI benefit receipt. For example, the increase in the FRA from 65 to 66 has resulted in a larger proportion of SSDI beneficiaries who are ages 65 and older, and this proportion is likely to increase further as the FRA increases from 66 to 67 between 2020 and 2027. Another example is the consequence of the expansion in the eligibility criteria, which has resulted in more than half of the disabled-worker beneficiaries being enrolled into the program based on mental disorders or musculoskeletal disorders (typically back pain or arthritis). This trend is likely to persist in the future. However, some of the effects on the growth in SSDI enrollment are likely to diminish over time. For example, the rise in labor force participation among women resulted in more women becoming eligible for SSDI benefits during the 1980s and the 1990s, but its positive effect on SSDI rolls became smaller as the female labor force participation rate stabilized and the disability incidence rate of women approached that of men. In addition, some factors may have started to work in opposite directions. One example is the change in age distribution of the population. As the baby boomers reach their FRA (gradually increased from 65 to 66) between 2012 and 2031, there is expected to be a growing proportion of disabled workers who terminate disability benefits due to the attainment of FRA. About the same time, the lower-birth-rate cohorts (people born after 1964) started to enter peak disability-claiming years in 2015, which would likely reduce the size of the insured population between age 50 and the FRA and, consequently, result in a lower number of disability applications. Another example is the availability of more jobs during the post—Great Recession period. The increasing opportunity in employment may have made working more attractive than disability benefits for people who could qualify for SSDI, thus reducing the disability applications and awards after 2010. These factors are likely to contribute to a decline in the number of disabled-worker beneficiaries. In addition to the change in the population age distribution and the availability of jobs in the market, some other factors may also be acting to decrease SSDI rolls in the recent three years. These factors are likely to include the prevalence of the Affordable Care Act (ACA) and the decline in the allowance rate (i.e., the share of applicants who are awarded disability benefits). The nationwide effects of the ACA on disability benefit receipt and the cause of the decreasing allowance rate are as yet unclear. Congressional Research Service, R45419, Zhe Li, November 30, 2018.
John Lowell read an article highlighting, as the author pointed out, that employees value benefits more than a raise. Some of the findings were predictable -- the two most important were health insurance and a 401(k) match and they were followed by paid time off. But, just barely trailing those were pension benefits with flexible work hours and the ability to work remotely far behind.
Let's put some numbers behind the ordering:

  • Health insurance -- 56%
  • 401(k) match -- 56%
  • Paid time off -- 33%
  • Pension -- 31%
  • Flexible work hours -- 21%
  • Working remotely -- 15% 

What Lowell found remarkable about this is that five of those six get constant attention. In today's workplace, however, as compared to one generation ago, pensions get little, if any, attention yet nearly one-third of workers would rather have pensions than a raise.  Why is this the case? Neither the survey nor the article got into any analysis as to the reasons, so Lowell gets to way in here entirely unencumbered by nasty things like facts. Blogger, Lowell gets to express my opinions. Ask a worker what they fear. Lowell thinks they will tell you that two of their biggest fears are losing their health and outliving their savings. The second, of course, can be mitigated by guaranteed lifetime income. Workers are beginning to realize that 401(k) plans are exactly what Congress intended them to be -- supplemental tax-favored savings plans. In fact, generating lifetime income from those 401(k)s is beyond what a typical worker is able to do. Their options for doing so, generally speaking, are to self-annuitize (when you run out of money, however, the guarantee goes away) or to purchase an annuity in the free market. That, too, comes with a problem. While that purchase is easy to do and does come with a lifetime income guarantee, it also comes with overhead costs (insurance company risk mitigation and profits plus the earnings of a broker). Roughly speaking, a retiree may be paying 20% of their savings to others in order to annuitize. That's a high price. Is it worth it? Is that why workers want pensions despite often not really knowing what they are? Pensions are not for everybody; they're also not for every company. But, this survey strongly suggests that companies that provide pensions may become employers of choice. In the battle for talent, that's really important. Many companies exited the pension world because the rules made those pensions too cumbersome. But, the rules have gotten better. They've put in writing the legality of plans that many employers wanted to adopt 15 to 20 years ago, but feared doing something largely untried. And, there is bipartisan language floating around in Congress that would make such plans more accessible for more employers. Designed properly, those plans will check all the boxes for both the employer and the employees. It seems time to take another look. John Lowell Blog, November 29, 2018.
There is such a thing as too much fixed income for corporate pension fund portfolios, new research shows. As companies have closed and frozen their defined benefit plans en masse, the vast majority have implemented a bond-heavy strategy for liability-drive investing. But shunning riskier asset classes comes at a cost for beneficiaries, according to the recent paper “Should Corporate Pensions Invest in Risky Assets?” by University of Iowa professors Wei Li and Tong Yao, and Southern Illinois University at Edwardsville’s Jie Ying. If plan sponsors can’t handle the volatility of stocks, hedge funds, private equity, and real estate, they should move to a defined contribution plan structure. The research contradicts the view held by some defined benefit plan sponsors that given their fixed-income-like payouts, they should engage in liability-driven investment strategies, which rely on fixed-income assets to secure returns. According to the research, this isn’t exactly beneficial for employees. Here’s why: many employees rely on their pension funds completely for retirement savings, according to the research. Regardless of how their plan sponsors invest, these employees are taking on some risk because their pensions could be wiped out if their employers file for bankruptcy. And while the Pension Benefit Guaranty Corp. (PBGC) provides insurance for pension funds, retirees are only insured up to a ceiling, the paper noted. For higher-paid employees expecting to retire with large pensions, a bankruptcy could spell trouble. “Employees have some desire to have a fair risk-return tradeoff,” Li said by phone. “They would prefer to have some risk exposure.” Because they already must take on some risk, it makes more sense for employees to seek out higher yields on investments, the research argued. Indeed, plan sponsors are incentivized to share their pension surpluses with employees via tax benefits, according to the paper. So why are some defined benefit plans still investing using liability-driven investment strategies? They have strong incentives, like corporate tax advantages, to invest in less risky assets, the research shows. What’s more is that these plan sponsors don’t gain anything from taking on riskier investments beyond full funding: the value added to their portfolios from these risky investments is passed onto employees, the research shows. When those more volatile investments fall, they can reduce the plan sponsor’s value as a company, according to the paper. There is, perhaps, a better way to distribute the risk fairly according to the paper: defined contribution plans. These plans make up 48.6 percent of pension assets in the seven major pension fund markets, according to Willis Towers Watson, and are steadily increasing their market share. Assets under management at these defined contribution plans increased by 5.6 percent over the past 10 years, while they grew by 3.1 percent at defined benefit plans during the same time frame, the report shows. “A more efficient contract would let employees to shoulder all the pension investment risk while keeping them insulated from firm-specific risks,” according to the paper. “Interestingly, this arrangement resembles what a defined contribution plan offers. Our analysis shows that such an arrangement may substantially reduce firms’ pension funding costs.” Alicia McElhaney, Institutional Investor, November 18, 2018.
The Pension Benefit Guaranty Corporation’s Fiscal Year 2018 Annual Report shows improvement in the financial condition of the agency’s Single-Employer Insurance and Multiemployer Insurance Programs. The Single-Employer Program showed a positive net position of $2.4 billion as of September 30, 2018, emerging from a negative net position or “deficit” of $10.9 billion at the end of FY 2017 and continuing a trend of improving results. The Multiemployer Program showed a deficit of $53.9 billion, reduced from $65.0 billion at the end of FY 2017. Despite this improvement, the Multiemployer Program unfortunately continues on the path toward insolvency, likely by the end of FY 2025. The primary driver of the financial improvement in both programs was higher interest rate factors, which reduced the value of PBGC’s benefit liabilities. A strong economy and the absence of new large claims also contributed to the financial improvement. “A financially strong pension insurance program that workers and employers can count on is a vital source of retirement security for millions of workers, retirees, and their families,” said PBGC Director Tom Reeder. “The continued improvement in the financial condition of the Single-Employer Insurance Program is a welcome result. The Multiemployer Insurance Program deficit has narrowed, but it clearly won’t keep the program from running out of money. PBGC continues to work with Congress and the multiemployer plan community to preserve the solvency of multiemployer plans and the Multiemployer Program.” In the coming years, absent legislative changes, more and larger claims on the Multiemployer Program will lead to the program’s insolvency. If the Multiemployer Program is allowed to become insolvent, PBGC will only be able to pay a small fraction of guaranteed benefits for participants in failed multiemployer plans. PBGC’s two pension insurance programs — single-employer and multiemployer — are designed to protect participants’ pension benefits when plans fail. However, the programs differ significantly in the level of benefits guaranteed, the insurable event that triggers the guarantee, and the premiums paid by insured plans. By law, the two programs are operated and financed separately. Assets of one program may not be used to pay obligations of the other. The Single-Employer Program had assets of $109.9 billion and liabilities of $107.5 billion as of September 30, 2018. The positive net position of $2.4 billion reflects an improvement of $13.4 billion during FY 2018. The program’s improvement is consistent with PBGC’s recent projections and was accelerated by the continued strong economy, lower than expected claims, and higher interest rates. In FY 2018, the agency paid $5.8 billion in benefits to more than 861,000 retirees, about the same as last year. During the year, the agency became responsible for 58 single-employer plans that terminated without enough money to provide all promised benefits. These plans cover 28,000 current and future retirees. PBGC works collaboratively with plan sponsors to negotiate agreements that protect pensions and premium payers. PBGC protected the pension benefits of about 52,000 people by working with eight companies to maintain their pension plans as the companies emerged from bankruptcy. Additionally, through the Early Warning Program, the agency negotiated over $550 million in financial protection, for about 100,000 people in plans put at risk by certain corporate events and transactions. The Multiemployer Program had liabilities of $56.2 billion and assets of $2.3 billion as of September 30, 2018. This resulted in a deficit of $53.9 billion, down from $65.1 billion last year. The $11 billion decrease in the deficit stems mostly from higher interest rate factors used to measure the value of PBGC’s future payments to insolvent plans. During FY 2018, the agency provided $153 million in financial assistance to 81 insolvent multiemployer plans, up from the previous year’s payments of $141 million to 72 plans. In the coming years, the demand for financial assistance from PBGC will increase rapidly as more and larger multiemployer plans run out of money and need help to provide benefits at the guarantee levels set by law. Absent a change in law, the assets and future income of PBGC’s Multiemployer Program are only a small fraction of the amounts PBGC will need to support the guaranteed benefits of participants in plans that are currently insolvent as well as those expected to become insolvent during the next decade. PBGC, PBGC No. 18-08, November 16, 2018.
“Haste makes Waste.”
Why is it called "after dark" when it really is "after light"?
It is not what you do for your children, but what you have taught them to do for themselves, that will make them successful human beings. — Ann Landers
On this day in 1606 Virginia Company settlers leave London to establish Jamestown, Virginia.


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Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.

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