Across all 50 states, there was a collective $6.96 trillion in liabilities for public pensions that were unfunded, meaning the cost disbursed in pensions was higher than the amount collected, averaging almost $21,000 in unfunded liabilities per person, according to ALEC’s Unaccountable and Unaffordable report. California, Hawaii, Illinois and Alaska all exceeded $35,000 in liabilities per capita, while Tennessee and Indiana were the only states below $10,000 per capita.

“Understanding our pension crisis is difficult, but thankfully this report charts a path for legislators to permanently solve this growing problem,” Lisa Nelson, ALEC CEO, said in a press release. “Absent a fix, the fiscal meltdown of state pension funds threatens to leave American taxpayers on the hook for trillions of dollars in unfunded liabilities.”

Most state pensions receive funding from current employee contributions and employers through tax revenue, and then they use that money to pay retired workers a fixed monthly payment, with the states taking on debt to cover the difference, according to ALEC. Funding pension obligations with debt kicks the issue down the road, leaving future taxpayers to pick up the bill.

Large states were the biggest contributors to the overall amount of unfunded liabilities, with California accounting for $1.4 trillion, Texas accounting for $437 billion and New York accounting for $368 billion, according to ALEC. Illinois had the second-highest unfunded liabilities at $468 billion.

State governments are bound by contract and state constitutional law to make pension payments even if economic conditions change, according to ALEC. The total liabilities decreased by $1.32 trillion since the last version of the report covering 2021.

“When it comes to public pensions, keeping the promises made to state workers and retirees is critical,” Jonathan Williams, chief economist and executive vice president of policy at ALEC, said in the press release. “Without major reforms — such as switching to defined contribution plans — pension promises will be harder to keep, and taxpayers will be forced to bail out unfunded pension plans at great personal expense.”

The U.S. is facing a debt deluge, reaching $33 trillion in national debt for the first time on Monday, with $26 trillion being held by the public. The national debt has increased by $5 trillion during the Biden administration.

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CalPERS saw the personal information of 769,000 of its retired members exposed in a third-party breach earlier this month, KCRA reported this week. The fund serves more than 2 million members in its retirement system and 1.5 million in its health system, the report says.

The California State Teachers’ Retirement System, the second largest pension fund in the U.S., also suffered from the breach. It has more than 947,000 members.

This week CalPERS said that its third party vendor, PBI Research Services, had notified it of a “vulnerability” with software used to identify member deaths and make sure payments are distributed correctly. It told CalPERS the issued had since been fixed.

The app contains identifying information, including full names, birth dates and social security numbers. This information was accessed by an “unauthorized third party” the report says, also noting that names of family members may have also been exposed.

The third party told CalPERS that it found the issue “at the end of May” and that it was “actively being exploited by cyber criminals.”

In a statement, PBI said: “PBI promptly patched its instance of MOVEit, assembled a team of cybersecurity and privacy specialists, notified federal law enforcement and contacted potentially impacted clients. The cyber criminals did not gain access to PBI’s other systems – access was only gained to the MOVEit administrative portal subject to the vulnerability. PBI is working directly with impacted clients to identify impacted consumers and develop notice plans.”

And it isn’t just CalPERS that was affected: “thousands” of other organizations have also been impacted, the report says, including the U.S. Department of Energy and other federal agencies. Over 9 million drivers in Oregon and Louisiana, Johns Hopkins University, the Ernst & Young accounting firm were also exposed.

Randy Cheek, legislative director for the Retired Public Employees’ Association of California, concluded: “I felt just… flabbergasted that they didn’t say anything to anybody before this. We should have known. We should have been able to check our accounts.”

CalSTRS said in a statement: “This incident did not involve unauthorized access to CalSTRS’ network. CalSTRS is working with PBI to identify the CalSTRS members whose information was involved in PBI’s incident. CalSTRS will provide notice to any members and beneficiaries whose personal information was involved in accordance with applicable law.”

Article cross-posted from Zero Hedge.

I am NOT a financial advisor, but I don’t think I’m tooting my own horn too much when I say I’ve been far more accurate about the economy than most of the “experts” over the last couple of years. This is why I was not in favor of moving wealth or retirement to precious metals in 2020 or any time before then. Things clearly changed and I started recommending an America First, fellowship-driven gold company last year for self-directed IRAs backed by physical precious metals. With that said, here’s Kevin Stocklin’s article…

President Joe Biden used his veto power on Monday to block a bipartisan action from Congress that would have prevented pension fund managers from investing retirees’ money according to environmental and social-justice criteria.

“There is extensive evidence showing that environmental, social, and governance factors can have a material impact on markets, industries, and businesses,” Biden stated.

However, despite attempts by its advocates to brand environmental, social, and governance (ESG) criteria as an effective risk-management tool, recent bank failures such as Silicon Valley Bank (SVB) suggest the opposite.

In defense of ESG, Senate Majority Leader Chuck Schumer (D-N.Y.) wrote in a Wall Street Journal op-ed that “America’s most successful asset managers and financial institutions have used ESG factors to minimize risk and maximize their clients’ returns. In fact, according to McKinsey, more than 90 percent of S&P 500 companies publish ESG reports today.”

This echoed a statement by Bank of America CEO Brian Moynihan in 2020 that “our research shows that companies that do well on ESG end up doing better, or fail less.” Also advocating for ESG, The New York Times was quick to “fact check” critics who claimed that ESG was partly to blame for SVB’s demise.

In an op-ed titled, “No, ‘Wokeness’ Did Not Cause Silicon Valley Bank’s Collapse,” the Times argues that SVB “was not an outlier in its diversity goals or its ESG investments,” which is accurate as far as it goes. But the fact that most other financial institutions are doing the same thing is not reassuring to many who are concerned that ESG will now be used as a risk-management criteria for pensioners’ money.

Hiding Management Failures

“If management is focusing on ESG, then important functions like risk-management can easily fall to the wayside,” Aharon Friedman, a former senior counsel to the House Ways and Means Committee and former senior advisor to the Treasury Department, told The Epoch Times. “ESG metrics are inherently subjective and unquantifiable, so using ESG factors to measure a company’s performance can hide bad management practices.”

A cursory glance at SVB’s last two 10-K filings with the Securities and Exchange Commission underscores Friedman’s point. The bank’s balance sheet showed obvious red flags about how precarious its mismatch of assets and liabilities had become, and yet a substantial amount of management’s focus appeared to be on diversity and its exposure to climate change.

From 2020 to 2021, the bank’s holdings of U.S. Treasurys and mortgage-backed securities ballooned from $49 billion to $128 billion. These mostly fixed-rate longer-term assets were funded by short-term deposits, which increased from $102 billion to $189 billion that year, creating an enormous liquidity mismatch for a bank with $16.6 billion in equity and $211 billion in total assets.

These numbers were down slightly by the end of 2022 as depositors began their exodus, but remained in about the same perilous proportion. Given the mismatches on its balance sheet, if interest rates were to increase, which would cause the value of fixed-rate bonds to fall, SVB would be unable to make enough from selling its assets to pay out depositors.

And yet according to the risk factors detailed in its 10-K filings, SVB management didn’t appear to be particularly concerned about that. When detailing the bank’s most important risk factors, SVB’s 10K report dedicated three paragraphs to its exposure to climate change.

The bank’s filing states that because “federal and state regulatory authorities, investors, and other third parties have increasingly viewed financial institutions as important in addressing the risks related to climate change … we have announced commitments related to the management of climate risks and the transition to a less carbon-dependent economy.”

Regulators Push ESG on Banks

SVB was not wrong about regulatory authorities pushing ESG compliance. The Federal reserve Bank of San Francisco, which regulated SVB, states, “The impacts of a changing climate—including the frequency and magnitude of severe weather events—affects each of our three core roles: conducting monetary policy; regulating and supervising the banking system; and ensuring a safe and sound payment system.”

Regarding racial equity, the San Francisco Fed states, “Our Framework for Change is our commitment to taking action that will result in greater racial and ethnic equity in our organization and the communities we serve across the Federal Reserve’s Twelfth District.”

Meanwhile, SVB’s exposure to interest-rate risk—one of the most basic but more mundane aspects of bank risk management—became a material problem in March 2022, when the Federal Reserve announced its determination to fight runaway inflation with the first in an ongoing series of interest-rate hikes. Looking back at the end of that year, the bank noted in its 2023 filing that “increased interest rates can have a material effect on the company’s business … For instance, increases in interest rates have resulted, and may continue to result in, decreases in the fair value of our [available for sale] fixed-income investment portfolio.” But it had little else to say on the subject and nothing that suggested a sense of urgency.

According to one report, BlackRock, the world’s largest asset manager, warned SVB in early 2022 that the bank’s risk controls were “substantially below” what they should have been and offered to assist SVG in managing its portfolio risks. But its offer was rebuffed.

According to another report, SVB’s chief risk officer, Laura Izurieta, stepped down in April 2022, and the bank continued on without a replacement until Kim Olson took the job in January 2023. By that time, interest rates were substantially higher, and there was little the bank could do to right itself.

SVB Earns Top ESG Governance Scores

Prior to its collapse, SVB was a strong advocate of ESG criteria, both from an environmental and social-justice perspective, and it appeared to buy into the notion, echoed by President Biden this week, that ESG was an appropriate risk-management tool. Indeed, according the S&P’s ESG scoring system, SVB was rated an 89 out of 100 in the area of “corporate governance,” just shy of the “industry best” score, which is 91, and well above the “industry mean” score of 51.

Morningstar, one of the top ESG rating agencies, had given SVB a rating of 7.9 out of 10, or “leader,” in the governance category.

“In the case of SVB, the corporate governance management measurement was assessed before the public discovery of the bank’s collapse on March 10, 2023,” a Morningstar representative told The Epoch Times. “The news initiated an urgent review of its rating, resulting in the overall risk rating score increasing significantly with the assignment of a severe controversy (another layer in the methodology) and reflected in our public ratings on March 15. This controversy shows that even companies with leading corporate governance practices on paper are not immune to significant controversial events.”

SVB was able to earn such a high governance rating because of policies like its dedication to racial and gender criteria in hiring and promotion. The bank’s website notes that “45 percent of our board of directors are women, including our new chair as of April 21, 2022.” It further states that “we aim to create equity in hiring, performance management, benefits, supplier diversity, donations and volunteering,” and “we promote inclusion through cultural awareness celebrations, employee advocacy networks, DEI [diversity, equity, inclusion] trainings, employee surveys, and focus groups.”

But while SVB was outperforming according to ESG management principles, some argue that it was doing so at the cost of its most essential responsibilities.

“Insofar as ESG involves trying to show that your board and staff are ‘diverse,’ it means that you are willing to ascribe considerable importance to things like skin color or sex in selecting your people,” Samuel Gregg, author and Senior Research Fellow at the American Institute for Economic Research, told The Epoch Times. “The problem is that people’s degree of financial expertise has nothing to do with such things. If you are willing to trade off financial knowledge and experience for ethnicity and gender, that means you are not giving financial expertise the priority that it should have in banking and finance.”

Credit Suisse, which faced collapse and was rescued by Swiss rival UBS on March 20, had also been promoting its adherence to ESG principles. It created a chief sustainability officer position and announced: “Our organizational structure is designed to ensure that ESG standards are embedded across regions and divisions in our client-based solutions as well as in our own operations as a company.”

Credit Suisse had so many management failures leading up to its collapse that ESG can hardly be blamed. However, it raises another issue about ESG, which is the extent to which corporate managers use it to cover up for underperformance.

An August 2021 study by the University of South Carolina and the University of Northern Iowa found that focusing on non-quantifiable ESG goals over financial results “provides managers with a convenient excuse that reduces accountability for poor firm performance.” In contrast to Biden’s claim that evidence proves the value of ESG investing, this report found that there was a correlation between CEO’s underperformance and how vocal they were in supporting ESG goals.

Disputing the ‘Extensive Evidence’ for ESG

Recently, even firms that had once championed ESG criteria, are now backpedaling.

Testifying before the Texas state senate last December, State Street chief investment officer Lori Heinel said, “I have no evidence that this [ESG] is good for returns in any time frame. In fact, we’ve seen the evidence to be quite contrary. Last year, if you didn’t own energy companies, you did miserably compared to broad benchmarks. The year before, that was quite the opposite … but that was just a happenstance, that’s not because it’s a good investment.”

Last month, Vanguard CEO Tim Buckley said, “Our research indicates that ESG investing does not have any advantage over broad-based investing.”

Meanwhile, a Harvard University report titled, “An Inconvenient Truth About ESG Investing,” found that ESG investing actually hurts returns. “ESG funds certainly perform poorly in financial terms,” the report stated.

SVB may have been no more compliant than its peers regarding its allegiance to ESG dogma, but the problem was that it was too weak to afford losing focus on its core business. Given its smaller size, concentrated depositor base, and undiversified asset portfolio, it could not survive having an unserious risk management structure in place.

SVB depositors were ultimately bailed out by federal regulators, but retirees, who will be affected by Biden’s new rule allowing ESG into Americans’ pensions, have no such guarantees. And when it comes to risk management, pension investors are in a significantly different position than bank depositors. They are the equity holders, who are last in line and who typically get wiped out when companies fail.

“The priority of anyone managing pension funds is to ensure that they create the profit and shareholder value that allows people who have saved to enjoy a comfortable retirement—period,” Gregg said. “If ESG distracts pension fund managers from pursuing that goal, they are doing a grave disservice to present and future retirees.”

Article cross-posted from our premium news partners at The Epoch Times.

That means the first federal backstop for such pensions created by Congress in 1974 – the Pension Benefit Guaranty Corporation – is being kept busy dealing with troubled plans, with about 1,600 terminations annually in recent years. All told, more than 145,000 plans shuttered from 1975 to 2019, with the PBGC becoming trustee for almost 5,000 of them.

And the private pension problem still festers: The Great Resignation of older workers in the pandemic era threw Social Security earnings and retirement savings off track, making the issue of failing pensions even more pressing to those with a claim to them.

What is the government doing about it, and what can affected retirees do to protect themselves? Some tips:

• Documents are king in this process – i.e., paperwork saying you were vested and owed a pension. You may first need to track down your former employer.
• The PBGC provides a list of “trusteed” plans that it has taken over. If your plan is being managed by the agency, then that’s your first stop, although you may have no way of knowing that. You can call the agency at 1-800-400-7242.
• The PBGC’s pension search directory is another resource. You can also try the PBGC’s “My Pension Benefits” portal.
• The PBGC has an “Advocate” office that offers “pension tracing services.” Call (202) 229-4448 or [email protected].
• If your own work records are long gone and the above steps prove fruitless, your last resort for proving your claim to a pension might be a Certified Itemized Statement of Earnings from Social Security, listing when you worked and for whom. That will cost $122 and likely take 120 days to process, Social Security says. It gives a number to call, 1-800-772-1213, but only after that four-month wait period.

When a company files for bankruptcy, a plan may be also terminated by a court or continued without PBGC intervention – if there are enough assets in the plan. It’s helpful to know what kind of termination an employer chooses when electing to shut down a defined-benefit plan.

• Standard Terminations. The majority of plans are shuttered under this category, which means “a plan that has enough money to pay all benefits owed to participants and beneficiaries . . . For each participant or beneficiary, the plan administrator either purchases an annuity from an insurance company or, if the plan permits, pays the benefit owed in another form (such as a lump sum),” according to the PBGC.
• Distress Terminations. This is when the employer or “controlled” group can’t fund future benefits and meets certain PBGC rules. Then the “PBGC takes over the plan as trustee and uses its own assets and any remaining assets in the plan to make sure that current and future retirees of the plan receive their pension benefits, within the legal limits.”

The Labor Department maintains a list of the most underfunded multi-employer plans, but it provides little direct help for workers looking for unclaimed pensions.

Finding plans that have shut down may be easier than finding some that still have money in them and owe benefits. There are more than 16 million retirement accounts sitting out there (including 401ks) – typically with balances of $5,000 or less, according to the Government Accountability Office. It’s not a simple matter to do a search engine query to find them. Congress has authorized the PBGC and other agencies to set up a user-friendly “lost and found” database or “registry” of pensions, but it may not be up and running for a few years.

What about bolstering underfunded plans? The $1.9 trillion American Rescue Plan Act of 2021 was kind to the multi-employer plans generally offered to union members, to the tune of billions of dollars in assistance. Under the ARPA, a Special Funding Assistance Program was embedded in what became known as the “Butch Lewis Act.”  It supports about 250 most “severely” underfunded plans, the PBGC stated in its fiscal 2021 Annual Report.

Before the pandemic and the ARPA, some 1.3 million workers were in troubled multi-employer plans. But now, observes Karen Friedman, executive director of the nonprofit Pension Rights Center: “If your plan is accepted and qualified for the special assistance, most people won’t have to worry (this is for multi-employer plans only).”

For now, many retirees are in the same boat as Jesus Nunez, a former Checker Motors worker in Burbank, Illinois, who is now working to recover his pension with the help of Anna-Marie Tabor of the Pension Action Center at the University of Massachusetts-Boston.

“There’s often a complete lack of transparency,” Tabor said of what’s become painfully obvious to those adversely affected. “Some people have no idea what happened to their pension plans.”

Editor’s Note: This is just another reason we are so bullish on precious metals to protect retirement and wealth. The sponsors we hand-selected are America-First companies who, unlike the vast majority of precious metals companies out there, do not donate to Democrats or have ties with proxies of the Chinese Communist Party.

This article was adapted from a RealClearInvestigations article published Sept. 14. This article was originally published by RealClearPolicy and made available via RealClearWire.

“They didn’t tell me anything about my pension,” says Nunez. “Later someone said they lost my records.”

Nunez’s concerns are shared by millions of Baby Boomers who are in or nearing retirement. Although so-called defined-benefit pensions were long considered the gold standard of retirement plans – promising guaranteed regular payments for life – corporate churn, financial pressures and outright fiscal malfeasance have made many of them less secure than the employee-guided, non-guaranteed 401k stock investment plans that many companies now offer in their stead.

Only about 10% of private-sector workers have defined-benefit pensions today. But prior to the 1980s, most did. That fact, and what happened to guaranteed pensions in the interim, make them a persistent problem today, ensnaring, among others, American taxpayers who have to bail out a lot of them.

Many affected workers and retirees – potentially 33 million in more than 25,000 federally protected defined-benefit pension plans – are among the more than 70 million Baby Boomers (those born from 1946 to 1964) who are retiring at an accelerating rate, with only some 40% already retired.

That means the first federal backstop for such pensions created by Congress in 1974 – the Pension Benefit Guaranty Corporation – is being kept busy dealing with troubled plans, about 1,600 terminations annually in recent years. From 2014 to 2019, there were 8,000 shutdowns. All told, more than 145,000 plans shuttered from 1975 to 2019, with the PBGC becoming trustee for almost 5,000 of them.

Multi-employer pensions, generally offered to union members, typically saw the biggest funding shortfalls with some funded at only 30% to 40% of their obligations, according to a University of Virginia study. These pensions were thrown a stopgap, multi-billion-dollar lifeline by President Biden’s $1.9 trillion American Rescue Plan Act passed last year by the Democrat-run Congress.

“Pension managers—including politicians, union officials, and employer representatives—consistently over-promised and under-funded pension benefits, and have done little if anything to correct for their shortcomings over time,” writes Rachel Greszler, a research fellow at the Heritage Foundation. “Such mismanagement is tragic for workers and retirees who did nothing wrong.”

The situation raises the specter of a fiscal crisis on the order of much more publicized problems involving government support for Americans’ personal finances, from potential Social Security insolvency to mismanaged public employee pensions – as opposed to the private ones at issue here. The moral hazards posed by government guarantees extend to student loans, with President Biden proposing a bailout of hundreds of billions of dollars in student debt. Ironically, the unlucky older beneficiaries who lost private pensions could see their taxes go to bail out those younger borrowers.

And the private pension problem still festers: The Great Resignation of older workers in the pandemic era threw Social Security earnings and retirement savings off track, making the issue of failing pensions even more pressing to those with a claim to them.

What is the government doing about it, and what can impacted retirees do to protect themselves?

Below is a primer.

How You Can Track Down a Lost Pension

Have a guaranteed pension dating back to the days of disco? Hunting it down and getting the checks due you can be an unusually arduous process. Although you may have received official notices of pension benefits, companies offering them may have folded or changed names over the years, with their pension plans taken over by others. Remember Times Mirror, the newspaper giant of decades ago now gone down the memory hole? Pension search engines aren’t likely to either.

Tips:

• Documents are king in this process – i.e. paperwork saying you were vested and owed a pension. You may first need to track down your former employer.
• The PBGC provides a list of “trusteed” plans that it has taken over. If your plan is being managed by the agency, then that’s your first stop, although you may have no way of knowing that. You can call the agency at  1-800-400-7242.
• The PBGC’s pension search directory is another resource.
• You can also try the PBGC’s “My Pension Benefits” portal.
• The PBGC has an “Advocate” office that offers “pension tracing services.” Call (202) 229-4448 or [email protected].
• If your own work records are long gone and the above steps prove fruitless, your last resort for proving your claim to a pension might be a Certified Itemized Statement of Earnings from Social Security, listing when you worked and for whom. That will cost $122 and likely take 120 days to process, Social Security says. It gives a number to call, 1-800-772-1213, but only after that four-month wait period.

When a company files for bankruptcy, a plan may be also terminated by a court or continued without PBGC intervention – if there are enough assets in the plan.

It’s helpful to know what kind of termination an employer chooses when electing to shut down a defined-benefit plan.

• Standard Terminations. The majority of plans are shuttered under this category, which means “a plan that has enough money to pay all benefits owed to participants and beneficiaries…For each participant or beneficiary, the plan administrator either purchases an annuity from an insurance company or, if the plan permits, pays the benefit owed in another form (such as a lump sum),” according to the PBGC.
• Distress Terminations. This is when the employer or “controlled” group can’t fund future benefits and meets certain PBGC rules. Then the “PBGC takes over the plan as trustee and uses its own assets and any remaining assets in the plan to make sure that current and future retirees of the plan receive their pension benefits, within the legal limits. PBGC also tries to collect plan underfunding from employers and shares a portion of its recoveries with participants and beneficiaries.” This is a more involved process, though, and the full benefits promised under the original plan may not be paid.

When the PBGC takes over a single-employer plan, it typically pays participants their plan benefits in the form of a life annuity. The benefits, however, are capped based on the PBGC’s “guarantee limit,” so many retirees may not receive what they were originally promised by the plan.

The guaranteed level for 2022 for an annuity for the life of a participant whose benefit commences at age 65 is $74,455. You have to be vested in the plan, meaning you had to have worked for the company a certain number of years to qualify for a benefit. The guaranteed amounts vary by age. Generally, the older you are, the higher the benefit. The potential payment is lower if a benefit commences before age 65 or if the participant’s spouse has a survivor benefit. The guarantee is higher if the benefit commences after age 65.

“People whose pension benefits exceed the guarantee amount thus can lose some of their promised benefits, but in some situations people who are already retired when the plan terminates may be paid benefits in excess of the guarantee levels,” says Norman Stein, a national pension expert and senior policy and legal counsel for the Pension Rights Center.

“In multiemployer plans—collectively bargained plans to which several employers contribute—the guarantees are much lower than they are for single employer plans.”

Keep in mind that it’s difficult to decipher what underfunding means. It’s a fluid process. Employers may pony up more contributions, or market returns may improve a plan’s fiscal health. Gauges showing how long a pension plan will be able to pay full benefits are complex and understood by few.

Still, tracking down owed benefits can be a wild goose chase with a lot of dead ends. You may need professional help, someone who can aid you in finding the right documents and asking the right questions. PensionHelp America is a good place to start.

What the Government Is Doing to Help

Although most workers are required to receive official notices when their pensions are underfunded, terminated, and taken over by the PBGC, they may be long gone from the workplace. The Labor Department, separate from the PBGC, maintains a list of the most underfunded multi-employer plans, but it provides little direct help for workers looking for unclaimed pensions.

But finding plans that have shut down may be easier than finding some  that still have money in them and owe benefits. There are more than 16 million retirement accounts sitting out there (including 401ks) – typically with balances of $5,000 or less, according to the Government Accountability Office. It’s not a simple matter to do a search engine query to find them. Congress has authorized the PBGC and other agencies to set up a user-friendly “lost and found”database or “registry” of pensions, but it may not be up and running for a few years.

“We have developed a technology roadmap for a pension plan registry system,” notes a spokesperson for the PBGC Advocate Office, “and we are now in the process of evaluating options for building and implementing the pension plan registry system architecture. In the interim, the Office of the Advocate continues to offer pension tracing services to participants seeking information about a defined benefit plan.

What about bolstering underfunded plans? The Democrat-dominated Congress under President Biden has been kind to the multi-employer plans generally offered to union members, to the tune of billions of dollars from the $1.9 trillion American Rescue Plan Act of 2021. Under the ARPA, a Special Funding Assistance Program was embedded in what became known as the “Butch Lewis Act,” named by liberal Ohio Sen. Sherrod Brown for late Cincinnati ex-Teamsters president and pension advocate Estil “Butch” Lewis. It supports about 250 most “severely” underfunded plans, the PBGC stated in its fiscal 2021 Annual Report.

While the program will aid the most troubled multi-employer pension programs, it won’t eliminate the total underfunding issue long-term. The PBGC’s most recent Office of Inspector General audit estimates that it could be on the hook for about $329 million for multi-employer plans alone – after its nearly $9 billion infusion thanks to the Lewis Act. Funding shortfalls, in essence, were covered by the Lewis Act, which allowed loans  to plans in “critical and declining status,” or if a plan became insolvent after December 2014 and had not terminated.

Before the pandemic and the ARPA, some 1.3 million workers were in troubled multi-employer plans. But now, observes Karen Friedman, executive director of the nonprofit Pension Rights Center: “If your plan is accepted and qualified for the special assistance, most people won’t have to worry (this is for multi-employer plans only).”

In any case, sorting through the PBGC’s enormous growing liabilities, it’s likely that Congress may need to pony up billions more to guarantee future defined-benefit pensions.

“The doomsday scenario that the PBGC would become insolvent in five to six years is now old history,” according to Grace Ristuccia and Thomas Vasiljevich, writing recently in The National Law Review. “The new estimated time of PBGC insolvency is the mid-2040s.”

The potential bill for underfunded single-employer plans, however, was much larger at $105.4 billion, the PBGC audit reported for the last fiscal year (page 24). This number focuses on companies that have below investment-grade credit ratings with plans classified as “reasonably possible of termination” as of the end of September last year. Actually, that liability figure is an improvement from $176 billion in fiscal year 2020. Nevertheless, the PBGC is not out of the woods when it comes to future liabilities.

Neither are the many retirees in the same boat as Jesus Nunez, the former Checker Motors worker, who is now working to recover his pension with the help of Anna-Marie Tabor of the Pension Action Center at the University of Massachusetts-Boston.

“There’s often a complete lack of transparency,” Tabor said of what’s become painfully obvious to those adversely affected. “Some people have no idea what happened to their pension plans.”

Image by Charles Clyde Ebbets, Public domain, via Wikimedia Commons. Article cross-posted from Real Clear Investigations.