“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.

Critics say the scenario would increase U.S. energy dependence on a hostile power – one accused of using forced labor in the manufacture of both lithium batteries and solar panels – and undercuts the Biden administration’s emphasis on domestic sourcing of green energy.

“We need the finished product here,” said Glenn Miller, a retired professor of environmental science at the University of Nevada, Reno, who has spent decades in mining chemistry.  “I would hope there is an advantage to taking that lithium and shipping it 200 miles south to process it [rather] than shipping it around the world. We should all be troubled by China’s control of [minerals]. Why can’t we do this?”

While the United States has ample supplies of lithium, it currently falls short on the capacity to process it into a usable form, meaning that the $7 billion in taxpayer money invested in the nation’s battery supply chain will have to include a foreign component. That is almost certain to include China, which produces 79% of the world’s lithium-ion batteries.

Lithium has taken the spotlight in Biden’s energy plan, since it is a key element needed to produce batteries for electric vehicles and solar panel storage. The administration acknowledges the lithium processing challenge – tacitly – in a June 2021 report produced by the U.S. Department of Energy. “The nation would benefit greatly from development and growth of cost-competitive domestic materials processing for lithium-battery materials,” the report reads.

Department of Energy spokesman David Mayorga did not respond to a list of questions on domestic lithium.

The White House in March issued an order invoking the Defense Production Act, a 1950’s-era law meant to prioritize production of materials in the name of national security. The action allows the federal government to direct taxpayer funds to private companies to extract more lithium in the U.S. – including foreign-based interests.

Prominent in the initiative is Canadian-based Lithium Americas, a publicly traded group whose largest shareholder is Chinese-owned lithium mining giant Ganfeng Lithium, which is currently under investigation in China for alleged insider trading.

Lithium Americas is seeking to mine lithium from Thacker Pass, an 18,000-acre wilderness area on the Nevada-Oregon border. If the mining is approved, Thacker Pass would join a mine at Silver Peak outside of Tonopah, Nevada, as one of the only active lithium mines in the U.S. The company projects it will yield 80,000 tons of lithium a year, which would make it one of the largest lithium mines in the world, producing a quarter of the world’s demand.

Lithium Americas’ local company, Lithium Nevada, has been approved to receive Nevada tax abatements worth $8.5 million. And the parent company has applied for a grant through the Department of Energy, including money that Biden made available via the Defense Production Act.

But there is no promise from recipients of tax breaks and grants that the end product will benefit the U.S. In a statement to RCI, Lithium Americas’ CEO Jonathan Evans downplayed the company’s China connection and skirted the question of whether the mined lithium will go to U.S. partners for processing.

“While Lithium Americas is partnered with Ganfeng Lithium at Cauchari Olaroz in Argentina, [Lithium Americas] owns 100% of Thacker Pass and has 100% of the offtake uncommitted,” Evans said in the statement. “We remain devoted to producing a domestic supply of essential lithium from our Thacker Pass project focused on selling to U.S. focused customers to strengthen the domestic battery supply chain.”

Daniel Simmons, a former assistant secretary who focused on renewables at the Energy Department during the Trump administration, said: “Every mining company that I have talked to wants to see the lithium they produce processed and turned into batteries in the United States. But if there aren’t enough facilities here in the United States, the Chinese will likely process it and turn it into batteries.”

The U.S.’ share of worldwide production has dropped from 27% in 1996 to 1% in 2020 while other countries have increased their mining of lithium since the mid-1990s, when the mineral was used primarily for construction materials, glass, and strengthening aluminum and magnesium.

The growth in worldwide lithium production coincides with the increase in production of electric vehicles. In 2015, less than 30% of lithium demand was for batteries, according to a report from McKinsey & Company, a consultancy. By 2030, McKinsey projects, 95% of produced lithium will be for batteries.

The U.S. last year produced 2,500 tons of lithium – a far cry from the 80,000 tons anticipated at Thacker Pass – and it exported 1,900 of those tons.

The destination of lithium exported last year by the U.S. has not yet been compiled and 2020’s numbers are skewed by the COVID-19 pandemic. In 2019 – predating the Biden renewable goals – Germany and Japan were the largest recipients of U.S.-mined lithium. Little U.S. lithium went to China in 2020, according to data from the U.S. Geological Survey.

Despite the high strategic priority placed on lithium by the Biden administration, Beijing’s continued push for mineral dominance in the world means that “China will continue to dominate lithium chemical production for the foreseeable future,” according to a projection from Benchmark Mineral Intelligence, a London-based price-reporting agency.

Reliance on Chinese processing of lithium would again put the Biden administration in the politically uncomfortable position of overlooking humanitarian abuses and trade violations by China.

Forced labor has been found in so-called green industries in the Chinese region of Xinjiang, a region home to solar panel manufacturing and some of the country’s major lithium processing plants.

Last week, seven Democratic lawmakers sent a letter to Homeland Security Secretary Alejandro Mayorkas asking why three large Chinese solar firms were left off a list of companies whose products are banned over violations of forced labor rules. Under the Uighur Forced Labor Prevention Act that took effect on June 21, all goods manufactured in Xinjiang are presumed to have been made with forced labor and should be blocked from entry into the United States.

In another recent instance irritating environmental and human rights advocates who are usually in Biden’s camp, the President last week fist-bumped Saudi Crown Prince Mohammed bin Salman, tied to the 2018 murder of journalist Jamal Khashoggi, while on a visit to coax greater oil production from the kingdom and stem soaring U.S. gas prices at the pump. At home, the climate change-focused administration has imposed or proposed policies intended to hinder fossil fuel producers.

U.S. reliance on foreign interests for usable lithium, as well as for solar panels, echoes the situation in Europe, where several countries looked to Russian energy sources over the years before Vladimir Putin’s invasion of Ukraine. That led Germany and Italy to recently announce plans to revamp coal use to supply their energy needs.

There are other ramifications to Biden’s willingness to cut against the traditional Democratic Party grain in energy policy. Mining and solar plant development are disrupting federal lands claimed by Native American tribes as culturally significant. And the Reno-Sparks Indian Colony and the Oregon-based Burns Paiute Tribe have sued the U.S. Bureau of Land Management to halt the Thacker Pass project. They claim the area is a religious and cultural outpost. Lithium Americas had been in talks with the land bureau to build a mine on the land since at least 2017, according to a RealClearInvestigations review of court filings.

Native American communities lean to Democrats and in 2020 gave Biden an estimated 60% percent of their vote, but that support is now counterbalanced by the National Mining Association, a longtime coal-mining advocacy group, which has backed off its favoritism of Republican candidates.

The mining association’s political action committee has for the past decade donated to Republican candidates at a 9-1 pace over Democrats, but this year the ratio dropped to 3-1 as mining companies have warmed to the administration’s move away from coal and into lithium.

Rich Nolan, president of the mining association, did not respond to an interview request.

Gary McKinney, a spokesman for the People of Red Mountain, a Native American group challenging the Thacker Pass mine, sees a familiar ulterior motive at play. “You can’t fix the climate crisis through dirty mining,” he said. “This is all about money, not the environment.”

Image via Mining.com. Article cross-posted from Real Clear Investigations.