President Joe Biden on Wednesday announced an update to a program funded by last year’s COVID-19 relief law that he said is expected to prevent pension cuts for two to three million workers.
Biden announced a final version of the Special Financial Assistance Program, which will help keep pension plans above water for nearly 30 years or longer, preventing cuts from plans that were at risk of drowning in debts. It will provide nearly $97 billion to dozens of eligible plans, according to the Pension Benefit Guaranty Corporation, the agency that oversees the SFA Program.
“People around the country wake up every day wondering whether they're saved enough to provide for themselves and their families before they’ve stopped working,” the president told union workers and retirees gathered at a high school in Cleveland.
“But the reality is, for so many people, the goalposts keep moving,” he added.
The financial assistance program first began accepting applications with an interim rule last July, but Biden announced an updated version on Wednesday. It is designed to aid multiemployer pension plans, which are plans agreed to by a union and multiple employers, usually within the same industry.
More than 200 multiemployer plans were on pace to become insolvent in the coming years, according to the White House, impacting two to three million workers. More than 80,000 workers and retirees had already had their benefits cut under a 2014 law that allowed pension plans trim plans in order to remain financially secure.
The new assistance program will aid those workers retroactively and boost all plans at risk, in order to keep them financially sound through 2051 or longer.
“With today's actions, millions of workers will have the dignified retirement they earned and they deserve,” Biden said.
Secretary of Labor Marty Walsh, whose department oversees the updated program, joined the president in Ohio.
Multiemployer plans are insured by the PBGC, which will also get a boost through the SFA program. Originally expected to be underwater by 2026, new funding will keep its insurance program afloat until 2055.
Biden on Wednesday criticized Republicans who have said investing taxpayer money in these pension plans was a waste, specifically calling out the lead Republican on the House Education and Labor Committee, Virginia Foxx of North Carolina, who said the investment was like “pouring money down a rat hole.”
Foxx and Rick Allen of Georgia — the top Republican on the Health, Employment, Labor, and Pensions Subcommittee — released a statement Wednesday once again criticizing the financial assistance program.
They called for “long-term structural reforms to the management of multiemployer pension plans.”
“Democrats instead chose a deeply flawed bailout of a select group of privately managed retirement plans,” they said in the statement.
“These pension plans failed to protect workers and retirees, and their trustees refused to make the changes necessary to make good on their promises,” Foxx and Allen added. “[The American Rescue Plan] creates perverse incentives for further mismanagement and underfunding and leaves the taxpayer holding the bag.”