More than half of the participants in multiemployer plans that are expected to need help from the Pension Benefit Guaranty Corp. will see their pensions cut, according to a study released by the agency Wednesday.

That’s a considerably higher figure than the roughly 20 percent of participants in such plans that have seen cuts in benefits after becoming insolvent.

The study examined 109 plans, covering 152,000 participants, in plans that are either already insolvent and receiving PBGC assistance, or plans that are expected to need financial assistance in the future.

There are 64 terminated plans that are expected to run out of money within the next 10 years, according to the PBGC. The study didn’t look at those.

The projected increase in benefit reductions is the result of richer benefits being promised to workers in plans yet to receive assistance, compared to the benefits in plans PBGC now helps support.

As benefit accrual rates increase, fewer promised benefits can be covered.

Benefits paid in the multiemployer program are less than what is covered in the single-employer program.

The PBGC does not fully assume responsibility for multiemployer plans when they become insolvent, as it does for those in its single-employer program. Rather, it pays financial assistance to the plans, either in the form of periodic payments, or one lump-sum.

The overall guaranteed payment for a worker with 30 years of service is $12,870, much less than in the single-employer program, where the maximum guaranty is more than $60,000.

For the half of the workers in plans expected to need assistance, 46 percent of the expected cuts will be between 10 percent and 20 percent of promised pensions.

In the single-employer plans PBGC has taken over, only 16 percent of workers have experienced a cut in their promised pension.

PBGC’s 2014 annual report showed a $40 billion deficit in its multiemployer program.

The study of projected benefit reductions was conducted before the passage of the Multiemployer Pension Reform Act in December, which gives the worst funded plans the power to cut promised benefits.

But even accounting for the potential reduction in liabilities the law creates, the PBGC still projects its multiemployer fund to run out of money in the coming decade.

Instant Insights /

More benefit cuts expected in ailing multiemployer plans

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