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An Unpalatable Plan to Rescue Failing Pensions

Business and labor ask Congress for power to cut retirees’ benefits
An Unpalatable Plan to Rescue Failing Pensions
Photograph by Evan Sklar/Getty Images

When Hostess Brands went bankrupt in 2012, employees at Ottenberg’s Bakery, a family-owned business near Baltimore, got nervous. They shared a multi-employer pension plan with hundreds of Hostess truck drivers. If Hostess couldn’t meet its obligations, the pension fund could collapse. “If you have all these guys out on retirement and you only have Ottenberg’s paying into it, the math doesn’t add up,” says Gary League, who has delivered Ottenberg bread for almost 30 years. “I was thinking I would have to work forever.” On Feb. 18 he got good news: The Obama administration had stepped in to stabilize the fund by placing the Hostess workers into a federal government plan that picks up the payment of their benefits.

League is one of 10.4 million Americans in multiemployer pension plans, large investment pools once considered low risk because they don’t rely on the fortunes of a single company. Two recessions and an aging workforce have left the plans, which cover unionized truckers, miners, carpenters, retailers, and others, confronting a total shortfall of $400 billion. Dozens of multiemployer plans have failed and the federal government estimates 173 of them will exhaust their assets in the next decade.