Thanks in part to Sen. Elizabeth Warren, the rollback of banking regulations woven into the recently-passed, so-called “crominbus” spending bill generated–understandably–plenty of press coverage. But another provision in the spending package did not get nearly the examination from reporters that it warrants: language that guts one of the fundamental tenets of the Employee Retiree Income Security Act, better known as ERISA. Under ERISA, pensions cannot be cut unless a plan runs out of money, and if that happens, benefits for those already retired are the last to be cut. Here is how The Wall Street Journal‘s John D. McKinnon, whose reporting was more comprehensive than most of what I saw, summarized the relevant language and the change it represents:
A measure included in Congress’s mammoth spending bill permits benefit cuts for retirees in one type of pension plan, a big shift that lawmakers and others believe could set a precedent for other troubled retirement programs.
The legislation is aimed at defusing a potentially explosive problem–the deteriorating condition of what are known as multiemployer plans, jointly run by unions and employers.
The bill cleared by the Senate late Saturday would allow troubled funds to cut benefits for current retirees in some circumstances. That is an exception to a long-standing federal rule against scaling back private-pension benefits.
The 161 pages of legislative language authorizes a plan to cut pensions of some current retirees in order to save some benefits for those in the future if a plan is projected to fail in the next 10 or 20 years. Workers–about one million who are members of multi-employer plans–could find their benefits cut by as much as 60 percent. Taking benefits away from people already relying on them would have been unthinkable 40 years ago when Congress passed ERISA, and could, as the Journal‘s McKinnon noted, “set a precedent” for future benefits cuts, with “lawmakers and experts” agreeing “it could well be the first of many.”
Unfortunately, not many reporters set this measure–to the extent that they paid it more than passing attention–in the wider context of the coming national debate over retirement income. More typical of coverage was this Hill piece which described the pension provision, as it advanced through the House last week, in this bland, innocuous way: “The GOP-dominated [House Rules Committee] voted to insert an amendment into the funding bill…to reform the way companies pay their retirees’ pension funds. It would allow beneficiaries of struggling plans to adjust their benefits in an effort to save struggling funds without a federal bailout.” (The Hill also passed along a comment from Oklahoma Republican Tom Cole calling the “pension deal” a “huge, huge, victory for the American people and the American taxpayer.” Nothing bland about that!) The New York Times used similarly benign shorthand to describe the pension provision– “Allows trustees of certain multiemployer pension plans to cut retirees’ benefits, keeping the plans solvent without a government bailout”– in a bullet-point-style list of “what is in the spending bill.” An Associated Press story on House passage of the spending bill described the pensions provision in passing as one that “sets a new course for selected, highly shaky pension plans.” What about the impact on retirees? Words like “adjust,” “victory” and “new course” hardly capture it.
Reports from NPR’s Morning Edition and The Washington Post were more thorough–the Post in particular–but both fell short in trying to explain an important supposed safeguard for workers and retirees. Morning Edition reporter Jim Zarroli told listeners that “the cuts would have to be approved by the plan’s trustees, which typically include representatives of both companies and labor unions.” Then he allowed George Miller, D-California, to add opaquely “there’s nothing here mandated. They would have to make a decision that they wanted to come together and try to design the best rescue plan they can so their pension plan can survive for a longer period of time.” The Post reported simply that “any benefit cuts would be subject to a vote of plan participants.” That’s not the full story, though. Financial Advisor magazine’s Ted Knutson told readers more. The Pension Benefit Guaranty Corporation (PBGC) would have to approve any plan to cut benefits, but it could be invalidated by a vote of the workers and retirees in a plan–but their decision could then be overruled by a joint action of the PBGC and the Treasury and Labor Departments, Knutson wrote. LA Times economics columnist Michael Hiltzik called the vote ratification process in many cases “a pure sham.” Wrote Hiltzik: “The implications of this wretched bill won’t be fully understood until it can be carefully analyzed and subjected to public debate. The first takes days, and the second won’t happen at all.”
I asked the Pension Rights Center, a long-time Beltway advocacy group, what the real story is here–at least as far as protections. Communications director Nancy Hwa told me the Treasury Department, in consultation with the Labor Department and the PBGC, can override the vote of plan participants. And more than half of all participants must vote to block the cuts. As it is with all legislation, the devil is in the details. It’s just that reporters need to work hard to expose the devils, something not easily done in today’s Washington.
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Trudy Lieberman is a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for CJR's Covering the Health Care Fight. She also blogs for Health News Review and the Center for Health Journalism. Follow her on Twitter @Trudy_Lieberman.