By Robert Romano 114 out of the nation’s 1,400 multi-employer pension plans covering 1.3 million workers are underfunded to the tune of $36.4 billion, with plans expected to start going insolvent in the next 5 years or so, an Aug. 2017 analysis by Cheiron has found. This is the end result of unsustainable collective bargaining arrangements between unions and employer, creating defined benefit pension plans that promise retirements far in excess of what could be justified by monthly contributions and market returns. If these had been investment products, surely the Securities and Exchange Commission might have investigated for fraud. But because they were collectively bargained pensions, a different set of fiduciary rules apply. Other factors leading to the shortfall include unfavorable demographics with fewer new workers joining the plan as the ratio of workers to retirees continues to drop. Unfortunately for pensioners, that will mean a huge cut in retirement benefits should the plans go belly up. Even with federally backed Pension Benefit Guaranty Corporation (PBGC), in the event of failure, only a fraction of benefits will be paid out. According to the PBGC, the payouts under existing law can be “summarized as a maximum guarantee amount of $12,870 per year (payments…
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