A crisis years in the making is about to hit retired coal miners and truckers first.
FAIRMONT, W.V. ― Joe Brown worked for 33 years as a roof bolter at the Federal #2 Mine in Marion County. Installing roof supports is one of the most hazardous jobs in coal mining, essential to the safety of all the other miners. Even though Brown’s lanky 6-foot-3 frame made bolting easier for him than others, he’s had four surgeries ― two on his back, two on his knees ― as a result of his decades at the mine.
But the pension plan through the United Mine Workers of America that Brown and 86,000 other retirees rely on is on track to be insolvent in about three years, which could result in deep cuts to once-guaranteed monthly payments. A growing number of plans are in similarly bad shape. If nothing is done, the coming rash of insolvencies could torpedo part of the Pension Benefit Guaranty Corporation, or PBGC, the government-run corporation that insures defined-benefit pensions.
The only real options for policymakers are to increase contributions by employers, shave benefits for retirees, or provide plans with government aid, such as federally backed loans ― an idea that has already drawn “bailout” criticisms from conservatives. The most likely course is a combination of all of the above.
The vastly smaller workforce has left the miners’ pension plan with way more money going out the door than coming in. According to the union, there are about 12 retired miners collecting pensions for every active miner working in the plan ― a startling, and unsustainable, ratio. The trucking industry hasn’t disappeared the way coal has. In fact, trucking companies are growing in a strong economy and are looking for more drivers. What’s changed is how few of them are union shops. Deregulation of the industry starting in 1980 opened the door to smaller, non-union operators, dramatically shrinking the Teamsters’ footprint over the years. As a result, a plan that was underfunded even in the good days has deteriorated even more.
“A lot of it falls on the downturn of the coal market. But a lot of it falls on the bankruptcy courts, allowing these companies to walk away from their obligations,” said Merriman, whose mine changed corporate hands multiple times and is now out of operation. “A company files for bankruptcy, we are the last in line to get our money.”
“These are people who worked physical jobs and the benefits they’re getting aren’t something you can grow fat on,” said Jean Pierre-Aubry, a researcher at the Center for Retirement Research. “This is minimal support for people who helped build the nation.” But the cuts alone won’t necessarily stave off insolvency for individual plans or the PBGC itself. Policymakers have toyed with other methods of stabilizing them, such as requiring higher contributions from employers or further raising the premium rates they pay to the PBGC. But they fear that doing so could spook more employers out of the plans, further burdening the remaining pool of contributors.
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