The Biden administration has unveiled details of the final rules surrounding the federal bailout of hundreds of union pension plans passed as part of Democrats’ $1.9 trillion American Rescue Plan Act (ARPA) coronavirus relief package last year.
ARPA’s Special Financial Assistance Program injects $90 billion of taxpayer funds into the federal government’s Pension Benefit Guaranty Corporation, which insures private-sector pensions. Prior to the passage of the purported COVID package, the PBGC was set to become insolvent in 2026. The White House claims the plan will prevent 2 to 3 million workers from having their pension payments cut in retirement, by saving upwards of 200 private-sector union plans that had been in danger of insolvency.
But some pension experts are skeptical of the plan, and are raising concerns. One sticking point is that the rules have changed to allow one-third of the taxpayer-provided funds to be invested in stocks, which, according to The Wall Street Journal, “overrides a previous restriction that generally limited them to investment-grade bonds.”
Derek Kreifels, CEO of the State Financial Officers Foundation, noted that the pension funds were in trouble long before the pandemic, asserting the move was political and a gamble for taxpayers and union workers alike. “The White House is going to allow the same pension fund managers – who have been historically awful at their jobs – the ability to make riskier investments with not only hardworking American’s pensions, but also the nearly $100 billion worth of taxpayer dollars delivered to unions under the guise of COVID relief,” Kreifels told FOX Business.