Those Pension Cuts and What You Need to Know

Congress recently carved a hole in a 40-year-old pension law that has prevented employers from cutting benefits earned by those already retired. This change applies to people covered under multiemployer plans that are in critical financial shape.

Cutting pension benefitsHere’s what you need to know:

What is a multiemployer plan? This is a pension covering workers and retirees from more than one employer in the same or related industries, such as trucking or construction. (Most of them were established under collective bargaining between a union and the employers.) There are about 1,400 multiemployer plans with 10.4 million participants. Most workers with traditional pensions are in a single-employer plan, meaning it covers workers from only one employer.

>> Discussion: Forced into early retirement, now what?

Why are lawmakers doing this? The federal Pension Benefit Guaranty Corp., which insures these pensions, says that some 10 percent of multiemployer plans — covering about 1.5 million people — are in such financial trouble that they are likely to become insolvent. The PBGC estimated that its fund insuring multiemployer plans will likely run out of money in eight to 10 years unless changes are made. Some lawmakers argued that these distressed plans need the ability to cut retirees’ benefits so pensions can survive longer.

AARP and other consumer advocates argue that these pensions aren’t in immediate danger of insolvency so there is no need to rush this drastic measure without considering alternatives, such as scaling back on optional benefits in a plan or providing the PBGC with greater funds and the authority to intervene earlier. Advocates also worry that this move by lawmakers might someday open the door to similar pension cuts in other plans.

How do I know if my pension is in financial trouble? Under a 2006 pension law, plans are required to notify participants if they are significantly underfunded. The U.S. Department of Labor also posts a list online of plans whose status is considered “critical” or “endangered.”

Will everyone in a distressed plan experience cuts? It’s up to plan trustees to decide how much to cut benefits, though the legislation offers certain restrictions. For instance, benefits cannot be cut for retirees age 80 and older or those receiving a disability pension. And those under age 75 would see bigger cuts than retirees ages 75 to 79, whose benefits could be slashed but not as much.

>> Get discounts on financial services with your AARP Member Advantages.

How big are the cuts? Some retirees could see their benefits cut by more than 60 percent. The Pension Rights Center, an advocacy group, provides an online calculator to figure any potential benefit loss under the legislation for those under age 75.

Do retirees or workers get any say in these cuts? Participants will get to vote on any proposed pension cuts. Yet as the Pension Rights Center points out, this right is “illusory.” A majority of all participants — all employees and retirees, not just those voting — must reject the cuts, the group says. And ballots can be sent via email, a hurdle for those without Internet access. Yet even if participants overwhelmingly reject cuts, their vote can be simply set aside if the troubled plan may jeopardize the financial health of the PBGC, the group says.

When will this take effect? The pension provisions take effect beginning in 2015.

Photo: Fatido/iStock

Staying Sharp: Keep Your Brain Healthy





Also of Interest

See the AARP home page for deals, savings tips, trivia and more.

vacation17 5pts

I was 100% vested and when my job was eliminated the company cut my pension. I do not think this is right that a company can do this.

rp4527 5pts

If a pension "fund" is in trouble there should be other options than to cut benefits..... why does the government opt to "bail them out" if the problem is not due to negligence.

flybum 5pts

The government in this country is losing all credibility.  Pensions are EARNED and belong to the person who earned them.  Neither the government nor the corporations have any right to take this money away.  A person who has earned a pension should have the right to sue the corporation and the Pension Benefit Guaranty Corp. if they fail to give the pensioner what is rightfully his.  No law should undermine this credibility.  Why is the AARP standing back and letting this happen?  These people are just trying to make even more profits by reneging on their obligations.  I am an Independent and the Republicans will never get my vote again if this is allowed to happen.  

davecreps 5pts

The making of the multiemployer plans was brought about by an act of Congress after the ERISA law was enacted and has brought about an unrealistic situation for a small employer "caught" within the multiemployer plan that is dominated by a few large employers that have now either gone out of business or have left the plan for a single-employer plan.  

This legislation is a way for these small employers to stay in business without facing severe withdrawal liabilities as the "last-man-standing" situation that is developing as these plans face underfunding.  

It is a situation that Congress created and a situation that they now have to "fix". 

myexper 5pts

If you are upset about the pension cuts, brace yourself for more cuts. This time to your Social Security benefits, courtesy of the newly installed Republican controlled Congress. Please read the excerpt below from "Social Security Works" on Tuesday, January 6, 2015 5:30 PM, " by Alex Lawson, Executive Director of  "Social Security Works".

 "We knew that the new Republican Congress wanted to dismantle our Social Security system brick by brick—but we didn’t expect them to do it on their first day!

They’ve taken what should be a dry, mundane exercise – the adoption of new rules by the newly convening House of Representatives – and turned it into a stealth attack on our Social Security system. This rule is nothing more than an attempt to divide people who believe in Social Security. ..............."

" ..............The new Republican rule prevents a simple technical amendment, known as “reallocation” – something that has been done many times over the history of Social Security, something that few persons other than actuaries and other Social Security experts ever know about – from being enacted in the next two years to ensure that all Social Security benefits continue to be paid in full and on time.

The new rule mandates a 20% cut in benefits to disabled workers unless legislation is passed that either cuts workers’ Social Security retirement benefits or raises taxes."

cg7681827 5pts

What can we do?  What is AARP and Pension Rights doing? 

cg7681827 5pts

What went through Congress and the way it went through is horrible.  I feel that I was sold out by my Democratic Party, the President, the union, etc. 

LarnLinK 5pts

I know for a fact that the Pensions I am drawing are both very sound and therefore I have no concern about their solvency over the long haul.  I have NO FAITH in Congress and therefore am concerned as to whether this legislation can hurt my pensions.  The article does not appear to indicate whether Congress can meddle in the Pensions of solvent sources.  From the comments below, I am not the only one concerned about a solvent pension being forced to help the more insolvent.  What is the real story?? 

WHO IN AARP management is following this new twist?

johnandrose330 5pts

There they go again!  Slash benefits from the bottom of the food chain while the human waste at the top flourishes.  They won't touch benefits for those at age 80.....and they shouldn't!!!  But I suspect there are many more retirees under the age of 80 who will be hurt by this sneaky budget add on.  They need the money to bail out the banks again!!!!!  Congress, bought and paid for by the money handlers!!!!!

jh3092 5pts

And this is why nobody in their right mind will EVER vote for a Republican again......

AndytheActuary 5pts

Rpsld55 makes a valid point about veto. However, unfortunately, in the last 40 years, there have only been two Congressional acts that focused principally on pensions. Most pension legislation, such as the recent changes, are incorporated with numerous non-pension provisions. Ostensibly, such laws are enacted for the common good. This means winners and losers. The line-item veto enacted under the Clinton administration would have worked to resolve this. Unfortunately, it was ruled unconstitutional and repealed. The recent changes were tied to spending. If the President vetoes, the government shuts down.

age6549 5pts

Since seniors provided the critical votes that put most of this congress in place in 2010 2012 and 2014 they are getting exactly what they deserve.

There is a price to be paid for your greed selfishness and racism and this is just the beginning.

I just wish I was not part of the worst generation.

fw1855 5pts

Any cuts to my pension allotment would severly hurt me finanically. I am supporting myself living month to month.  I am living montth to month without being able to safe. I cannot live on any reductoin in my pension. I worked and earned very penny of my monthly pension during the 35 years I worrked as a engineer with the US Army Corps of Engineers. The President and the People in Congress are at fault for this current national deficient not the working indiviluals that worked all the working lives. It is way past time for President and everyone in Congress to work together for the good of this GREAT NATION that they were elected to prepresent; not them selves!!!!!!!!!!!    

MR44Goucher 5pts

My pension fund has been in difficulty ever since the Pension Protection Act came down the pipe. It seems that all those DC conservative politicians think people are not entitled after 50 or 60 years of work to settle in and enjoy the pleasures life has to offer.  

This is because their big donors are billionaire business owners (capitalists) who take their last breath while on the job - they have no other life.  Everything in this world is about change and they haven't the ability to LET GO and let the change happen.  

Get money out of politics and see what happens afterwards.  Even the good politicians have to spend more than half their days begging and shaking the cup, otherwise they lose because they can't buy TV ads.  

P.S. - I haven't seen many print ads in the newspapers over the past 10 years; have you?  If it's not in print, they can tap dance their way around a TV 'sound bite.' 

jv897 5pts

Any cuts to my pension would be devastating- I would not be able to live- I am divorced and my ex gets half my pension as it is. Can't live on any reduction in pension. What is happening here in America?

I can't believe that this can be allowed!

mvaluri 5pts

These pension funds are in trouble? and yet hedge funds and other wall street funds are doing great. I don't understand this.  Maybe instead of CUTTING benefits to the retirees, they should get decent financial managers to head up the investment of these pension funds? Ya think?

de8960 5pts

Enough people have bought into political parties that the crooks stay in office no mater what they do.  When money is involved the rich get it the poor get it taken away.  Politicians know the majority are too dumb to realize they can vote the bums out of office.  Vote for the independents and unknown and throw them out too if they do not represent the people and not the elite.

rpzld55 5pts

Eileen, you mention Congress but not the president with respect to this action.  Why didn't Barack veto this?  Did Congress have enough votes to override?  Did BO get something else he wanted more and this was the tradeoff?  Does he think driverless vehicles will eliminate the need for truckers and he wants to influence the populace away from this field as a career choice?

Employees need to get all their compensation up front (vacations, sick pay, retirement, health care) in order to help avoid these power plays by employers.  Then they need to have the discipline to set a portion of the loot aside for these adverse contingencies.

garycampbell46 5pts

Politicians are just like cancer, if there's a way to reach into the average man's pockets, they'll figure out some way to squeeze out another dime.  A little bit at a time, so it doesn't hurt so bad, but added up; it's a killer!

rewalt 5pts

PBGC was set up to guarantee private pension plans, when the company is unable to pay, up to a limit (full disclosure: I get $151.93 a month from PBGC). As the article points out, these cahnges involve only multi-employer funds, which should be safer. Which is more likely to fail one company in an industry, or all the companies in the industry? Also, as the article points out, most of the plans are negotiated by unions. The unions should be able to use the union dues to hire financial experts to help them see well in advance if companies are approaching financial difficulties.

dh4444532 5pts

Yes, Congress is overseeing Pension funds, but what they plan to do to Social Security fund is not mentioned. Yes they plan to take funds from the federal Healthcare fund ( Social Security) to fund the military!!!)

ph8322 5pts

@cg7681827  I  don't know what we can do. I wrote to Sen. and Rep  and even Obama...all I know

No response, of course.

cg7681827 5pts

We can't just sit by and let this happen.  Retirees need help. Many of this group that are affected are also Vietnam Veterans.  Come on!

ph8322 5pts

@LarnLinK  I receive, from Carpenters my late husbands newsletters.  Articles have been written last few months about this.  It states  "We believe 'defined benefits' means just what it says:  Specified pension benefits that will not be reduced and will be there as promised,"  Jones said.  "Current law includes an anti-cutback provision that says once someone retires his or her pension benefit cannot be reduced.  If Congress changes the law, that guarantee will no longer exist.  (Not sure who this 'Jones person is.  So I guess we up the  ------creek without a paddle. 

And it goes on to say, though,  UPS withdrew from the Teamsters Central States multi-employer plan-the most-troubled plan-would get "a #2 Billion bailout"  Go figure. 

cg7681827 5pts

@jh3092  Many of my family who are auto workers, corrections officers and IRS call center associates are Republicans.  I cannot make them understand that their party is not protecting them.

myexper 5pts


Your comment places the blame squarely where it belongs ..... on Republicans.

mikeclaggett 5pts

@jh3092  It is juvenile to play the blame game, since a GOP House, a Democrat Senate, and a Democrat President approved the legislation. Let the blame game be played by children, not mature adults.

Now, let's look for solutions!

The company I work for has a profit-sharing plan that was originally run by trustees. The trustees usually invested conservatively, using bonds and collateralized mortgages obligations(CMO's). In 2008, they expanded to include stocks to get more "bang-for-their-buck", but alas, the Panic of 2008 struck, and they " got egg on their face". The company changed course, consolidating the profit-sharing program and the 401-k program into one, with each employee controlling their own funds, not trustees. If an employee wants to invest in all or some stocks, or all or some bonds, or a combination of the two, it's THEIR decision, not someone else's. We are VERY happy with our retirement fund set-up, since we make our own decisions- and we live with our decisions. There is also helpful advice with how to invest for maximum benefit to us.

I suggest the following: give every future pensioner, from Social Security to company pensioners to government worker pensioners, their rightful share of their pension, for them to control. If you are conservative, invest in bonds or short term obligations. If willing to take on some risk, invest in dividend-paying stocks. If risk doesn't bother you, and you want to go for the big returns, go into aggressive stocks. Or, do as I do, mix it up, but not invest in any 1 strategy or kind of investment.

Some years ago, Chile gave their workers a choice- choose a government retirement pension with a set benefit, or take the retirement money taken out of their paycheck and invest in stocks/bonds/bank savings/etc.  The result: a booming economy and stock market, with massive investment in Chilean businesses, and one of the fastest growing economies in Latin America. All made possible by workers who became investors in their nation's businesses and industries. The Chileans found the secret to prosperity, being an investor in businesses they believed in, and prospering WITH them. Chilean businesses found the money they needed to grow and expand from fellow citizens and foreigners that believed in them.

Let's find  sound solutions that work  and leave the petty politics to immature children.

mirador1014 5pts

@age6549 With an attitude like that, we wish you weren't part of this generation, either. (If you actually are, that is.) Calling today's seniors the "worst" generation is ludicrous. If you actually think that way it must stink to be you.

And I'd say you're painting the senior electorate with a pretty wide brush - accusing them all of somehow earning their own misfortune. A great number of us have been progressive since the '60s. If you're part of this generation you should know that. Yet despite our votes we suffer the fallout of voters older AND younger who've been misinformed and misdirected enough to unwittingly vote against their own best interests.

I suggest you peddle your "greed selfishness and racism" kite elsewhere. It doesn't fly here.

mikeclaggett 5pts

@MR44Goucher  According to the PBBGC web-site, many of the pensions are funded by industries that have fallen on hard times(eg- the coal mining industry). That is not caused by conservative politicians, but by businesses, unions, and the economic winds blowing through our country.

ph8322 5pts

@jv897 I just wrote a letter to Obama,  first time for me in my 65 years.  Doubt if will do any good, but is all I can think of doing...wrote my Senator and Rep.   No response,  really didn't expect one.  Maybe because I ended with "I will have to think long and hard next election day"  The rest of the letter was very cordial. 

mvaluri 5pts

@rewalt this is what I say, rewalt.  It is the responsiblity of the financial managers to see that the funds are invested properly.  I think there are shenanigans involved, and the pension funds are not handled properly. 

ss49598324 5pts

@dh4444532  That's outrageous can you show me your references for my response to my congressman. Thanks for the tip. SS

myexper 5pts


You ask "what can we do?"  ....... Stop voting Republican!

And AARP will do nothing as blaming the people responsible for the pension cuts (Republicans) would affect the agenda of AARP to remain politically neutral. And AARP's political neutrality is above protecting seniors. Please see my post above and note how the organization "Social Security Works" squarely places the blame on Republicans for cuts to Social Security benefits, educating seniors instead of cowering down to political neutrality.

myexper 5pts


Understanding the politics behind certain actions is most mature and responsible. Knowing that Republicans are behind all the demands to cut seniors' hard earned and promised benefits is most important and hardly "petty".

myexper 5pts


Spreading the blame to the Democrat Senate and Democrat President is a cop- out as the pension cuts were rolled into a must-pass annual funding bill when our country was facing a government shutdown.

If Republicans didn't demand the pension cuts in the first place, the cuts would not be included as a compromised item.

josephroger1 5pts

@mirador1014 @age6549 I don't think jr3092 was referring to all us older folks.I think He or She was referring to those who didn't vote  and those older T party people who were convinced that the Democrats would rob them of there medical benefits with Obama care.Well the first thing,even before the ink was dry they put a crack in the countries pensioners jr3092 those who voted these people in should be very happy.But I didn't vote them in and those who voted Democratic  are very unhappy.

StuKin 5pts

@mirador1014 @age6549 It appears to me that you might have misinterpreted what 6547 meant.  It amazes me how many seniors consistently vote against their own self-interests and then complain bitterly about the results, but I doubt that he or she meant that ALL seniors are responsible for the actions of the few.  There's no question that many seniors are greedy, selfish and racist, but I like to believe they are a small minority.  Most seniors have been around long enough to have gotten beyond those attitudes, but sadly there will always be those who will remain hopelessly unenlightened. 

burbankd1951 5pts

@mirador1014 @age6549

I absolutly agree with you! @age6549 has no business labeling any of us seniors nor should he/she be allowed that sort of rant in this forum.

ph8322 5pts

@cg7681827 @ph8322  Got a response from Senator(Republican)  just same old same old. Something about wasn't  the best bill, but has to be cuts somewhere.   And that not everyone will be happy. 

Went on to say different things he had voted for and against. 

Really not addressing our main issue about us who are on pensions. 

Kind of makes you want to give up...but think I will try again,  this time with the added Social Security mess....

This is getting so bad.  

myexper 5pts

@kimster @myexper @cg7681827 

While (finally) publishing the attack, AARP will not simply state that Republicans want to cut seniors' Social Security benefits. All Democrats voted against the cuts to Social Security. This Social Security cut is pure Republican. Thus AARP should have squarely blamed Congressional Republicans but failed to do so.

mikeclaggett 5pts

@myexper @mikeclaggett  Since the PBGC is underfunded and headed to serious financial troubles(meaning benefit cuts caused by more contributing employers are switching out of Defined Benefit Pension (DBP) to 401-k's because of funding problems), what do YOU propose to solve this dilemma?  Force companies to provide DBP? That's socialism/fascism. Make the companies pay more to the PBGC? Possible, however some companies will just do like many others- switch to 401-k's/IRA's/ROTH's, etc. So, what is YOUR IDEAS of possible solutions? Come, let us reason together!

Sticking one's head in the sand is not a solution. For the sake of our seniors and future retirees, we need solutions that work. The old way of doing things will not always work today.

I look forward to your reply of solutions. Perhaps together it will be what our nation needs to solve the dilemma.

myexper 5pts


The solution you praise does absolutely NOTHING to address the present situation. Seniors could see their pensions cut by over 60%, the Republican solution!!  I don't consider this any solution. Please re-read the article and understand what is happening NOW and how the retirements of millions of seniors are set up for destruction.

ph8322 5pts

@josephroger1 @mirador1014 @age6549 I don't think it matters anymore who votes for who...The politicians all say pretty things in their campaigns while running.  Once voted in everything changes. 

They all have let us down, big time. 

myexper 5pts


The solutions you propose are, as you state, "future". So, "getting one's head of the sand", please realize that the problem in question is NOW! Your solutions do absolutely nothing for the seniors who will NOW face enormous pension cuts, some over 60%!  Please re-read the article, start looking at a clock instead of a calendar and understand the real situation occurring is NOW.And the Republican solution NOW will destroy the retirements of millions of seniors. Instead, if the situation is as dire as Repubs think, how about a bail out of the PBGC, when and if it ever needs it? There was no problem with bailing out Wall Street or allowing Billions of dollars each year in tax loopholes for wealthy oil companies and other Republican interests.

mikeclaggett 5pts

@myexper @wezoom72 Myexper, please read the article again: the article says 8-10 years out . However, some pensions are already in trouble. The PBGC will take care of them for now, but if action is not taken soon to shore up, reform, or change the PBGC, the situation will become  dire. "A prudent man foresees the evil(hard times), and hides himself(prepares himself by wise planning)". GOT ANY SOLUTIONS??? The blame game and sticking one's head in the sand will NOT get the job done. 

myexper 5pts


Please read the article yourself. The problem is NOW .... the problem of having your pension cut and your retirement destroyed NOW even though article says 8-10 years out. And due to this available time, there is no need to cut pensions NOW. And alternatives (SOLUTIONS) were mentioned in the article. Please read the ENTIRE article.

Taking your head out of the sand (as you state), please realize that most pensions are not as great as yours and there is no time for these current retirees to go back to work and start a new retirement plan as wonderful as the one you have.

And refusing to realize WHO it is that wants to destroy your retirement is "wise" and prudent. Refusing to identify those who attack you is "putting your head in the sand."