Comstock's magazine 1119 - November 2019 | Page 62

n FINANCE
TAKING BACK (SOME) CONTROL
Pension plans that are struggling but haven’t yet failed are
taking steps that squeeze retirees. More pensioners are facing
recoupment claims than in the past, says Jennifer Anders-Ga-
ble, managing attorney at the Western States Pension Assis-
tance Project in Sacramento. In those cases, the plan claims a
pensioner has been overpaid for months or years, sometimes
by tens of thousands of dollars, and wants the money back.
Recoupment claims are “98 percent of the time” the plan’s
fault, says Anders-Gable. Spousal rights cases — in which the
pensioner dies and the plan claims it doesn’t owe the surviv-
ing spouse what the spouse believes they’re entitled to — also
have grown dramatically in the past two years, she says.
Current workers are also being asked to make bigger con-
tributions from their paychecks. For CalPERS employees in
two unions, for example, contributions have gone from 5.5
percent of salary in 2013 to 8.5 percent today, says Ted Top-
pin, chair of Californians for Retirement Security, which rep-
resents 1.6 million public employees and retirees. Teachers
have faced similar increases.
All that means a pensioner’s fate depends on where they
worked. Those in private company plans will more likely
fare best. Not only are those plans better funded, but the
Pension Benefit Guaranty Corporation program that in-
sures those pensions are adequately funded: With a few ex-
ceptions, the PBGC guarantees up to about $65,000 a year.
Those with state pensions also are safe as long as the “Cal-
ifornia Rule,” which so far has been upheld in state court
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rulings, stays in place. It treats pensions as contracts that
are sacrosanct and requires any benefit cuts to be offset
by a new benefit of equal or greater value, though at least
one case pending before the California Supreme Court will
again test the rule.
As for the precarious multiemployer plans, their future
is mostly in the hands of Congress. There’s no consensus on
how to rescue them. A bill that passed the U.S. House in July,
largely with Democratic votes, would provide low-interest,
government-guaranteed 30-year loans designed to let them
get back on their feet. But its prospects for passage in the
Republican-controlled Senate appear dim. At the same
time, the PBGC program that partially insures beneficia-
ries under multiemployer plans is near collapse. (A separate
PBGC program covers single-employer plans.)
To take back some control, workers and pensioners can
first find out about the health of their plan. Roberts says
the best source is the annual funding notice that plans
must send to participants by 120 days after the close of the
plan year. It gives a three-year snapshot that shows, among
other details, the funded ratio — which ideally is trending
up and is higher than 80 percent — and the maximum the
PBGC will pay out in the event the plan sponsor declares
bankruptcy. For more detail, including whether the plan is
considered at risk, participants can get the plan’s annual
report, known as Form 5500, from the U.S. Department of
Labor’s website, says Petersen.
In an uncertain era for pensions, Anders-Gable says
there are a few basics. Keep all your pension documents for-