By Teresa Ghilarducci

Included in the $1.9 trillion stimulus bill signed by President Biden on Thursday is an $86 billion aid package for participants of about 185 to over 300 employer-union pension plans. If aid had not been available more than a million retired retail clerks, candy makers, truck drivers, construction workers and others would have faced severe cuts in their pensions.

These plans are part of a larger system of about 1500 multiemployer pension plans covering about 10 million workers. These plans are union negotiated among many small businesses which are too small to sponsor their own plans. The plans are typically in construction, trucking, coal mines, food stores, and entertainment industries. Former President Ronald Reagan was a member of the Screen Actors Guild multiemployer pension plan.

Joshua Gotbaum, former director between 2010-2014 of the Pension Benefit Guaranty Corporation— the government agency that insures pension funds — wrote last week the aid package was a surprise, but not unprecedented or ill-considered.

In contrast a New York Times NYT +2%  article which contained crucial errors, criticized the package for not solving all the problems of the system.

Let me explain what the aid package does, what would have happened had it not been passed, whose fault was it the pension funds needed aid, and whether there is a precedent for this kind of aid.

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