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SPRINGFIELD/WASHINGTON (Illinois News Network) — Congressional Democrats want a Federal bailout of private sector pensions. An expert thinks that states like Illinois, with hundreds of billions of dollars in public pension debt, would try to be next in line, making the effort unfeasible.
U.S. Sen. Sherrod Brown of Ohio is introducing legislation that would allow underfunded private pension systems to borrow from the Federal treasury, with no interest, in order to shore up their members’ retirement fund. The legislation, which he says will be filed soon, would also place restrictions on the pension funds to ensure they cannot make risky investments. How this would be enforceable is unclear.
The Democrat told a group of Teamsters that their pensions deserve to be protected.
“We’re not going to give up on the people who have earned the pensions, we’re not going to give up on their families,” he said. “This restores these pensions so these workers will be able to know that the pensions they earned will be there for them.”
Mark Glennon, founder of Illinois-based financial watchdog Wirepoints, thinks the effort would likely be popular with pro-union Democrats but ultimately infeasible. The subsequent calls for public sector bailouts would likely foil the effort since not even the federal government could spend that much.
“I just cannot see Congress willing to get onto what they’ll conclude is a very slippery slope of which pensions they’ll bail out and which they won’t,” Glennon said. “Congress simply doesn’t have the money to tackle a problem this large.”
Glennon says the best route Congress could take to handle states’ public pension mess is to allow for debt restructuring through bankruptcy.
One of the largest private sector pension funds in the world, as ranked by financial firm Willis Towers Watson, is Illinois-based Boeing. It’s valued at $107 billion.
In a report, Willis Towers Watson show that private sector pensions are suffering from many of the same ills that plague Illinois’ public sector pension plans. Years of employer underfunding have many of the plans’ members worried about future solvency. Like Illinois’ plans, the private sector pensions were forced to add more debt to their ledgers due to updated lifespans of current and future retirees. The longer they live in retirement, the more money the fund will have to set aside to honor their defined benefits contract.
Brown admitted that his legislation has yet to bring on a Republican sponsor in Congress, although he says several other Democratic congressmen on board.
Written by Cole Lauterbach. Lauterbach reports on Illinois government and statewide issues for INN. Lauterbach has managed and produced shows for news/talk radio stations in both Bloomington/Normal and Peoria and created award-winning programs for Comcast SportsNet Chicago.
The Center Square -- formerly known as Watchdog.org and the Illinois News Network -- and their reporters represent 18 states across the United States as the taxpayers' watchdog, exposing the way government really works.
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Written by: The Center Square
Boeing Congress Democrats Mark Glennon Ohio public pensions Republican Sen. Sherrod Brown Sherrod Brown Teamsters Willis Towers Watson Wirepoints
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