New Petri Bill Would Fix Pension Injustice
Unequal treatment for pensioners' spouses is the target of a bill introduced today by Congressman Tom Petri (R-WI).
The federal government's Pension Benefit Guaranty Corporation provides pension fund insurance to make sure that most or all of a business' defined benefit pension obligations will be met, even if the company is in financial distress and has to end an underfunded plan. Companies are required to pay a premium to the PBGC in exchange for this coverage.
The agency provides coverage for both single employer plans and multiple employer plans where a group of employers contributes jointly to a plan.
"Unfortunately, while the PBGC generally provides the same benefits for single and multiple employer plans, the pensioners in multiple employer plans are treated unfairly in one respect," said Petri. "It appears to have been a mistake, and it should be corrected."
Specifically, in the multiemployer program, if a covered employee dies prior to retirement, that employee's spouse will receive an annuity only if the employee dies before the PBGC takes over the employer's pension plan. Under the single-employer program, the spouse receives an annuity regardless of whether the PBGC had taken over a company's pension responsibilities at the time when the employee dies.
"Whether or not a surviving spouse receives an annuity depends crucially on a drafting error," Petri said. "The surviving spouse clearly has a reasonable expectation of receiving survivor benefits, as promised by the spouse's employer. It is unjust to leave a widow or widower high and dry due to what appears to be a drafting mistake in a law."