Congressman Cleaver Announces Results of GAO Report on Central States Pension Fund
June 5, 2018
(Washington, D.C.) - Congressman Emanuel Cleaver, II announced the results of a two-year study released yesterday from the U.S. Government Accountability Office (GAO) regarding how the Central States Pension Fund handled thousands of pensions that are facing insolvency.
“What happened to these workers and retirees just isn’t right. Now that we know and understand the results, it is time for Congress to take action. The thousands of hard-working individuals spent their working years putting away money for retirement only to find that money has vanished. Retirees must not give up. This is vital,” said Congressman Cleaver.
Congressman Cleaver, along with other members of the House and Senate, called for an investigation after hundreds of retirees and workers contacted his office regarding the stability of the Central States Pension Fund (CSPF). The GAO, which investigates federal spending and conducts audits, determined that;
• Cumulative contributing factors for CSPF’s critical financial condition include lack of full funding over its history; investment declines as a result of two market downturns; and a steep decline in active contributors from 69 percent of all participants in 1982 to 16 percent in 2016; and United Parcel Service’s withdrawal in 2007, which accounted for a 30 percent loss of active contributors.
• CSPF investment performance and expenses were generally in line with similarly-sized institutional investors with demographically similar (peer) multiemployer pension plans.
• CSPF’s investment fees and other administrative expenses were in line with other large multiemployer plans from 2000 to 2014. Fees as a percentage of assets were about 9 percent lower than the median of large defined benefit multiemployer plans—largely due to a relative reduction in investment fees since 2007.
The full GAO report can be found here.
“I had a gentleman call my office who said, he has never needed to call his Congressman’s office for anything until now. He takes chemo pills for Leukemia and if he can’t get his pension because of what has happened, he won’t be able to get his pills. We have to make this right,” said Congressman Cleaver.
The House and Senate have convened a Joint Select Committee on Solvency of Multiemployer Pension Plans to determine ways to improve long-term health. The committee is seeking stakeholder input from affected workers, retirees, and businesses. Comments will be read and considered by committee staff in advance of recommendations. Public comments must be received by September 30, 2018. Instructions on providing comments can be found here.
Congressman Cleaver has been working to help Central States Pension Fund retirees and active workers since 2015. He held a town hall, in which nearly a thousand people attended to hear U.S. Treasury’s Ken Feinberg speak. He cosponsored H.R. 4444, the Rehabilitation for Multiemployer Pensions Act (also known as the Butch Lewis Act), which creates a new office within the U.S. Treasury Department called the Pension Rehabilitation Administration (PRA). The PRA would allow pension plans to borrow the money they need to remain solvent and continue providing retirement security for retirees and workers for decades to come. Congressman Cleaver will continue to push House Leadership to bring up the Butch Lewis Act for a vote to address CSPF’s looming insolvency.
Emanuel Cleaver, II is the U.S. Representative for Missouri’s Fifth Congressional District, which includes Kansas City, Independence, Lee’s Summit, Raytown, Grandview, Sugar Creek, Blue Springs, Grain Valley, Oak Grove, North Kansas City, Gladstone, Claycomo, and all of Ray, Lafayette, and Saline Counties. He is a member of the exclusive House Financial Services Committee, the Ranking Member of the Subcommittee on Housing and Insurance, and also a Senior Whip of the Democratic Caucus. For more information, please contact Heather Frierson at 816-842-4545 or Heather.Frierson@mail.house.gov A high-resolution photo of Congressman Cleaver is available here.