private company pension funds have historically been overfunded. they invest in (among other things) stocks. stocks have fallen more than expected. private company pension funds can therefore become underfunded. when this happens, pensions payments can be reduced. retirees are squeezed.
i am not certain why some pension funds deserve government bailouts and others do not.
i think the incentive of pension funds investing in stocks derives from keynesian economics (but i am not an economist).
Since the teamsters backed Biden in 2020 this is why this is happening.
The stock based mutual funds in my 401K “have fallen more than expected”. When should I expect my bailout?
I respectfully disagree. It's not a problem of investing too high a portion into equities, but not enough. Certainly not enough to keep up with the impossible demand of high pension payout for decades in retirement.
The PBGC is to pensions what the FDIC is to banks. Basically pensions pay a kind of insurance premiums to the PBGC agency, to be bailed out later if needed. The problem is, one of the requirements of the PBGC it to have too high a portion of the portfolio in somewhat safe funds like bonds, treasuries, and money markets. Thus it limits growth overall. If the pension managers don't have a high portion in safe funds, the PBGC raises the premiums. Thus, PBGC disincentivises pensions from growing well.
In my financial Sunday school class for years I've suggested a retirement portfolio that's about 70% in various equity funds (including a high-yield bond fund)/ 30% in various bound funds (including some treasury funds and money market). With a 4% annual withdrawal the portfolio gains enough to keep up with both the withdrawal and inflation (well, until Brandon hyperinflation maybe). During stock downturns (in which you don't want to pull your 4% withdrawal from a fund that's down), you have not only 1/4th of your funds in usually safe funds to help you (30% safe funds can handle 7 years of a stock downturn at 4% withdrawals), but also many equity funds to choose from (if spread out among 30 or more asset classes, there's always a few that are up even if most are down). That's me trying to keep up with inflation.
Pension managers have the same kind of problem. Even if they don't have to keep up with inflation (for the most part the pension payouts don't increase enough to keep up with inflation, if they increase at all), they do have to keep up with an increasing number of retirees demanding their pension checks beginning. Their PBGC insurance plan tells them not to be aggressive enough in investments to keep up with this huge demand.
The truckers’ triumph: The incredible story of how a scrappy group of blue-collar retirees rescued their pensions