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senate Bill S. 2318

Should Criminal Fines Paid by Financial Institutions Go to Funding Failed Pensions?

Argument in favor

The PBGC needs additional revenue to remain solvent. Imposing fees on financial institutions convicted of financial crimes that are seeking waivers to manage retirement funds is a sensible way to make sure that these institutions pay for their crimes while stabilizing funds that may have been harmed by their misconduct.

KansasTamale's Opinion
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11/23/2018
If the financial institution had something to do with the failure of the pension, THEY SHOULD PAY!!!
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A's Opinion
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11/23/2018
We need to do something to keep America on par with other developed nations. We’re defrauding our baby boomers out of their pensions. We must do something.
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Dena's Opinion
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11/24/2018
If the fraud comes from the company itself, of course they should fund the pension funds. Why should employees suffer because their company are crooks.
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Argument opposed

This bill violates an existing regulation, and also does not necessarily create much new revenue for PBGC, as the minimum fee of only $1 million is a drop in the bucket against PBGC’s $76 billion deficit. Additionally, imposing fees on financial institutions seeking exemptions may just drive them away from seeking to manage retirement funds.

Deborah's Opinion
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11/24/2018
Everything has to be funded. Get the rich to start paying higher taxes!! They have the money!!
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TuckerWantsLiberty's Opinion
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11/24/2018
Stop using the justice system to subsidize failure. Criminal payments should go to the victims of the crime, not to trying to keep union and government pension plans from facing their inevitable demise.
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David's Opinion
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11/24/2018
The top 1,400 tax payers pay more in tax that the bottom 50% of tax payers. We should go back to the biblical model of equality! Right Libs! Equality! Every one pays 10% of what they earn to the federal Gov’t. Once we do that, you WILL have lower spending, a balanced budget, and few domestic welfare programs. Everyone would help by pulling their own weight.
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bill Progress


  • Not enacted
    The President has not signed this bill
  • The house has not voted
  • The senate has not voted
      senate Committees
      Committee on Health, Education, Labor, and Pensions
    IntroducedJanuary 17th, 2018

What is Senate Bill S. 2318?

This bill — known as the Pension Stability Act — would generate new revenue for the Pension Benefit Guaranty Corporation (PBGC), which insures multi-employer and single-employer pension plans. It would impose a minimum of a $1 million fee on financial institutions convicted of financial crimes seeking an exemption to manage retirement plan funds. The proceeds of these fees would be collected by the Dept. of Labor (DOL) and sent to the PBGC for the multi-employer program until the multi-employer program is in a substantially similar financial condition as the single-employer program. At that point, the collected fees would be divided equally between the two programs.

If the programs’ finances diverge at a later point, the Director of the PBGC and the PBGC Board would be able to reallocate the fee revenue to match the programs’ financial needs.

For repeat offenders, the fee imposed for waivers would be increased by the number of prior waivers sought.

Impact

Financial institutions convicted of financial crimes; retirement plan managers; Department of Labor; Pension Benefit Guaranty Corporation; Director of the PBGC; the PBGC Board; and the Secretary of Labor

Cost of Senate Bill S. 2318

A CBO cost estimate for this bill is unavailable.

More Information

In-Depth: Sen. Tammy Baldwin (D-WI) introduced this bill to generate new revenue to protect the pensions of over 40 million workers and retirees by imposing fees on banks convicted of financial crimes which are seeking a waiver from the Labor Dept. in order to manage retirement plan funds:

“We must keep our promise to workers and retirees by making sure they receive the pensions they have earned. I am introducing this reform to address the financial challenges of the pension insurance program and to generate new revenue to fund worker pensions. Financial institutions convicted of a crime should have to pay a penalty that will provide funding to support workers and retirees who saw massive cuts to their pensions through no fault of their own. This reform helps us keep our promise to workers.”

Groom Law Group, commenting on this bill, raises the prospect that rather than creating revenue from new fees on financial institutions convicted of financial crimes, this bill would instead drive them away from seeking to manage retirement plan funds:

“Given the significant amount of time, costs and internal and external resources that are now required to obtain an individual exemption, asset managers that rely on the QPAM Exemption may need to carefully consider whether obtaining the exemption is worth the costs. If an asset manager has primarily a retail base of retirement clients (IRAs and small employee benefit plans) with liquid strategies and neither the asset manager nor any of its affiliates typically takes 5% or more stakes in other asset managers with ERISA Plan clients, the manager may want to consider relying upon other exemptions for the ten-year period following conviction rather than expending the resources to obtain an individual exemption that would permit continued reliance on the QPAM Exemption."

There is one cosponsor of this bill, who is also a Democrat. The Pension Rights Center supports this bill.


Of Note: The PBGC was created by Congress in 1974 to essentially act as a fail-safe for private pensions. The PBGC picks up the tab for pensions if their insured private pension plans fail. Currently, the agency delivers benefits to 900,000 workers enrolled in nearly 5,000 failed pension plans.

Currently, the Department of Labor does not charge any user fees for reviewing applications for individual financial institutions’ exemptions to allow financial firms convicted on criminal charges to manage retirement plan funds. This bill would change that practice, by directing the Secretary of Labor to establish regulations to set a user fee schedule based on the severity of the crime committed, with a minimum $1 million user fee. For repeat offenders, the user fee would be increased by the number of prior waivers sought.

At a $76 billion deficit, the PBGC’s finances are in need of shoring up, and substantially raising PBGC premiums on multiemployer plans is not a good option, as doing so would raise their expenses and exacerbate already-dire financial conditions of many of these plans, since premiums are paid out of fund assets. In their FY2016 Projections Report, the PBGC projected that the multiemployer program would run out of money in 2025, severely impacting millions of retirees’ pensions.

Qualified professional asset managers (QPAMs) that are subject to this bill are entities, such as financial services firms, that manage the interest of employee benefit plans in investment funds. Under current law, QPAMs that have been convicted of financial crimes must seek individual exemptions from the Department of Labor to continue working with retirement plan funds. The DOL has granted exemptions to all but one firm seeking these exemptions since 1997, issuing a total of 38 waivers.

Crimes committed by firms seeking QPAM waivers include: currency price fixing, false tax filings, and securities fraud.


Media:

Summary by Lorelei Yang

(Photo Credit: iStock.com / clubfoto)

AKA

Pension Stability Act

Official Title

A bill to require the payment of user fees by qualified professional asset managers seeking an individual exemption from certain requirements.

    If the financial institution had something to do with the failure of the pension, THEY SHOULD PAY!!!
    Like (95)
    Follow
    Share
    Everything has to be funded. Get the rich to start paying higher taxes!! They have the money!!
    Like (63)
    Follow
    Share
    We need to do something to keep America on par with other developed nations. We’re defrauding our baby boomers out of their pensions. We must do something.
    Like (50)
    Follow
    Share
    Stop using the justice system to subsidize failure. Criminal payments should go to the victims of the crime, not to trying to keep union and government pension plans from facing their inevitable demise.
    Like (32)
    Follow
    Share
    If the fraud comes from the company itself, of course they should fund the pension funds. Why should employees suffer because their company are crooks.
    Like (29)
    Follow
    Share
    The top 1,400 tax payers pay more in tax that the bottom 50% of tax payers. We should go back to the biblical model of equality! Right Libs! Equality! Every one pays 10% of what they earn to the federal Gov’t. Once we do that, you WILL have lower spending, a balanced budget, and few domestic welfare programs. Everyone would help by pulling their own weight.
    Like (28)
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    Share
    Yes. Use fines paid by financial institutions to fund pensions for workers.
    Like (25)
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    I find it so amusing how some of the conservatives here are saying, "Yay! Let's do it!" and some of the others are saying, "Nope! More Democratic stupidity." Which is it, folks? *laughs* Institutions found guilty of financial crimes should definitely be made to fund those who may have been harmed by their crimes. Besides prison, I can't think of a better deterrent than making criminals pay restitution in big dollar signs.
    Like (22)
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    Absolutely yes !
    Like (16)
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    Failed retirement funds are a tragedy for people and I like to see them get something.
    Like (13)
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    How can you tell the difference between minor and major surgery? Major surgery is when its on me. Same idea pensions aren't a big deal unless you are the recpient. CEOs single handedly destroying workers pensions by receiving exorbitant bonuses for themselves. It happened at Morrison Knudson based in Boise. Seems to be a common practice of the rich stealing from the middle class.
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    As a person who had his pension defaulted on by his company, I understand firsthand how companies shed liabilities such as pensions to create more capital for the business. The workers bear the brunt when companies get rid of pensions. If companies are fined for illegally activities, refunding pensions would not only be a good idea but a form of justice for the workers.
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    Why not?
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    S. 2318 AKA the Pension Stability Act I’m in support of this Senate bill S. 2318 AKA the Pension Stability Act — would generate new revenue for the Pension Benefit Guaranty Corporation (PBGC), which insures multi-employer and single-employer pension plans. P.S. as long as the monies go to the employees and not padding Union Pockets for Democratic supporting benefits. It would impose a minimum of a $1 million fee on financial institutions convicted of financial crimes seeking an exemption to manage retirement plan funds. The proceeds of these fees would be collected by the Dept. of Labor (DOL) and sent to the PBGC for the multi-employer program until the multi-employer program is in a substantially similar financial condition as the single-employer program. At that point, the collected fees would be divided equally between the two programs. SneakyPete..... 🤔🤔👍🏻👍🏻. 11*23*18.....
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    Pensions need to be fully funded. If a company’s pension fails, the company needs to be be deeply fined with all proceeds going to its pension plans. No company should be allowed to disaggregate itself from its pension plans.
    Like (6)
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    Why Not! Giving the fines to the government does nothing for the workers that are being screwed over.
    Like (6)
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    That would be a GREAT idea!!
    Like (6)
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    Of course. Why should a corrupt financial institution, not have to fund their employee pensions! Send the fines to the PBGC.
    Like (4)
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    No. Fines should be distributed to the injured parties.
    Like (4)
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    The penalties on financial institutions for criminal activity are already too low as it is! If they don’t want to manage retirement plans then they should help to pay for these plans so that seniors can have a comfortable retirement in spite of the recklessness of our financial sector.
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