Central States last year was only 17% funded and projected to collapse in a few years. The federal Pension Benefit Guaranty Corp. (PBGC) insures pensions up to $12,870 a year for participants with 30 years on the job. But it, too, is under-funded. If Central States failed, its liabilities could have taken down the PBGC, which insures multi-employer pensions for 11.2 million workers and retirees.
Congress in 2014 acted to prevent this death spiral by passing bipartisan legislation that let sick plans reduce benefits and make other changes to avoid insolvency. Eighteen plans took advantage of the law, but Democrats then had second thoughts and decided to ding taxpayers instead.