WASHINGTON -- With twice as many retirees as active workers, the Western Pennsylvania Teamsters Fund, like many multi-employer pension plans, is in trouble.

A proposal by Sen. Bob Casey, D-Pa., would help rescue the fund and one other pension plan by allowing beneficiaries of bankrupt companies to spin off into their own federally backed plans instead of dragging down the larger plan.

The rescue effort would apply only to the Western Pennsylvania Teamsters Fund -- which is in critical condition at less than 60 percent funded, according to the fund's attorney, Vincent Szeligo -- and the Central States, Southeast and Southwest Areas Pension Fund, a large plan that covers a variety of industries including trucking and construction.

Multi-employer plans are negotiated by unions but paid by employers, offering defined pension benefits for life to their employees. For decades, small businesses flocked to multi-employer plans because of the larger risk pool. But, more employers going to individual 401(k) plans rather than defined benefits -- if they offer pensions at all.

One of the particular weaknesses of multi-employer plans is that when companies go out of business, they are not being replaced with new active contributors to the fund, leaving a large imbalance between contributors and beneficiaries. The tumultuous stock market in recent years hasn't helped. For example, the teamsters' plan lost about 30 percent of its value in 2008, according to Mr. Szeligo. The teamsters' plan includes 168 employers in the transportation industry.

"It's a long-term problem. It's not an immediate problem, and it's something that has to be addressed in order to preserve the funds," Mr. Szeligo said.

If a single corporation goes under, the federal Pension Benefits Guaranty Corp. assumes the pension liabilities. But in a multi-employer plan, the remaining employers cover the "orphaned" beneficiaries. The Casey bill would allow the orphans to come under the umbrella of the PBGC, with the parent plan funding them for the first five years.

Mr. Casey's office estimated the cost to taxpayers, in a worst-case scenario, as between $8 billion and $10 billion, though the Congressional Budget Office has yet to provide a calculation.

Committee chairman Tom Harkin, D-Iowa, praised the bill as "an important first step" at a Thursday's hearing of the Health, Education, Labor and Pensions Committee, but the committee's top Republican, Sen. Mike Enzi of Wyoming, favored a more systematic approach instead of a Band-Aid for only two struggling pension plans.

Mr. Harkin said he wanted to look at how to encourage employers to get back into the multi-employer system, and several witnesses testified to their advantages over having employees individually invest for retirement.

"We should, can and must do better to help Americans prepare for retirement than give each of them a savings account and tell them, 'You are on your own,' " said Norman Stein, a professor at the University of Alabama law school.

"For such a do-it-yourself system to work, workers must combine Spartan discipline, a Harvard investment degree, and a Cassandra-like ability to predict not only the direction of different investment markets but also the precise date of their own death."

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