A last-minute deal on pension reforms thrown into the $1.1 trillion CRomnibus passed by Congress over the weekend has some unions up in arms, while others had lobbied in support. Although far short of a cure-all, these reforms should reduce the chances of a taxpayer bailout.

The most controversial provision of the 160 pages of proposed pension legislation that emerged from closed-door sessions between Representatives George Miller (D–CA) and John Kline (R–MN) allows some deeply troubled union pension plans to pre-emptively cut benefits to avoid insolvency.

This change could affect millions of pension beneficiaries as well as all federal taxpayers.

Without reforms, many union pension plans—some representing hundreds of thousands of workers and retirees—would soon be insolvent. Although there is a government entity—the Pension Benefit Guaranty Corporation (PBGC)—that insures these pensions, its maximum benefit of $13,000 per year is much less than many retirees receive and much less than current workers have been promised. To make matters worse, though, the most recent report from the PBGC showed that the PBGC itself would be bankrupt within eight years. If that happens, what’s now a $2,000 monthly pension check could be reduced to $100 per month or less.

The reforms passed in the CRomnibus attempt to avert such drastic benefit reductions that might otherwise occur over the next 10 years, replacing massive and widespread cuts with smaller and more limited reductions.

Although some unions have condemned the reforms as a sneak attack on pensions, benefit cuts will be very limited: only 5 percent to 10 percent of plans are eligible to reduce benefits; cuts can only be made after all other actions fail to achieve solvency and only if they result in future solvency; certain beneficiaries must be exempt from cuts (such as those over age 80 and the disabled); and benefits cannot be reduced below 110 percent of the PBGC guarantee.

Furthermore, pension plans do not have to reduce benefits; that decision is left to the plans’ trustees, half of whom are union representatives. Only “systemically important” plans—those that impose $1 billion or more in projected PBGC liabilities—are subject to benefits cut without the approval of plan trustees.

Yes, reduced benefits will be a hard pill to swallow. But they are absolutely necessary. Without benefit cuts, most retirees and virtually all current workers will receive lower lifetime benefits and either the PBGC guarantee will be rendered worthless or federal taxpayers will be forced to bail out private-sector pensions.

Reduced benefits will allow some plans to prolong, if not completely avoid, insolvency. Plans, in contrast to the PBGC, will pay benefits longer. This means that most workers will receive higher lifetime benefits and the guaranteed pensions of PBGC recipients won’t be reduced—at least not as soon as would otherwise occur. The only legitimate explanation for some unions’ opposition is that they are counting on federal taxpayers to cover their broken promises.

Not only would a federal bailout set a bad precedent, but Americans simply cannot afford to bail out the trillions of dollars of unfunded retirement promises that have been made by private-sector and public-sector pensions across America.

In addition to allowing benefit cuts, the reforms contain some other provisions designed to boost plans’ future solvency, such as encouragement and support for plan mergers; allowing plans to partition certain participants; and repealing the scheduled 2014 expiration of the funding rules in the Pension Protection Act of 2006.

The bill also implemented a much-needed increase in PBGC premiums, from a current $12 annual premium to $26. It’s preposterous that the PBGC currently charges a flat $12 per year rate in exchange for what is, in many cases, an all-but-certain future payout of $13,000 per year. The rate increase is a positive first step, but the PBGC’s multi-employer program should also charge a risk-based premium so that fully funded plans are not charged the same price as those scheduled to go bankrupt next year. Risk-based pricing is standard among private insurers and is part of the PBGC’s single-employer program.

Further pension reforms will be necessary, but the current proposal marks a positive first step toward minimizing pension reductions for millions of hard-working Americans, and protecting taxpayers from yet another federal bailout.