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Unions want Washington’s help with pension funds
Question of the Day
Nonunion workers and private companies could be forced into absorbing the financial liabilities of underfunded union pension plans, thanks to pending health care mandates and an executive order that could be finalized this year, policy analysts and trade group representatives have concluded.
Even as unions continue to market themselves to new members on the basis of generous pension programs, government figures show these plans are performing poorly in comparison with retirement packages that operate beyond the orbit of organized labor.
In addition, unions are pushing the Obama administration on project labor agreements (PLAs), which, among other things, will give their pension plans new sources of outside funding - nonunion workers on government contracts worth more than $25 million.
The average union pension has resources to cover only 62 percent of what is owed to participants, according to the Pension Benefit Guarantee Corp. Pensions with less than 80 percent of the assets needed to cover present and projected liabilities are considered “endangered,” while those that fall below a 65 percent threshold are classified as “critical” under the Pension Protection Act of 2006.
Pension Benefit Guarantee Corp. figures also state that less than one in every 160 workers is covered by a union pension with required assets.
Michelle Ringuette, a spokeswoman for the Service Employees International Union (SEIU), acknowledged that pension funds for her union and for others were facing difficulties but said the fault lies with businesses, not the unions.
“SEIU’s pension funds - like all pension funds - were hit hard when the market collapsed in late 2008. The union is deeply concerned about the instability big banks and the high-finance industry have created in the markets and throughout our economy, and we take very seriously all threats to the retirement security of our members and people who work for a living,” said Ms. Ringuette, who represents the nation’s largest union by number of members.
Diana Furchtgott-Roth, a scholar with the Hudson Institute, dismissed that explanation.
“A lot of these plans were in trouble even before the stock crash, and the members are entitled to know,” she said, adding that “there should be a law against putting out information about pension funds that is simply false.”
Time lag on reports
There is often a one- to two-year delay in submitting the papers, called 5500 forms, that record the ratio of assets to liabilities on pension funds. This means many 2008 forms, which will show the impact of the stock market drop and the recession, are just being filed and are not reflected in these and other official statistics.
Demographics are at least partially responsible for the collapse of pension assets within unionized plans, according to labor analysts. Private-sector union membership has fallen from about 20 percent in 1980 to 7.6 percent in 2008 and 7.2 percent in 2009, the U.S. Bureau of Labor Statistics reports. For the first time in U.S. history, a majority of union members work for the government rather than in the private sector.
The fallback position for union leaders who need an influx of members to sustain underfunded pension plans is to push for policy changes that would coerce workers and companies into joining organized labor, Ms. Furchtgott-Roth said.
“In countries where there is a single-payer health care plan, you find that the doctors, nurses and health aides are all government workers, and this is always a source of new union membership,” she said. “If more Americans have health insurance, the demand for health care expands, as does employment in the health care field.”
The SEIU, which has many of its members employed in health care, has been out front and center in pushing for the legislative changes to the nation’s health care system that won congressional approval over the weekend and was signed by President Obama on Tuesday. The SEIU home page included a section titled “The Final Push for Health Care” that instructed union members to call and lobby elected officials.
By Michael P. Orsi
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