Bailout Aimed at Failing Union Pensions
On the heels of a series of taxpyer-funded bailouts that resulted in over 600,000 people participating in nation-wide "tea parties", AWF fears the next bailout will be to save failing union pensions. As reported in the press release below, hundreds-of-thousands of multi-employer defined benefit union pensions are underfunded. Meaning there are simply not enough assets to cover current liabilities.
The unions only hope is to force more and more companies to fund these massive failing pension plans by forcing binding interest arbitration on employers in the mis-named Employee Free Choice Act. The problem: most companies will choose to shut down rather than loose most of the capital in these plans. The companies will no longer be economically viable if they are forced by the government to fund these failing pension plans. This is what the Pension Benefit Guarantee Corporation (PBGC) is for. However, they don't have enough money to cover all the liabilities either.
The rank-and-file union members are on the loosing end of this stick by not having a traditional, portable defined contribution plan such as a 401(k). This would allow them to control where their money goes, and it's portable. This is extremely threatening to the unions as a worker would then be able to leave the union, with their pension, for another job. The union depends on the workers' dues and therefore uses this failing pension model as a way to trap more and more workers.
Scroll to the end for more reading and information on this subject.
Next Taxpayer Bailout Aimed at Failing Union Pension Funds
Employee Free Choice Act is an Attempt to Bring in More Funding for Pension Plans
WASHINGTON, D.C. — The Alliance for Worker Freedom (AWF), a national workers’ rights organization, announced the next taxpayer funded government bailout will likely go toward the nation’s failing union pension funds. A review of the actuarial reports indicates pensions for half of the nation’s 20 largest unions are listed as “endangered” (only 80% funded) or “critical” (less than 65% funded).
“The unions’ ulterior motive behind the Employee Free Choice Act (EFCA) is to use the forced binding interest arbitration clause to mandate companies fund the underperforming and underfunded union pension plans,” says AWF Executive Director Brian Johnson. “For companies, the choice is clear: shut down immediately or go out of business due to loss of capital to pay for operating costs by being forced to fund a failing system – it’s that easy.”
AWF claims the most deceptive part about this situation is the unions have known about this for close to ten years and have done nothing. Here are some facts:
Average union pension has resources to cover only 62% of what is owned to participants
Less than one in every 160 workers is covered by a union pension with the required assets
In a Pension Benefit Guarantee Corporation Rescue, pensioners only get $12k/year – max
Nothing prevents EFCA from forcing more workers and employers into these funds
The Service Employees International Union (SEIU), the United Food and Commercial Workers (UFCW), the International Brotherhood of Electrical Workers (IBEW), the Laborers International Union of Northern America (LIUNA), the International Association of Machinists, the United Brotherhood of Carpenters, the International Union of Operating Engineers, and the National Plumbers Association all reportedly have underfunded plans.
On June 30th, the Financial Services Accounting Board (FASB) will issue notices to potentially hundreds-of-thousands of union employees indicating their pensions are only 65% funded or less. FASB has been told this issue is a “national epidemic”.
Below you will find several articles for additional reading and information on this subject:
- Almost half of top unions have underfunded pension plans
- Union officer pension plans remain flush as rank-and-file retirement plans deteriorate
- Forcing firms to bail out failing union pension plans
- Workers deserve better pensions
- The hidden agenda behind card check