Why Isn't the SEIU Telling Their Members About Their Failing Pensions?
On Tuesday, July 28th, SIEU members refused to leave a private, invitation only event hosted by AWF as reported here by Politico. Eventually, the police were needed to escort the members out. The SIEU admits they were present, but got most of the other details wrong.
Rather than focusing on external political pressure, perhaps the SEIU should take more care to ensure their rank and file dues paying members have an adequate pension - details below.
Content adopted from "Union vs Private Pension Plans" by Diana Furchtgott-Roth at the Hudson Institute.
On its website, the SEIU argues that traditional defined contribution 401(k)-type pension plans are bad for workers because defined contribution plans: 1. Place the burden of fund management on workers; 2. can fail workers if the market performs poorly or the worker does not properly estimate his retired lifetime; 3. do not provide supplemental benefits; and 4. have lower returns than defined benefit plans.
The union also claims that “the purpose of a defined benefit fund is to provide employees who retire with as much replacement income as possible for as long as they live.” It would seem reasonable, therefore, for SEIU to work very hard to ensure that its now 2 million members receive generous, well funded pensions.
That is not the case – at least for rank-and-file workers. In 2006, the SEIU National Industry Pension Plan, a plan for rank-and-file SEIU members covering 100,787 workers was 74.9% funded. A separate fund for employees of SEIU had 1,305 participants and was 90.6% funded. The pension fund for SEIU officers and employees had 6,595 members, and was 103.3% funded. This inequity was not always the case. In 1996, the SEIU National Industry Pension Fund had close to 110% of the funds it would need to pay all promised pensions to its workers.
Why are the officers pension plans overfunded at 123% and the rank & file union members plans are near "endangered status" at 82%?
Of course, market performance has faltered since 1999, and the performance of the fund reflects that. In 1998, the fund had slightly more than enough assets to pay its obligations. In 2000, it had approximately 85% of needed funds, and it has not risen higher than 90% since.
The SEIU in general blames the poor performance of private pensions on “the weak economy, poor investment returns, and outdate[d] IRS rules” .
The argument for the effects of a weak stock market loses ground when the performance of the National Pension Fund is compared to the performance of the two staff and employee pension funds. Admittedly, they both lost ground from 2005, but they are performing well despite poor market performance. The officers and employees pension plan, being overfunded, had room to decline in value without hurting its beneficiaries.
The problem of poor funding is not only in the national pension plan. Research by the U.S. Chamber of Commerce revealed that 13 SEIU local pension plans were all less than 80% funded. Six of them were less than 65% funded. In 1996, all of them were more than 65% funded, and half were more than 80% funded. While those who were in poor shape back in 1996 are worth significant concern, the Massachusetts Service Employees Pension Fund is perhaps of greater concern. It fell from nearly 110% to 70% funded in 10 years, and the SEIU 1199 Upstate Pension Fund fell from 115% to 75% since its inception in 1999. The chart below shows the degeneration of these funds’ strength from 1996 to 2006.
Part of the problem in local pension management could be the more secure futures of the leadership. Participation in the officers and employees pension plan (the overfunded plan) is mandatory for the officers and employees of local SEIU unions. As a result, these union members, even if they consider themselves dedicated, have less incentive to protect the pension plans of the locals.
The only hope the SEIU has is to force other employees to fund these multi-employer defined benefit plans. Under the Employee Free Choice Act (EFCA), which the SEIU strongly supports, government arbitrators are given complete control over labor-business contract disputes. The employer and employees hands will be tied in negotiations leaving the workers powerless over their own employment fate.
- Government arbitrators could force workers into underfunded pensions, putting their retirement at risk
- The average union pension has resources to cover only 62% of what is owed to participants
- Less than one in every 160 workers is covered by a union pension with required assets
- Under EFCA, government arbitrators can force businesses to fund failing pensions
- The PBGC already supports upwards of 30,000 pension plans
- Pension Benefit Guarantee Corporation (PBGC), the governmental pension insurer, will assume $86.7 billion in liabilities by 2015
- The PBGC limits the benefits in multi-employer plans to $13,000 a year per retiree, compared with roughly $52,000 for single-employer plans.
- In 2007, the PBGC reported a deficit of $955 million, a $216 million increase from the previous year
- On July 23, PBGC agreed to take on $6.2 billion in pension liabilities from bankrupt auto supplier Delphi Corp
Why is the SEIU supporting a bill that will force more and more union members into these failing plans?
AWF sent our undercover film crew into a Service Employees International Union (SEIU) rally over the summer of 2007. We asked typical questions about wages, employment, benefits, etc. The answers may shock you. We even managed to get an elected official on record saying "The union got me elected." Click below to play the video and for more videos and interviews, please visit our YouTube site at www.youtube.com/WorkerFreedom, or click the icon on the home page.
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I was forced to join the union as a doorman in chicago Il. in 1983 worked for 17 years at the same biulding 227-237 e. delaware. I n 2007 had a stroke flatlined for 90 minutes from the neck up.,left me with dementia. the SEIU demanded documentation from my wife as well as my self in april2009. I'm still waiting for another reply. The seiu refused to pay me back money from when I was approved by the social security adim.There booklet sent to me is based on lies. I applied for the pension to pay for my medication,and the social security adim. based my disability payments on my pension. People wonder why people go postal in this country!!
>> richard stapinski September 9, 2009 9:24 pm
I applied for disability to the social security adim. in 2007 approved in 2/2008, the seiu won't pay back payments, contacted me 9/23/2009 and told me I might see a check in 1/2010 told me it takes4-6 months to process? I was forced to join the union in 1983,for my job at 227-237 delaware in Chicago Il. as a doorman for the Sudler magnagement company,even had my wages garnished to pay for union dues quarterly. Now I have dementia and can't work any longer the union as usual can't help me! The social security adim. counted the union pension plan into my disability check. WHAT A RIP- OFF! Why can't our goverment do something about this,another way BUSH adim. screws with the middle-class.
>> richard stapinski September 23, 2009 23:09 pm
I truly feel sorry for your plight, I do. However, the SEIU, ACORN, and multudinous subsidiaries are engaged in classic Chicago racketeering, with complicit endorsement from the DEMOCRATIC party, not Mr. Bush's republicans. I belong to neither party and would not debase mysely by letting any party think for me, or indoctrinate me according to their benefit, as has been obvious by the above in your case. As we observe Andy Stern's(SEIU)weekly conferences with the White House and their agressive push to coerce all of the healthcare industry into their union, they mean to place all Americans into the plight you are now suffering. I wish well and hope that the DEMs/SEIU redress your situation, but I won't hold my breath.
>> Archimedes October 1, 2009 1:22 pm
Since the Recovery Bill was passed I have been trying to tell people just what the Healthcare Reform Act is meant to do. It is meant to pay back SEIU so they can fund the pensions with tax payer dollars. They have squandered the money they collected from the working union members on lavish houses, vacations, and political dinners and support. Now we the American taxpayers are paying them back and in return we will receive shoddy healthcare. Please pay attention. Why do you think something so supposedly emergent isn\\\\\\\'t going to kick in until 2013 or later. The unions will get our tax money up front from the Democrats and they will work to get him re-elected to make sure they get there share from then on. STOP HEALTHCARE NOW.
>> jessica Lee November 28, 2009 28:27 pm
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