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Unions vs. Private Pension Plans: How Secure Are Union Members’ Retirements?. Diana Furchtgott -Roth Senior Fellow, Hudson Institute July 16, 2008. The Problem. Unions’ rank-and-file pension plans are not as well-funded as private sector plans

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Unions vs private pension plans how secure are union members retirements

Unions vs. Private Pension Plans:How Secure Are Union Members’ Retirements?

Diana Furchtgott-Roth

Senior Fellow, Hudson Institute

July 16, 2008


The problem
The Problem

  • Unions’ rank-and-file pension plans are not as well-funded as private sector plans

  • Union staff and officer plans are well- funded relative to rank-and-file plans

  • Unions play politics with pension funds


Funding of union pension plans compared to private sector plans
Funding of Union Pension Plans Compared to Private Sector Plans

  • Thirty-seven percent of large non-union pension plans are fully funded, compared with 19% of union plans






Why are pension plans poorly funded
Why Are Pension Plans is higher for collectively-bargained plans ($2.9 million) than for non-union plans ($2.3 million).Poorly- Funded?

Poorly-funded plans

  • Rely on past assets, or credits, to reduce payments;

  • Fall behind on payments;

  • Pay penalties and extra fees;

  • Are unable to adjust contributions every year

  • Don’t put enough into pension funds.


Union officer and staff plans do better than rank and file plans
Union Officer and Staff Plans Do Better than Rank-and-File Plans

  • The 21 largest pension plans for rank-and file union members had 67.7% of funds needed to meet obligations.

  • The 23 officer and staff funds for the same unions were 88% funded. 

  • Excluding the 7 staff and officer funds strictly for office employees, the remaining 16 were 98% funded.


The seiu pension plan ratios 2006
The SEIU Pension Plan Ratios, 2006 Plans

  • SEIU National Pension Plan (rank-and-file): 100,787 Workers, 75% Funded

  • SEIU Employee Plan:

    1,305 Participants, 91% Funded

  • SEIU Officers and Employees Plan:

    6,595 Participants: 103% Funded



The sheet metal workers international association
The Sheet Metal Workers International Association Plans

  • In 2006, TheSheet Metal Workers National Pension Fund plan covered 136,000 people.

  • It had guaranteed $7.45 billion in benefits, but only had assets of $3.1 billion ($22,879 per person)—a deficit of $4.35 billion

  • Benefits were increased after the creation of the fund


  • The SMWIA National Pension fund was 43% funded in 2006 ($22,879 per person)

  • The SMWIA Staff Pension Plan was 81% funded ($230,848 per person).

  • As rank-and-file members had their COLA benefits cut, the union staff's COLA fund more than tripled

    • Union contributions entirely paid for the increase, with nothing from staff salary

  • President Michael Sullivan received $133,198 in benefit plan contributions in 2006.


Playing politics with worker s pension funds
Playing Politics with ($22,879 per person)Worker’s Pension Funds

  • Definition of “fiduciary duty” changed in 1990s when unions were allowed to consider effect of investments on communities and environment.

  • Unions opposed Social Security personal accounts 

  • Unions threatened pension fund managers over Social Security accounts.


Union pension funds used to influence corporate decisions
Union Pension Funds Used to Influence Corporate Decisions ($22,879 per person)

Resolutions to split CEO and board chairman

  • Teamsters at Merrill Lynch, Coca Cola

  • Bricklayers at Walmart

  • Electrical Workers at Kohl’s

  • Plumbers at Allergan


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