Unions vs private pension plans how secure are union members retirements
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Unions vs. Private Pension Plans: How Secure Are Union Members’ Retirements? PowerPoint PPT Presentation


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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?

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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


Unions vs private pension plans how secure are union members retirements

  • Two percent of large, non-union defined benefit plans are in critical condition, compared with 11% of union plans.


Unions vs private pension plans how secure are union members retirements

  • Thirty-three percent of non-union plans in critical condition paid at least their minimum annual charges in 2005, compared with only 8% of union plans.


Unions vs private pension plans how secure are union members retirements

  • In 2005, 17% of non-union plans made additional contributions due to funding deficiency, compared with 30% of collectively-bargained plans.


Unions vs private pension plans how secure are union members retirements

  • The average annual payment to correct a funding deficiency is higher for collectively-bargained plans ($2.9 million) than for non-union plans ($2.3 million).


Why are pension plans poorly funded

Why Are Pension Plans 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

  • 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


Unions vs private pension plans how secure are union members retirements

  • Thirteen SEIU local pension plans less than 80% funded 

  • Massachusetts Service Employees Pension Plan fell from 110% to 70% funded in 10 years


The sheet metal workers international association

The Sheet Metal Workers International Association

  • 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


Unions vs private pension plans how secure are union members retirements

  • 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 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

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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