Union Pension Plans for Rank-and-File Members are Unfunded, Labor Department Records Show

BankruptcyBy Kevin Mooney — Come and join the union!

You will be guaranteed a safe, flush retirement fund for life. This has been the standard pitch from organized labor to workers who could earn more in the private sector. But government figures show that union pension plans are in trouble; especially for rank-and-file members who are not in leadership positions.

In fact, almost half the nation’s largest unions have pension funds that federal law categorizes as being either “endangered” or in “critical” condition, the U.S. Department of Labor’s Form 5500 shows. This list would include underfunded plans attached to the Service Employees International Union (SEIU), the United Food and Commercial Workers (UFCW), the International Brothers of Electrical Workers, the Laborers International Union of Northern America, the International Association of Machinists, the United Brotherhood of Carpenters, the International Union of Operating Engineers and the National Plumbers Union.

Looking at the big picture, the average union pension has resources to cover just 62 percent of what is owed to participants, according to the Pension Benefit Guarantee Corporation (PBGC). This means less than one in 160 workers is covered by a union pension with required assets. 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.

Diana Furchtgott-Roth, a scholar with the Hudson Institute, has initiated a study of underfunded union pension plans that was first released in the summer of 2008. Although the SEIU, and other unions, have criticized the study, the objective facts and figures substantiate Furchtgott-Roth’s findings.

The SEIU, for instance, has claimed that its 1199 pension fund, which covers SEIU workers in the New York area, is flush and well-funded, but, the U.S. Labor Department has reported otherwise. In 2007, the SEIU’s 1199 pension was funded at just 58 percent of its future obligations.

There’s more. Union officers have somehow managed to maintain the financial health of their plans, while rank-and-file members have seen their retirements deteriorate, according to Hudson. As of 2005, none of the rank-and-file pension plans surveyed were fully funded, seven were in critical condition and 14 had less than 80 percent of their needed assets, the study showed. Union officers and staff members do not have this problem. As it turns out, the funds for officers included in the study had 88 percent of their needed funding.

This is why many observers are concerned that Obama’s unconfirmed appointees on the National Labor Relations Board have gone overboard with rulings that tie the hands of job creators when they face union elections.  Among these actions is the recent NLRB quickee election ruling, which effectively stops management from making their case against unionization prior to an employee vote.

Bill Wilson, president of Americans for Limited Government, a leading national watchdog of labor union activity noted, “This is the ultimate hypocrisy.

“The high ranking labor officials have their own pension funds that are nearly fully funded, while leaving the workers with pensions that are on the brink of collapse, all the while trying to get Congress and the National Labor Relations Board (NLRB) to force even more workers into their pension Ponzi scheme.”

This is why it’s important to remain mindful of the actions of both Congress and the NLRB that could force more workers into joining unions to pay for bankrupt pensions, and if that fails, Big Labor is looking for a way to bail out their unfunded pension plans.

Kevin Mooney is a contributing editor to Americans for Limited Government. You can follow Kevin on Twitter at @KevinMooneyDC.

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