Definition of Sunset Provision – A condition or provision in a law that designates a certain point in time when that specific law will no longer be in effect. The law will no longer have any effect at that point, unless the governing powers reinstate the law or extend the sunset provision before the expiration point.
For the last 8 years we have all heard the terms of Red, Green and Yellow with regard to the funding level of our Taft-Hartley Defined pension plans. Funding level is the amount of money expressed as a percentage, of the plans ability to pay for promised benefits.
What the PPA of 2006 allowed for, is certain treatment of the pension plan. So for example the losses in 2008 and 2009 to be amortized (paid off) over a different schedule from the then – existing formula. Basically we took out a credit card to pay off our losses from 2008.
So as we get into 2015 and early 2016 as the plan year of the pension’s work thru, the members of all existing plans will be confronted with numbers that they haven’t seen. The warm and fussy terms of yellow and green may not be the reality of many plans when they are calculated the way they have been prior to 2006.
Consider what Brother Josh Shapiro of the NCCMP (National Coordinating Committee of Multiemployer Plans) said about the sun setting provisions of the PPA (Pension Protection Act) earlier this year at a conference, and which will happens at the end of 2014.
The report he gave was sobering to be sure. The potential is that as many as 150 Taft-Hartley pension plans are poised to fail outright in the next couple of years. Should those plans fail the participants would receive approximately $13,000 per year instead of the plans promised accrual rate.
Understand that to even receive that $13,000 per year requires that the PBGC (Pension Benefit Guarantee Corporation) be funded.
Currently the PBGC has 2 Billion dollars in it. Should the plans fail that are expected then the amount needed to pay the REDUCED benefit of $13,000 would be approximately 60 Billion. There is no way that the PBGC will have that kind of money since it collects about 100 million in premiums a year.
The greed of my generation is poised to potentially reap havoc on our pension plans and our unions. From approximately the mid 70’s until the mid-90’s, the men of my generation said vehemently to put wage increases “on the check”, we don’t need anyone saving “OUR” money – we will do it!! Well in the full light of day most wage increase went on the check consistent with the majority vote taken to do this.
Now spring ahead 30 plus years and these very same members that are near or at retirement age are not happy, their retirement benefit is small because they did not put the money in the pension, they took it on the check!
So from the late 90’s on – there is a sea change on the union floors thru-out the Building Trades, and in most all locals, the manta was put a lot of money in the pension. Well if the money put in the pension + interest, matched the money one could reasonably get out (plus interest) at retirement then we would not be in this problem. What happen in the simplest terms possible is the members put in a $1 to get many times that back plus interest!
The leadership and pension trustees did not provide the leadership necessary to run these programs fair, perhaps because many of them saw a poor retirement check also!
Grown men, who clearly voted to put the money on the check for decades and are now near or at retirement age, put hugely disproportional amounts of money in the pension – and applied it to past years and in some cases, decades’ old service. In other words they put $1 dollar in to get $5 – $10 out, plus interest!
No pension is built to do this – greed is why many funds have the issues they have. The huge loses of 2008 while very bad are events a properly run fund can bounce back from. Also to be certain the rules in place that mandate benefits to be paid when there is a surplus of funds absolutely did not help matters. However solid pension trustees can maneuver thru those situations.
Greed – taking way more out than one put in, is the predominate reason for the underfunded status many funds now face and after the PPA sunsets will face.
The younger generation is paying off this marker thru higher contributions and cuts in benefits, that in some cases may not be nearly enough to pay for this underfunded status anyway, and they get razor thin BS increases in benefits, if any at all.
Only organizing – raising our numbers and expanding our market share can erase the above situation. We need new inflows of money that accompany new members along with taking the non-union contractors – and not just the workers.
Danny L Caliendo
Organizer
Labor Rising
