As articles #1 & #2 below point out – Pension Reform of the multi-employer plans is now on the table, and time is quickly running out! As you read the news snip of #1 & #2, pay attention to the wording used. ALL parties will compromise in dealing with pension underfunding solutions – if any solutions are achieved at all! The caveat is WILL the anti-union legislators support at least some reasonable compromise. No sure thing!
Also, in NO plan which is trying to address this underfunding to date, is the participant/member made whole. Whole is defined by what the participant/member was told they earned towards retirement before they find out about being in an underfunded pension!
Two different funding issues are at play, both are no wins for participants/members and in some cases retirees, dealing with an underfunded pension. So, if you look at #4 below – these are the funds in various stages of underfunding with Critical and Declining being those most troubled. ALL of “our” funds come under the Pension Benefit Guaranty Corporation (PBGC – https://www.pbgc.gov/)
The first pension issue is that the PBGC insures our funds – BUT only to a point! The formula is approximately 30 cents on the dollar. The PBGC is also severely underfunded itself – translation being that the PBGC CANNOT even pay the 30 cents on the dollar they cover. So, the PBGC needs a loan from a source. Enter the U.S. Congress and efforts to secure loans in order to shore up the PBGC to pay even the 30 cents! The PBGC is currently $65 billion short of paying the 30 cents to those troubled plans and participants/members! Read the above link from the PBGC to see how and who gets paid.
That leads into #3 below and the 2nd issue – the 2014 Multiemployer Pension Reform Act (MPRA). For pensions that can NOT pay even the retirees what has been promised, MPRA was passed. This is draconian for retirees/participants/members of pensions that will flat out run out of money in the not so distant future. Our Internationals/District Councils/Locals have zero choice in participating in this reform.
What they do have is choice in what strategy they pursue. The choice of Value on Display has dramatically hurt pension funds “NET” since inception! Pensions are heavily dependent on 2 key provisions. The first is hitting a bogey called an accrual assumption. It is typically approximately 7% for Multiemployer Pension Funds. So, our funds must hit the bogey to break even on commitments to promised benefits. However, hours have a big impact. Full employment in most Locals today IS NOT what it was even a decade ago. Those missing hours loom large and the bogey is then also negatively affected.
Value on Display has taken what was mostly a self-inflicted wound by greedy BT Trustees, and put not only the trades’ viability in doubt, but also the pensions of participants/members.
How were the issues of today’s underfunding mostly self–inflicted? Men of my generation said almost unanimously for nearly 30 years, starting in the mid 70’s, to PUT THE MONEY ON THE CHECK!! For 30 years they didn’t fund their own retirement through contributions. Then, as they neared retirement they put almost all new contract money into their pension funds. “If” those contributions had gone forward through a policy of funding prospective service, from that date forward, we wouldn’t be dealing with this problem today. But, it did not. Pension calculations went back 20 and even 30 years to pick up past accruals. Do the math – you cannot put 3 -5 years of contributions in, and then when you retire expect that money to support 30 years of very rich retirement benefits, to be paid in the hundreds of dollars per month!
Weak union politicians blame the government. To be sure the funds had rules to GIVE benefits once funding levels hit approximately 120% of funding. Good/great trustees back then had little issue following the rules and NOT getting into underfunding problems.
Greedy Trustees wanted the increases even though they were part of the “put it on the check” crowd, misrepresenting the consequences to participants/members. And, what participant/member turns down a great benefit increase? This mess is not the members’ fault. They did NOT know they were building their own coffin in those plans!
Past the help from the loan, if it materializes, how will the trades go forward? With Value on Display we are by design by the IP’s a temp agency – selling training and bodies for hours. Many future employers will no longer pay into a mostly failed pension, which is what they are demanding in negotiations more and more!
The flip side is ORGANIZING! Not recruiting, not selling, not apologizing! Organizing both workers and companies. Imposing a CBA on contractors regardless if they want one or not! Then and only then will there be the foundation for restoring our pensions. And effective organizing would do more than that! It would restore the Middle Class and current underfunded pension funds will begin to realize surpluses! Any IP in the privacy of their own office and working with pension pros can see that path.
We can Organize our way back to a seat at the table and solid pensions through hard work and the passion of a Labor Movement – not a business organization! The numbers work out!
I’ve been at this for a long time. For your consideration, many of us worked with U.S. Representative Earl Pomeroy in 1998, long before the ERISA Committee, on a summary of a plan that he not only acknowledged but advanced. This plan, along with other initiatives and organizing has many intersections. The “good ole boys” of the Building Trades – from the seventies through today have wreaked havoc on the Membership, Middle Class, Organizing efforts, market share of the trades and our underfunded pensions! The same cadre of senior leaders and their loyal to a fault minions have wreaked both Organizing and Pensions! Our Blogs are based on numbers and solutions grounded in experience and not politics.
So here is a new spin on a tried and true concept: Organize your way out of these issues or die! When these participants, members and even retirees start missing checks all the BS PR spin will not help! Some funds have already gone to the PBGC and are securing applications for MPRA! Time is running out!
- Multiemployer pension reform effort launches in Washington BY HAZEL BRADFORDMARCH 14, 2018 2:57 PM Pensions & Investments
- Multiemployer Pension Reform Principles from the S. Chamber of Commerce – Wednesday, March 14, 2018 – 8:00am
https://www.uschamber.com/report/multiemployer-pension-reform-principles
- Pension plans that have applied to cut benefits under the Multiemployer Pension Reform Act
Pension Rights Center – Date Published: Tuesday, April 10, 2018
- Department of Labor – 2017 Critical, Critical and Declining, Endangered Status Notices – Critical Status Notices & Endangered Status Notices
How to Obtain Employee Benefit Documents from the Department of Labor – 3 pages.
“if you see a good fight – get in it”
Danny L Caliendo
Organizer/Trustee
Labor Rising/Labor Combat
