Skip to content
September 6, 2010 / J. Shaw

No Taxpayer Bailout for Union Pensions

This Labor Day some labor union officials,Photo above, should be concerned. The Financial Accounting Standards Board, a private organization that sets the standards for financial standards, is considering a proposal that would require companies to disclose their potential liability from collectively bargained multiemployer pension plans.

With the liability on view for all to see, it would be difficult for unions to assert to potential new members that failing pension plans are solvent. Unions would lose a valuable tool to recruit new members.

What are multiemployer plans, and why does FASB want their liabilities reflected on companies’ books?

Multiemployer pension plans are created and sponsored by unions to generate retirement income for employees of different companies. These plans allow workers to take their pensions with them if they move to another participating company, and facilitate consolidation of union pension contributions into larger investment pools.

Although unions assure workers that union pension plans are more secure, multiemployer pension plans have lower levels of funding than do plans sponsored by of nonunion labor. This disparity in funding adequacy is evident in Labor Department data for 2007, the latest year for which complete reporting is available.

Since the 2008 stock market crash, the plans are likely in worse shape today.

Congress considers funds with less than 80 percent of needed assets to be in “endangered” status, and those with less than 65 percent to be in “critical” status. The Labor Department lists critical and endangered plans on a Web site at http://www.dol.gov/ebsa/criticalstatusnotices.html.

In a new study by the Hudson Institute published Wednesday, my associates and I examined the funding status of all 2007 pension plans, using Labor Department data.

Among all large plans — those with 100 or more employees — only 18 percent of union-negotiated plans were fully funded in 2007, compared with 39 percent of nonunion plans.

Twenty-four percent of union plans were in endangered status – less than 80 percent funded – compared with 9 percent of nonunion plans. And while 12.5 percent of union funds were in critical shape with less than 65 percent of required assets, 1.5 percent of nonunion plans were in critical shape.

Meanwhile, a few members of Congress have introduced bills that would have the government – that is, the taxpayers – rescue some plans.

Read more .washingtonexaminer.com    By: Diana Furchtgott-Roth

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: