More on Union Pensions

0 June 11, 2009  Uncategorized

Yesterday I wrote about how pension provisions in typical PLAs:

  • Hurt retirement for non-union workers. Employer retirement contributions into union pension plans on behalf of non-union workers are forfeited unless workers join a union.
  • Keep underfunded and mismanaged union pension plans afloat.
  • Expose contractors to underfunded multi-employer pension withdrawal liability.
  • Increase costs to construction users because double pension payment (one payment for the existing non-union plan that workers deserve and one for the mandated union “windfall” plan from which workers will never benefit) is factored into bids from the rare non-union contractors that do bid on a PLA project.
  • Cut competition from non-union contractors that do not want to participate in PLA plans (because of the aforementioned reasons), which reduces the number of bidders and increases construction costs.

More entities are starting to understand the problem with union pension plans.  The Right to Work Blog posted about PLAs and union pensions yesterday.

The Washington Examiner (“Union officer pension plans remain flush as rank-and-file retirement plans deteriorate,” 6/9) reported that pension plans:

…for union officers remain healthy and well-funded even as rising liabilities threaten to consume the savings of their rank and file counterparts who participate in different funds within the same labor organization, according to a Hudson Institute study

And now The Wall Street Journal reports that union financial problems are not limited to union pension plans (“Unions in Debt,” 6/11):

Alarm is coming even from inside the AFL-CIO — specifically, from Tom Buffenbarger, president of the International Association of Machinists and Aerospace Workers, who sits on the AFL-CIO’s finance committee. Bloomberg News reports that he is circulating a report claiming the AFL-CIO engaged in “creative accounting” to conceal financial difficulties heading into last year’s Presidential election. As recently as 2000, the union consortium of 8.5 million members had a $45 million surplus. By June of last year it had $90.6 million in liabilities, or $2.3 million more than its $88.3 million in assets. “If we are not careful, insolvency may be right around the corner,” Mr. Buffenbarger warned.

Evidence suggests that union pensions and overall union finances are in shambles, so why would construction workers and their employers want to board a ship already taking on water via a PLA?

Isn’t it irresponsible of the government to promote PLAs on federal projects over $25 million as PLAs funnel construction workers into insolvent union pension plans? When will the government wake up and realize these sweetheart deals harm the retirement prospects of workers?

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