1199 Union Forgoing Raises to Aid Pension

[Omaha Steve]

http://www.nytimes.com/2009/07/21/nyregion/21union.html?_r=1&ref=nyregion

By STEVEN GREENHOUSE
Published: July 20, 2009

Facing a crisis in its pension fund, 1199, New York’s giant health care union, reached an innovative settlement on Monday that calls for forgoing nearly a billion dollars in raises for 145,000 union members so that hospitals can increase their pension contributions to safeguard future retirement benefits.

The union, formally called 1199 S.E.I.U. United Healthcare Workers East, agreed to a wage freeze for next year, but also — in a move that parallels Mayor Michael R. Bloomberg’s proposal for municipal employees — accepted less generous pensions for future hires.

With the union’s pension fund losing $3.5 billion — or one-third its value — in recent years, mostly because of losses in stock market investments, 1199 feared that the fund would have to reduce promised pension payments to not only 48,000 current retirees, but also tens of thousands of current workers.

To restore the fund’s financial health, the tentative agreement calls for scrapping the 3 percent raise planned for December and redirecting that money into the pension fund, along with a second fund that pays for health benefits.

The pension crisis was so severe that 1199 and the League of Voluntary Hospitals and Homes of New York, which represents 108 hospitals and nursing homes, took the unusual step of negotiating this agreement more than two years before the union’s current contract was due to expire.

“Never before in the history of this collective bargaining agreement have we faced the kinds of challenges that we have been confronting in this bargaining,” said Bruce McIver, president of the league, whose members include Mount Sinai, NewYork-Presbyterian, Montefiore, St. Vincent’s and Beth Israel.

FULL story at link.