WSJ: Union Pensions in the Red

[Omaha Steve]

http://online.wsj.com/article/SB10001424052970203946904574300113800780786.html?mod=googlenews_wsj

* JULY 26, 2009, 7:45 P.M. ET

We’ve all read about underfunded corporate pensions, but here’s an unreported story: Union pensions are even more in the red, and it’s one reason union chiefs are so eager to rig organizing rules to gain more dues-paying members.

Only last week, the country’s largest union local re-opened the contract for its 145,000 members two years early and gave up raises and reduced retirement benefits for future hires. The SEIU’s United Healthcare Workers East struck this unusual deal so employers could instead plug a gaping pension hole.

In April, the SEIU National Industry Pension Fund—which covers some 101,000 rank-and-file members—announced that its pension has been put into what the feds call “critical status,” or “red zone.” In other words, it lacks the cash to pay promised benefits and may have to cut them. As of 2007, the last year for which it reported results to the government, the fund had 74.4% of the assets needed to pay its benefits.

Thirteen of the bigger plans operated for the Teamsters have, together, a mere 59.3% of reserves necessary to cover obligations. Or consider that 26 pension funds at the food workers union, the UFCW, are at 58.7%. Seven locals at the United Brotherhood of Carpenters fare better at 67%. As a rule of thumb the government considers a fund to be “endangered” at below 80%, and in “critical” status at below 65%, and requires them to come up with a plan to get off probation within a decade.

You don’t hear labor leaders touting this kind of performance in their organizing riffs, and not many workers are patient enough to review the 5,500 forms filed with the IRS and Department of Labor that track these retirement savings. But the data show a steady decline in recent years that can’t be explained merely by the stock market.

For example, Unite HERE’s National Retirement Fund stood at 115% in 1998 and dropped to 83.4% by 2007, well before the crash. The SEIU fund that was put into a “red zone” in April was at 103.4% as recently as 1998. On average, the asset to liability ration at so-called multi-employer plans, which union funds make up the bulk of, stood at 66% in 2006, according to the Pension Benefit Guaranty Corporation. By contrast, single employer plans, basically most company-provided pensions, were funded at 96%.

FULL story at link.