In a follow up report to our earlier coverage, the Hudson Institute has unveiled its damning study on the largely ubiquitous insolvency of the pensions plans of the nation’s largest unions (download PDF here)
At a time when unions are intensifying efforts to organize American workers, it’s troubling to see a widespread pattern of relatively poor performance among collectively bargained pension plans. They perform poorly relative to plans sponsored unilaterally by employers for nonunion employees. Equally disturbing, some pension plans for union officers are better funded than the plans for rank-and-file union members. The disparity raises this question: Do collective bargaining contracts lack provisions for the funding necessary to generate the generous retirement income that unions advertise?
Our analysis finds that pension plans for the officers and staffs of union were much better funded than those for the rank-and-file. On average, the 21 largest union pension plans had less than 70 percent of the finds that they would need to cover their total obligations, and none were filly funded. Seven were less than 65 percent funded. Yet 23 officer and staff funds from the same union had 88.2 percent of the funding they would need to pay promised pensions, including seven fully funded plans and another 13 with at least 80 percent of their required funds. Excluding the seven plans strictly for union office employees, staff funds had 98.4 percent of their required funds.
Unions have also been caught using their funds to achieve their political ends. In 2005, the Department of Labor wrote the AFL-CIO a letter telling it to reconsider such practices. Theoretically, pension funds are not permitted to make investment decisions based on politics or public policy. Using pensions as a political tool hurts union members because it may push their retirement funds into lower yielding investments. That diminishes investment returns and thus reduces resources available to pay promised benefits.
(My emphasis above)
This is a very interesting report that reveals how little unions really care about their own membership, the “little guys” that unions are supposed to be protecting. Unions have seen the draw of political power and found that bright, shiny object of far more interest then merely protecting the interests of their own members.
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