For several years now, even though problems were well documented before, union bosses have been hiding behind the current financial meltdown as a main cause for their massive pension under-funding problem. Now, it appears that the Obama Administration is helping to hide just how bad the problem is.
Despite a 2010 failed attempt at getting a tax-payer bailout for union pensions, the fact is, many union pension plans were underfunded well before 2008, as evidenced by United Parcel Service's paying $6.1 billion to exit the Teamsters' sinking Central States Pension Fund in 2007.
Earlier this year, Credit Suisse estimated that multi-employer pension plans are underfunded by as much as $369 billion:
Under fair-value calculations, multiemployer plans — collectively bargained plans maintained jointly by groups of employers and labor unions whose members work for those employers — are currently underfunded by $369 billion, Credit Suisse estimates. Most of that gap, $326 billion, is attributable to companies outside the S&P 500 and is concentrated within the construction, transportation, and mining industries. [Emphasis added.]
While the Department of Labor maintains a list of pension plans that are listed in "critical" or "endangered" status, under the 2006 Pension Protection Act, Congress is entitled to receive reports from the Departments of Labor and Treasury, as well as the Pension Benefit Guaranty Corporation.
These reports were due to December 31, 2011.
The Obama Administration has yet to provide them to Congress.
On Friday, House Republicans sent a letter to Labor Secretary Hilda Solis, Treasury Secretary Timothy Geithner, and Pension Benefit Guaranty Corporation Director Joshua Gotbaum
requesting when Congress could expect demanding the reports:
The Pension Protection Act of 2006 (PPA) made significant changes to the multiemployer pension plan system, and we remain concerned about the challenges facing these plans. Timely receipt of pertinent reports from the Secretaries of Labor and Treasury and Director of the Pension Benefit Guaranty Corporation (PBGC) is critical as Congress investigates the state of the multiemployer pension plan system and evaluates the consequences of PPA provisions. Two such reports required by the Employee Retirement Income Security Act of 1974 (ERISA) and the PPA were due December 31, 2011; however, neither has been submitted to Congress. [Emphasis added.]
Congressional Republicans gave Obama officials until November 2nd to provide the reports, as well as an explanation as to why they did not meet the statutory requirements.
However, given the ticking time bomb of union pensions, as well as the pending presidential election, it is questionable whether Congress will receive the required reports before November 6th.
- WSJ: The Union Pension Bomb
- Safeway Inc. Clarifies Multiemployer Pension Plan Underfunding
- The Next Pension Crisis
- The Dismal Future of Construction Industry Multiemployer Pension Plans
"Truth isn't mean. It's truth."
Andrew Breitbart (1969-2012)
Image credit: Weasel Zippers.