Trumping Union Pensions

Donald Trump and Carl Ichan do not want to pay into the Pension Plan of the National Retirement Fund from which employees of Trump Taj Mahal get their pension and health care benefits and a judge is with them while union representatives are taking it personally:
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But examine the funded status of that plan and you will see that it’s just business and doing business with a union that sponsors a multiemployer plan these days is not healthy.

According to their last 5500 filing the Hotel Employees and Restaurant Int’l Union Local 54 Pension Fund had an RPA* funded ratio of 55.11% in 2007 which might have been the reason they moved into the Unite Here National Retirement Fund that year.  According to the latest 5500 filing for that plan the RPA funded ratio dropped to 36.14%. and there are 19 pages of Schedule C Service Providers like actuaries, lawyers, and investment managers listed.

This plan is spiraling toward bankruptcy itself but remains far too lucrative for those Service Providers to give up the ghost so, based on my consulting experience with similar multiemployer plans, deals get struck to keep the money flowing and the Pension Benefit Guaranty Corporation (PBGC), deathly afraid of taking on more massive liabilities, out of it for as long as possible.

In this case Trump and Ichan are negotiating to keep their exposure down while the unions are posturing to keep them on the hook.  I’m fairly sure that Trump and Ichan grasp the real situation while the union leadership likely does also.  I’m almost positive that rank-and-file union members don’t and that will eventually be to their detriment.

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RPA refers to the Retirement Protection Act of 1994 which among other things required calculations of liabilities using somewhat reasonable assumptions though multiemployer plans still get to use their fanciful assumptions for funding purposes.

24 responses to this post.

  1. Posted by Tough Love on October 20, 2014 at 2:51 pm

    These Union pensions were a long-shop for survival in any case, and the PBGC insurance on Multi-employer Plans is VERY low (I believe about $10K max).

    So what’s worse, is that the Trump Taj Mahal has now rec’d a judge’s approval to end their health insurance coverage.

    Reply

  2. Posted by Anonymous on October 20, 2014 at 3:01 pm

    know it all

    Reply

  3. Posted by Anonymous on October 20, 2014 at 5:27 pm

    There are two major issues, will the Taj Mahal dissolved and become a totally new business from top to bottom? Then the new business can start new. If this is a bankruptcy reorganization with the chief shareholder becoming the principal own exchanging debt for ownership, does he use the exchanged debt as a state and federal tax write off? If his overall corporate tax obligation on his billions is reduced, what more should he be given? If the debt becomes a write off, that’s positive, so why can’t he support a group annuity and health plan for fulltime workers? Trump and Ichan sound like corporate pumps and indentured servant masters. The second. issue is the leaders of multiemployer pension funds, all good things come to an end, these schemes don’t work and the members need to demand an audit. The pensions need major reforms and the leadership should be removed. Just another group of pumps, feeding off of innocent, where is the NLRB, Congress, CC etc. Workers should be protected from scammers employers or union officials.

    Reply

    • Posted by Tough Love on October 20, 2014 at 5:39 pm

      Quoting ….. “If the debt becomes a write off, that’s positive, so why can’t he support a group annuity and health plan for fulltime workers? ”

      Because Icahn is GREEDY and doesn’t have too.

      It’s no different than asking WHY Public Sector Unions won’t agree to reductions in their FUTURE Service pension accruals … knowing that they are now MULTIPLES greater than what their Private Sector counterparts get.

      Again, because they’re GREEDY.

      Reply

      • Posted by Anonymous on October 21, 2014 at 10:07 am

        The reforms increased employee contributions, for pension and healthcare, the retirement age was also increased.

        Reply

        • Posted by Tough Love on October 21, 2014 at 10:18 am

          Almost ALL of the changes applied ONLY to NEW employees and will therefore have very little financial benefit for decades, until they begin to retire,

          JUST like it is ROUTINELY done in Private Sector Plan changes, ALL (yes ALL) of the changes should have applied to the FUTURE Service accruals of all CURRENT workers.

          Reply

    • Posted by Anonymous on October 20, 2014 at 7:28 pm

      TL you sound demented.

      Reply

      • Posted by Tough Love on October 20, 2014 at 7:41 pm

        Many many times I have called for EQUAL Public/Private Sector “Total Compensation” (cash pay + pensions + benefits).

        Got a problem with “EQUAL”?

        From the aggressive replys to THAT and similar proposals, I can only conclude that EQUAL is not OK with you.

        Why not, are you “special” and deserving of a better deal … right NOW a MUCH MUCH better (pension/benefit) deal (all while very RARELY making any less in “cash pay”) … 80-90% paid for NOT by YOU, but by the Taxpayers?

        While I don’t know if YOU are “demented”, I DO suggest you look into why you are so insatiably greedy.

        Reply

        • Posted by Anonymous on October 20, 2014 at 7:54 pm

          In a free employment market, how do you propose to make private sector employers agree to a universal pay scale for what you feel is comparable jobs. Most public sector jobs are under collective bargaining agreements, most private sector jobs are not..

          Reply

          • Posted by Tough Love on October 20, 2014 at 11:33 pm

            No, It’s (mostly) a “free market” ONLY in the PRIVATE Sector where …….pay, pensions, and benefits are constrained by the need for the Private Sector company to be profitable. If you pay TOO MUCH and have to raise your prices accordingly, your customers shop elsewhere.

            In the PUBLIC Sector there are few (if any) such controls ……. can the residents of a City choose a different Police force, an different DPW or a DIFFERENT road maintenance crew? And Gov’ts have no need to make a “profit” because they can TAX their residents. There is ZERO incentive for efficiency, & cost controls and PERVERSE incentives for the Public Sector Unions to Collude with our self-interested, vote-selling, contribution-soliciting elected officials.
            ————————————————————————————–
            And PUBLIC Sector “collective bargaining” in the TRUE sense is a bad joke. Who at that “bargaining table” is REALLY looking out for the best interests of the Taxpayers? Nobody !

          • Posted by Anonymous on October 21, 2014 at 10:10 am

            The free market determines the cost of labor, there is no uniformed pay scale, except minimum wage.

          • Posted by Tough Love on October 21, 2014 at 10:23 am

            The “free market” (which sets “market rate” compensation via TRUE and unrestrained competition for labor), is the 85% of all workers who are employed in the PRIVATE Sector, NOT the 15% of all workers who work in the Public Sector …… where their compensation is ROUTINELY manipulated by you-scratch-my-back-and-I’ll-scratch-yours deals between the Public Sector Unions and our self-interested elected officials.

  4. Posted by hondo on October 20, 2014 at 6:49 pm

    TL is a bitter jealousy hater. When smoke clear we will see and whatever, the outcome you will not be happy.

    Reply

    • Posted by Tough Love on October 20, 2014 at 7:30 pm

      A comment clearly coming from a Public Sector worker/retiree undoubtedly “promised” or now receiving WAY more than their Private Sector counterparts … I don’t care what you think.

      Reply

  5. Posted by Javagold on October 20, 2014 at 7:36 pm

    If u don’t hold it, you don’t it…..learn it, understand it, prepare for it.

    Reply

  6. It is not greediness, it’s absolution that’s what they are creating here!

    Reply

  7. Posted by Hoboken_Guy on October 21, 2014 at 11:43 am

    The Taj retirement issue seems like a good analog to the public pensions. The owners/politicians and the union understand the numbers and how the system is insolvent but the rank and file don’t, never have, and will suffer for it.

    This never should have happened but like int he Taj case the service providers, in this case the politicians and union leaders, were getting what they wanted and just want to keep the music going for as long as possible.

    Reply

    • Posted by Tough Love on October 21, 2014 at 12:35 pm

      In the Private Sector that’s a big problem in mufti-employer Plans, but to a rather small extent in single employer pension Plans.

      Almost ALL Public Sector Plans …. if “valued” on the EXACT SAME basis as the REQUIREMENTS for Private Sector Plans, have funding ratios below 60% (with NJ’s STATE and LOCAL Plans having TRUE funding ratios of roughly 35% and 50% respectively).

      Per Treasury/IRS regulations, any Private Sector Plan with a funding ratio below 60% is barred from grant any further pension accruals until (and if) such time that it rises above the 60% threshold.

      ALL PUBLIC Sector Plans below a 60% funding ratio ….. calculated on the exact same basis as Private Sector Plans …….should be frozen, simply to STOP digging the HUGE financial hole our States and Cities are in deeper EVERY DAY via additional accruals.

      Reply

  8. Posted by Anonymous on October 23, 2014 at 11:16 am

    There is a reason the public plans are not frozen.

    Reply

    • Posted by Tough Love on October 23, 2014 at 7:07 pm

      There sure is …….. the Public Sector Unions have BOUGHT-OFF (with campaign contributions and election support) the elected officials who would take such actions.

      Reply

      • Posted by Anonymous on October 23, 2014 at 9:32 pm

        No, there was a change in public pension reporting standard, a move to present value reporting instead of actuary smoothing. The new reporting standard change impacted the percentage level in a positive way. The 2009 financial crisis had a serious impact on pensions because of Investments. I’m reading reports to get an understanding of the impact of reporting standard changes.

        Reply

        • Posted by Tough Love on October 25, 2014 at 10:54 pm

          You’re “clueless”.

          GASB (Government Accounting Stands Board) changes applicable to Public Sector Plan valuations will make Public Sector Plan funding ratios look MUCH “worse”, not better. And gong forward, everything will have to be reflected on the balance sheet, instead of conveniently hidden them in hard-to-find footnotes.

          Reply

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