So who do you believe?
Archive for the ‘Multiemployer Pensions’ Category
The Central States Pension Fund did it last September and last week a second Multiemployer (Union) plan started the process to reduce core benefits.
There are many Union Plans that are as badly funded as your typical government plan (when valued honestly) since, even though Union Plans have rules, they have some ‘flexibility’ that allows them to keep using 7.5% interest rates for funding and, since 2014, cut benefits when they deem appropriate which is exactly what the Iron Workers Local 17 Pension Fund wants to do.
A little perspective:
There are many Multiemployer (Union) plans that are as badly funded as your typical government plan (when valued honestly) since, even though union plans have rules, they have some ‘flexibility’ that allows them to keep using 7.5% interest rates for funding and, since 2014, cut benefits when they deem appropriate which is exactly what the Teamsters Central States Pension Plan is doing.
A little perspective:
- The government will not protect your pension
- Actuaries for these plans are not independent
Public plan sessions are tomorrow with New Jersey likely to be featured but today I learned of two recent events that might mean in ten years nobody will get retiree health benefits outside of Medicare, Medicaid, or Obamacare and there will probably never be a federal bailout of pensions beyond what the PBGC can afford.
It was also announced that this will be the last EA meeting that will be recorded so in future years I may be the only one memorializing this sort of stuff:
I do not work on any multemployer plans as the actuary since, like government plans, it is a closed shop and there are only a few actuarial outfits that get all the work. But I did do one of these plans decades ago before the current collapse and bid to do another one before it’s own collapse. Over the years I have consulted for law firms representing employers in these plans, primarily on withdrawal liability calculations, and have studied their funding levels based on available 5500 data.
The multiemployer plan pension-cut bill about to be enacted makes sense if you consider:
Congress passed a law tonight that will allow benefits for retirees in Multiemployer (union sponsored) plans to be cut to preserve the system although there is already a mechanism in place through the Pension Benefit Guaranty Corporation (PBGC) to handle these zombie plans which includes benefit caps. The problem is that the PBGC already has massive liabilities and does not want to take on more but the union sponsors of these plans also do not want to involve the PBGC for their own reasons.