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.
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:
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.
I was skeptical when I started reading The Rule of Nobody: Saving America from Dead Laws and Broken Government by Philip K. Howard. My experience (especially in Union County where laws about not raiding Open Space Trust Funds don’t seem to apply) has not been that there are too many or too precise laws but rather that these laws are being broken, generally by another government, and there is no procedure to turn anybody in.
But after reading more than half the book, which mines New Jersey for examples of bad practice (a Franklin Township tree, the Bayonne Bridge mess, a Morristown soup kitchen) I am convinced Mr. Howard is right as regards the running of nursing homes and day care centers but when the object is not to fix a problem but to avoid actions so you can continue getting paid, as in the current situation with multiemployer pension plans that the New York Times profiled last Sunday, no action is possible because any action will damage, even to extinction, whoever takes it.
Hostess Brands, Inc. shut down and I see a scenario where their union pension plans were the reason. According to a news article there are two major unions at Hostess, IBEW Teamsters, which represents about 7,000 workers, and Bakery, Confectionary, Tobacco Workers and Grain Millers International Union (BCTGM) which represents about 5,000 employees. I couldn’t find the IBEW plan but the 2011 5500 filing for the BCTGM Multiemployer Pension Fund (This Dead Plan) told me all I needed to know.
If it were about revenue sharing or a luxury tax we could expect to see professional basketball soon since those issues are negotiable.
But it’s not. It’s about pensions and unfunded liabilities that over the term of the new CBA will bankrupt either the league or the teams that have to pay withdrawal liability.