Report Shows Union Members Eager for New Members to Bankroll Failing Pension Plans
September 1, 2009
by Hudson Institute
WASHINGTON – Hudson Institute released a new report today finding that collectively bargained union pension plans perform poorly when compared to plans sponsored by single employers for non-union employees. The report shows that union leaders have contributed to underfunded pension plans by negotiating for pension plans that are more generous than can be afforded, often seeking pension increases in the face of consistent employer complaints about costs.
The report, "Comparing Union-Sponsored and Private Pension Plans: How Safe are Workers' Retirements?" was produced by Diana Furchtgott-Roth, Senior Fellow and Director of Hudson Institute's Center for Employment Policy, and Andrew Brown, an independent economist.
"Our report reveals why organized labor is so eager to gain new members through proposed legislation like the Employee Free Choice Act – they need to help bankroll these failing pension plans with new dues-paying members," said Ms. Furchtgott-Roth.
"With the current low levels of union membership, unions are doing their best to recruit new members. The advertised benefits of joining a union sound appealing, but there is a widespread pattern of poor performance among collectively-bargained benefit pension plans that everyone should know about."
"The problem is that there is a lack of accountability required of union leaders and no clear union pension financing rules. Our report shows that union members have few assurances that the trustees of their pension funds are acting in their best interest. Given the continued poor status of union-run pension plans, it can be said that the union trustees are not adequately working to ensure that rank-and-file members have the stable financial futures they deserve," Ms. Furchtgott-Roth concluded.
This report illuminates the causes of the underlying problem of underfunding. The study goes on to analyze the general health of pension plans in the United States and, in particular, documents eight case histories that illustrate issues in pension funding. It also examines the role political interests may play in union membership and pension funding, and analyzes the link between legislation now pending in Congress, the Employee Free Choice Act, and underfunding of pensions. The report presents evidence of the disparity between union and non-union pension plans, and calls on union members to recognize their leaders' responsibility to close that gap.
1. The most recent data available show that union-negotiated pension plans fare consistently worse than their non-union counterparts.
2. Officer pension plans are often better funded than those for rank-and-file union members.
3. Rather than negotiating better-funded pensions, unions spend money on politics.
4. The failing union pension plans are one reason that union officials are promoting the Employee Free Choice Act (EFCA).
The full report can be found here.
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