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OCT. 2, 2009 :NWLP 9/29/09 9:53 AM Page 8 Multi-employer pension plans still not out of woods By DON McINTOSH Associate Editor For union pension plans, last year’s stock market meltdown could mean next year’s benefit cuts and/or steep in- creases in employer contributions — if Congress doesn’t change pension fund- ing rules. Local pension trustees are even saying privately that some union pension plans could fail and be taken over by the Pension Benefit Guaranty Corporation if they’re not given more time to make up for investment losses. Congressman Earl Pomeroy (D- North Dakota) has circulated a draft bill that would do just that. A multi-employer plan is a pension arrangement between a labor union and a group of at least two unrelated em- ployers, usually in a common industry. Tightly regulated by the federal govern- ment, the pension plans are based on the trusts’ promise to pay a certain amount per month to workers when they retire, usually based on years of service. To make sure there is enough money to pay the promises, employers may contribute a certain amount for every hour em- ployees work, and those contributions to the pension fund are invested. Deci- sions about the level and kind of bene- fits, and about where and how to invest, are made jointly by union and employer trustees, advised by an array of lawyers, pension administrators, actuaries, and investment managers. If investments lose value, a pension plan can become “underfunded.” Fed- eral rules say that when a plan becomes substantially underfunded, trustees must prevent insolvency by some com- bination of benefit cuts and contribution increases. That’s where it gets tricky for the jointly trusteed union pension plans. On the one hand, the amount employers contribute is part of collective bargain- ing agreements, and those can be time- consuming and difficult to change. On the other hand, trustees are not allowed to cut benefits to workers who have al- ready retired. So they can only cut the rate at which future pension obligations accrue, and optional “extras” like early retirement benefits and death and dis- abilty benefits. And that may not be enough in some cases. The problem is especially severe for some building trades union pension funds, because at the same time invest- ments have lost up to a third of their value, union members (“plan partici- pants” in pension jargon) are out of work, meaning their employers aren’t making those hourly contributions on their behalf to the fund. The healthiest plans are the ones with lots of “active participants” working relative to the number of retired participants. Plans with a high proportion of retired partic- ipants — where unions are losing mar- ket share or where their industry is shrinking — are at the biggest risk when investments lose value. Nationwide, the proportion of active participants in multi-employer pension U.S. Postal Service Statement of Ownership, Management and Circulation plans has been falling for decades — from 76 percent in 1980 to 45 percent in 2006. The remainder are retirees and in- active participants (workers who are not yet vested or no longer employed but are not yet collecting benefits). Pension plans are insured by the Pen- sion Benefit Guaranty Corporation, which takes over plans that default on their pension obligations. Only 10 multi- employer plans have ever been taken over by PBGC, and none since 1980. In short, union-affiliated multi-employer defined benefit pension plans are among the most stable and secure retirement plans out there. Could the current crisis render even them insolvent? Multi-employer pension plan trustees hope they won’t have to answer that question, if Congress acts to give plans more time to rebuild assets. That would give the stock market time to re- bound — re-inflating the value of assets and solving the pension plan shortfall painlessly. Alternately, a longer time frame could allow employers to make up a shortfall with a smaller increase in contributions over a longer time. Lynn Lehrbach, a union rep for Teamsters Joint Council 37, is a trustee of the 11-state Western Conference of Teamsters Pension Fund, one of the largest private-sector union pension plans in the country. The Western Con- ference pension is about 85 percent funded, Lehrbach said, so it’s not one of the hardest hit. But Lehrbach said he’s concerned about other unions’ funds, and during the August recess, he talked with much of the local congressional delegation about the need for action. Lehrbach said workers shouldn’t have to pay for the misdeeds of what he termed “banksters.” Pomeroy was expected to introduce his bill after an Oct. 1 hearing of the House Ways and Means Committee, of which he is a member. [Earl Blume- nauer (D-Ore.) is also a member.] The bill would allow multiemployer plans that remain solvent to make up losses over a 30-year period. The bill would also make it easier for troubled multi- employer plans to merge. If PBGC de- Q termined that such a merger would re- duce its likely long-term loss, it would facilitate such alliances by providing di- rect or indirect financial assistance. The House Education and Labor Committee also has jurisdiction over pension matters, and held hearings ear- lier this year. [Congressman David Wu (D-Ore.) is a member.] In June, com- mittee chair George Miller (D-Calif.) introduced HR 2989, which would give multi-employer plans another five years to make up the unfunded liability. Quest Investment Management, Inc. • } Serving Serving Multi-Employer Multi-Employer Trusts for for Twenty Years Trusts Over Twenty Years Greg Sherwood Adrian Hamilton Cam Johnson Greg Sherwood Adrian Johnson Hamilton Monte Johnson Monte Doug Goebel Doug Goebel Bill Zenk Garth Nisbet Pat Worley Cam Johnson One SW Columbia St., Suite Suite 1100, 1100 Portland, OR 97258 503-221-0158 www.QuestInvestment.com www.QuestInvestment.com Required by 39 U.S.C. 3685. 1. Publication Title: Northwest Labor Press. 2. Publication No.: ISSN 0894-444X. 3. Filing Date: Sept. 22, 2009. 4. Issue Frequency: Semi-monthly basis on first and third Fridays of each month. 5. No. of Issues Published Annually: 24. 6. Annual Subscription Price: $13.75. 7. Complete Mailing Address of Known Office of Publication: 4275 NE Halsey St., P.O. Box 13150, Portland, Multnomah, Oregon 97213. 8. Complete Mailing Address of Headquarters or General Business Offices of Publisher: 4275 NE Halsey St., P.O. Box 13150, Portland, Multnomah, Oregon 97213. 9. Full Names and Complete Mailing Address of Publisher, Editor, and Managing Editor. Publisher: Oregon Labor Press Publishing Co., Inc., 4275 NE Halsey St., P.O. Box 13150, Portland, Multnomah, Oregon 97213. Editor: Michael Gutwig, 4275 NE Halsey St., P.O. Box 13150, Portland, Multnomah, Oregon 97213. Managing Editor: Michael Gutwig, 4275 NE Halsey St., P.O. Box 13150, Portland, Multnomah, Oregon 97213. 10. Owner: Oregon Labor Press Publishing Company, Inc., (a non-profit corporation) 4275 NE Halsey St., P.O. Box 13150, Portland, Multnomah, Oregon 97213. Shareholders owning or holding one percent or more of the total amount of shares are: Musicians Mutual Association No. 99 (Bruce Fife, trustee); IBEW Local 125 (Travis Eri, trustee); Oregon AFL-CIO (Tom Chamberlain, trustee); United Food & Commercial Workers Local 555 (Jeff Anderson, vice president); Northwest Oregon Labor Council (Bob Tackett, vice pres- ident); LabelTrades Section, Northwest Oregon Labor Council (BobTackett);UNITE HERE Local 9 (Karly Edwards, trustee); Allied Printing Trades Council of Portland (Patrick Philpott, trustee); Iron Workers Local 29 (Kevin Jensen, trustee); Iron Workers Shopmen’s Local 516 (Michael Lappier trustee); Machinists District Lodge 24 (Bob Petroff, chair); Machinists Lodge 63 (Pat Maloney, trustee); Millwrights Local 711 (Brian Mundy, trustee); United Association Local 290 (John Endicott, trustee); Sheet Metal Workers Local 16 (Len Phillips, trustee); IBEW Local 48 (Ed Barnes, vice president); Office & Profes- sional Employees Local 11 (Mike Richards, trustee); Communications Workers Local 7901 (Madelyn Elder, trustee); Auto Mechanics Lodge 1005 (Gene McGlothlin, trustee); Columbia-Pacific Building and Construction Trades Council, (John Mohlis, secretary). 11. Known Bondholders, Mortgagees, and Other Security Holders Owning or Holding 1 Percent or More of Total Amount of Bonds, Mortgages or Other Securities: None. 12.Tax Status (For completion by non-profit organizations authorized to mail at non-profit rates): The purpose, function, and non-profit status of this organization and the exempt status for Federal income tax purposes has not changed during preceding 12 months. 13. Publication Title: Northwest Labor Press 14. Issue Date for Circulation Data Below: Sept. 18, 2009 15. Extent and Nature of Circulation Average No. Copies Each Issue During Preceding 12 Months Actual No. Copies of Single Issue Published Nearest to Filing Date A.Total No. Copies (net press run) ............................................................. 58,215 B. Paid Circulation (by mail and outside the mail): 1. Mailed outside-county paid subscriptions stated on PS Form 3541.....56,105 3. Sales through dealers and carriers, street vendors and counter sales........459 C.Total Paid Distribution (Sum of 15b (1), (2), (3) and (4) ............................56,564 D. Free or Nominal Rate Distribution......................................................................... 1. Outside-county copies included on PS form 3541 ..........................................0 2. In-county copies included on PS Form 3541 ..................................................0 3. Mailed at other classes through the USPS .....................................................0 4. Outside the mail (carriers and other means)...............................................125 E.Total Free or Nominal Rate Distribution .........................................................125 F. Total Distribution .....................................................................................56,689 G. Copies not Distributed ..............................................................................1,526 H.TOTAL ....................................................................................................58,215 I. Percent Paid 97.10% 43,401 42,323 348 42,671 0 0 0 125 125 42,796 605 43,401 98.30% SERVING UNIONS FOR OVER 25 YEARS BEAVERTON, OR (503) 644-1400 PAGE 8 Northwest Dental Associates, P.C. GRANTS PASS, OR (541) 479-6696 VANCOUVER, WA FISHER’S LANDING (360) 891-1999 GRESHAM, OR (503) 492-8487 Sarah Barber, D.D.S Charles Stirewalt, D.D.S. Chau Ngo, D.D.S. HILLSBORO, OR ORENCO STATION (503) 640-9999 VANCOUVER, WA SALMON CREEK (360) 574-4574 MILWAUKIE, OR (503) 659-2525 Phong Bui, D.M.D. Charles Stirewalt, D.D.S. Chau Ngo, D.D.S. Stirewalt, P.C. PORTLAND, OR (503) 777-0761 SALEM, OR (503) 362-8359 Protecting Union Member Smiles and Wallets. QUALITY, AFFORDABLE FAMILY DENTAL CARE General, cosmetic, and specialty care Most insurance and union plans accepted Easy credit and low monthly payments, O.A.C. Evening and Saturday appointments Ask about our Dental Discount Program ORTHODONTICS AVAILABLE! 100 $ OFF NON COVERED DENTAL SERVICES There may be future costs based on diagnosis. Limit one per person. Not valid on diagnostic or preventative services. Not redeemable for cash or credit. Must surrender at time of service. Valid for cash, PPO, Indemnity 12-31-2009 patients only. Can't be combined, subject to change, expires 12/31/2008. 1-888-BRIGHT NOW www.BRIGHTNOW.com Smiles for Ever yone! 16. Publication of Statement of Ownership.................................................Oct. 2, 2009 17. I certify that the statements made by me above are correct and complete: Michael Gutwig, Editor WILSONVILLE, OR (503) 682-8552 © 2007 Bright Now! Dental, Inc. NORTHWEST LABOR PRESS OCTOBER 2, 2009
