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.
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1. Publication Title: Northwest Labor Press. 2. Publication No.: ISSN 0894-444X.
3. Filing Date: Sept. 22, 2009.
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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.
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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
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The purpose, function, and non-profit status of this organization and the exempt status for Federal income tax purposes has
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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%
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PAGE 8
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