...Congress weighs letting union pension plans cut benefits
(From Page 1
pect any government bailout.
Given that framework, NCCMP’s
report proposes that pension plans
which are projected to become insol-
vent be given authority to stop the slide
by reducing current and future pension
benefits. Pension trustees would decide
how to do that, but would not be al-
lowed to cut benefits past the amount
needed to achieve solvency, and would
not be allowed to go below 110 percent
of the PBGC’s maximum benefit
amount.
Under current law, distressed pen-
sion plans are obligated to pay current
retirees the full dollar value of the prom-
ised benefits — until they run out of
money. DeFrehn says that’s not fair to
those retirees who were counting on
collecting benefits in the years after the
plans are projected to become insolvent.
“You really have to think of it in
terms of today’s pensioners versus to-
morrow’s pensioners. and right now,
all the burden is falling to tomorrow’s
pensioners. Their contribution rates
have doubled, tripled, quadrupled.
Their accrual rates have been slashed
in half and then in half again. And
that’s to support people who benefited
from a lot of those ad hoc increases in
order to protect the deductibility of the
contributions,” DeFrehn said.
The NCCMP report also proposes
formation of a new kind of pension
plan that would still guarantee a certain
income in retirement but would take
employers off the hook for pension
plan financial losses. Similar to a kind
of plan that’s common in Canada, the
proposed “target benefit” plan would
guarantee a minimum benefit based on
Carol Duncan, CEO of General Sheet Metal in Clackamas, Oregon, testifies
Oct. 29 at a hearing on union pension fund crisis held by the U.S. House
Subcommittee on Health, Employment, Labor and Pension. Duncan said
small union employers are struggling to compete for work because they're
saddled with responsibility of making up for pension fund losses, a
responsibility that's also affecting access to credit and bonding.
conservative assumptions about invest-
ment return, while aiming for returns
sufficient to provide benefits above that
amount.
On Oct. 29, the U.S. House Sub-
committee on Health, Employment,
Labor and Pension held a hearing on
NCCMP’s proposals. It was the sub-
committee’s sixth hearing on the multi-
employer pension crisis since early
2012. DeFrehn thinks the committee
will draft legislation in the coming
months along the lines of the NCCMP
proposal.
“We need to maintain the delicate
balance between the needs and desires
of plan participants with the economic
realities of the marketplace so that the
contributing employers can remain
competitive and profitable,” AFL-CIO
Building and Construction Trades De-
partment President Sean McGarvey
told the Congressional subcommittee.
Carol Duncan, CEO of General
Sheet Metal (GSM) in Clackamas,
Oregon, also testified at the hearing,
and told Congress how her construc-
tion business is threatened by the pen-
sion funding crisis. GSM employs 60
to 100 members of Portland-based
Sheet Metal Workers Local 16 — fab-
ricating and installing sheet metal
roofs, siding, duct work, and HVAC
systems. Under the union contract,
GSM contributes to a national pension
plan and a local pension plan. Both
plans lost value in the 2000 and 2008
financial meltdowns. The national plan
alone lost 28 percent of its asset value
in 2008. To make up the losses, the
pension increased employer contribu-
tions. GSM contributed $149,000 to
the national plan in the last year, and
that’s slated to increase 7 percent a year
every year until at least 2017.
“It is no longer feasible for employ-
ers to be the backup for stock market
performance,” Duncan told the sub-
committee.
In any downturn, construction is one
of the first industries to feel the hit, and
one of the last to recover. With little
work to go around, competition is
fierce, Duncan said, and the additional
pension contributions are making it
harder for her and other union firms to
compete. And makeup contributions
aren’t even the whole story, Duncan
said. Construction businesses are very
dependent on banks and insurance com-
panies for credit and bonding. A new fi-
nancial accounting standard requires
that company financial statements in-
clude detailed information on pension
plan contributions, and also note the
amount of any potential withdrawal lia-
bility. In GSM’s case, the withdrawal li-
ability — the exit fee it would have to
pay if it left the pension plan — exceeds
the value of the company. That makes it
harder for GSM to secure bank loans
and bonding, Duncan said.
“I feel good about taking care of our
employees by paying them a living/
saving wage, as well as providing good
health care benefits, and I want to con-
tinue to be able to do that,” Duncan tes-
tified. “My hope is that the system can
City of Portland to union rep: Get off the property
On Sept. 30, Laborers Local 483
Business Manager Richard Beetle re-
ceived a threatening letter from City of
Portland Human Resources director
Anna Kanwit.
It had come to Kanwit’s attention
that on two separate occasions, Local
483 Union Representative Erica Askin
came onto City property where Local
483 members (City maintenance work-
ers) work — without prior permission
from managers.
“On August 29, 2013 at approxi-
mately 2:40 p.m., Ms. Askin came into
the assembly room,” Kanwit wrote.
“She was distributing buttons and fly-
ers and yelling to the employees.”
And that’s not all.
“On or about August 20, 2013 at ap-
proximately 2:15 p.m.” Kanwit wrote,
“Maintenance managers observed Ms.
Askin meeting with at least one em-
ployee in the north conference room.”
“Richard, I would appreciate it if
you helped to control Ms. Askin,” Kan-
wit continued. “Her behavior is inter-
fering with employees’ work, disruptive
to the work environment, and damag-
ing our relationship with your Local.”
A union rep distributing buttons …
PAGE 8
talking to a member without manage-
ment’s permission … such conduct has
got to stop, and if it doesn’t, Kanwit in-
formed Beetle, she would “seriously
consider” filing a legal charge against
the union.
Beetle wasn’t sure what to make of
the letter, but he knew the idea that
Askin had interfered with members’
work in the assembly room was com-
plete and utter garbage. By and large,
the members’ work isn’t done in the as-
sembly room, or even in the mainte-
nance building; it’s done in the field.
Local 483 members repave City
streets, clean and repair sewers, and in-
stall or repair sidewalks. Every work-
day morning they gather in the assem-
bly room before their shift begins, and
at the end of the day, they return to the
room, known as the “bullpen,” to await
the end of the shift.
Askin had come into the bullpen at
shift end — and told members that
City leaders want to gut their job secu-
rity. She had to yell to be heard in the
large room.
Local 483 is part of the seven-union
coalition known as the District Council
of Trade Unions (DCTU), and a clause
L ABORERS L OCAL 483 U NION R EP E RICA A SKIN
in the DCTU contract says that the
City can’t contract out members’ jobs
unless managers first show that doing
so saves taxpayers money, and the sav-
ings can’t come from slashing worker
pay and benefits. The City is propos-
ing to eliminate that requirement,
thereby removing the only legal obsta-
cle to wholesale privatization.
Beetle considered what to do about
Kanwit’s letter. Must union reps go on
bended knee to managers, saying,
NORTHWEST LABOR PRESS
“pretty please, may I talk to my mem-
bers?” Beetle didn’t think so.
Local 483 leaders photocopied
Kanwit’s letter and distributed it to
members. When Askin returned to the
bullpen to give the next contract bar-
gaining update, they welcomed her
back with cheers.
“No way in hell are we going to let
the HR people tell us our union rep
can’t visit,” said street maintenance
crew leader Bruce Easley.
be reformed so that my business will
be viable for the long-term and that
pension benefits already earned can be
saved without any bailout from the fed-
eral government.”
NCCMP’s pension reform proposal
has the backing of the AFL-CIO Build-
ing Trades Council as well as Associ-
ated General Contractors and numerous
union contractor associations such as
SMACNA (Sheet Metal and Air Con-
ditioning Contractors’ National Associ-
ation), the group Duncan is active in.
But the proposal also has critics, in-
cluding the AARP. At the hearing,
AARP legislative policy director
David Certner objected to cutting cur-
rent retiree benefits, and said Congress
should first explore other alternatives.
“The retirement security offered by
defined benefit [pension] plans would
become illusory if, after having
worked a lifetime and earned that pen-
sion – which is, after all, income in the
form of deferred compensation – your
benefits can be cut after you’ve already
retired,” Certner said.
Certner said Congress should con-
sider increasing the insurance premi-
ums paid by pension plans to the
PBGC, to shore up PBGC’s funding
and enable more generous benefits.
Currently, PBGC premiums for multi-
employer pension plans are just $12
per year per participant.
DeFrehn agrees that premiums
should rise, but says even 10 times that
amount would not be enough to rescue
the PBGC if one or two of the biggest
at-risk pension plans fail, like the Cen-
tral States Teamsters Pension Fund or
the United Mine Workers Pension
Fund.
At least two national union leaders
have also come out in opposition to
parts of the NCCMP proposal — In-
ternational Association of Machinists
President Thomas Buffenbarger and
Teamsters General President James
Hoffa Jr. Buffenbarger sat through the
hearing, and afterward held a press
conference to oppose any solution that
would cut retiree benefits.
“Raiding pension plans and robbing
seniors of retirement benefits is not the
way to solve any financial crisis,
whether it’s in Detroit, state houses or
the latest ‘solution’ to fix a small num-
ber of troubled multi-employer plans,”
Buffenbarger said. “The proposals be-
ing considered by Congress ask our na-
tion’s most vulnerable citizens to pay
for a problem created by Wall Street,
the very ones who have taken billions
in taxpayer bailouts.”
“The last thing anybody wants is for
people to have benefits cut,” DeFrehn
told the Labor Press. “But ours is a so-
lution that says, ‘if they’re going to be
cut, is there a way for us to salvage
them at a higher level and not have
plans fail if they don’t have to.’ ”
For his part, Hoffa wrote a letter to
House Education and Workforce Com-
mittee Chair John Kline (R-Min-
nesota), saying the Teamsters can’t
support any proposal that would cut ac-
crued benefits of participants and cur-
rent retirees.
NOVEMBER 15, 2013