Liberal lawmakers trying to bail out private pensions with taxpayer money

By Rachel Greszler | The Daily Signal

Last year, liberal lawmakers wanted to bail out the United Mine Workers of America’s pension plan to the tune of roughly $6 billion.

This year, they’re at it again, except on a larger scale. Under pressure from a few very large and politically powerful plans — including the United Mine Workers of America and the Central States Trucking Union — liberal lawmakers are seeking up to a hundredfold increase in taxpayer bailouts for private, union-run pension plans.

Across the U.S., there are more than 1,300 union-run or “multiemployer” pension plans. More than 90 percent of them have set aside less than 60 percent of what they promised to pay.

Private pension plans are a part of workers’ compensation. In the case of union-run or multiemployer pension plans, unions and employers together negotiate and manage pension plan contributions and investments.

Typically, workers receive lower paychecks in exchange for the promise of future pension benefits — i.e., a “secure retirement.”

Unfunded pension promises resulted, in large part, from reckless mismanagement. That mismanagement will leave workers more than $600 billion short of their promised benefits. Essentially, unions and employers have cheated their members and workers out of hundreds of billions of dollars in contracted compensation.

Instead of putting the unions and employers on the hook for their failure to make adequate pension contributions, many lawmakers seem willing to rob taxpayers to furnish those broken promises.

That would set a horrible precedent. Not only would it prop up failing industries that made reckless promises while penalizing those who have not — it would also cost taxpayers hundreds of billions, if not trillions, of dollars.

It is absolutely unfair and reprehensible that unions negotiated and promised benefits that they did not then provide for, but taxpayers never had a seat at those negotiating tables. They should not be held liable for those unmet promises.

If they are, there will be little to stop current and future union-run plans from continuing to promise unrealistic benefits and then failing to fund those promises.

Unfair as it is for workers to receive less than their promised pension benefits, it is not unprecedented. That’s one reason the government created the Pension Benefit Guaranty Corp. — to provide insurance so that workers don’t lose all of their promised pension benefits.

When a private pension plan becomes insolvent, the guaranty corporation pays out insured benefits — up to about $13,000 a year in the case of union-run pension plans.

But the corporation itself is on tap to become insolvent within eight years. If that happens, it would be able to pay less than 10 percent of insured benefits.

Politicians that support bailing out insolvent plans argue that doing so will actually save taxpayers money, because it will prevent the plans from requiring Pension Benefit Guaranty Corp. assistance.

But that’s impossible. For starters, the guaranty corporation is not taxpayer-funded, so taxpayers cannot be on the hook for its unfunded liabilities. And second, even if taxpayers were required to bail out the corporation, it cannot be more expensive to provide a portion of promised benefits (the corporation only insures benefits up to a maximum of about $13,000 per year) than it would be to provide 100 percent of plans’ promised benefits.

Instead of bailing out 100 percent of private union pension plans’ unfunded pension promises, lawmakers should focus on reforming the Pension Benefit Guaranty Corp. so that it can continue to provide pension insurance to workers and retirees whose pension plans have become insolvent — and to do so without a taxpayer bailout.

The magnitude of unfunded pension promises across the U.S. is enormous. There are over $600 billion in unfunded private union promises and more than $6 trillion in unfunded state and local government promises..

Lawmakers must not open the door to private and potentially public sector pension bailouts. Taxpayers who have their own retirements to save for cannot afford to pay for these broken promises.

Image courtesy of Flickr/401kcalculator.org
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3 thoughts on “Liberal lawmakers trying to bail out private pensions with taxpayer money

  1. Liberals want every penny ” you earn ” so they can support there frivolous agenda
    of feel good policy …..

    Unions , I worked for one years ago , shameful how you pay !! don’t look for any
    payback for your money , buy the time you need it, it’s gone , I know……………. !!

    If you belong to a union that’s your business ( win or lose ), it’s not a tax payers problem
    if underfunded or funds missing take them to court ………… if you can find them .

  2. “Across the U.S., there are more than 1,300 union-run or “multiemployer” pension plans. More than 90 percent of them have set aside less than 60 percent of what they promised to pay.”

    A rather foolhardy decision by the employers that the tax payers no matter where they reside in the US bare not responsible for.

    Now for a politician of either party to even suggest such a idea shows that any said representative of We The People is in need of replacement by their employers We The People.

    • J.M, it’s really not the employer’s fault. When they sign a labor agreement with the union, there are certain stipulations to that contract. Usually, the employer makes a direct payment to the union for each individual employee’s benefits. The union then provides insurance , etc with payments the union employee and the employer contribute. In the case of the pension funds, it is solely the responsibility of the union to either administer the pension fund or to contract with an outside financial planner to do it. It would be foolish to think that with the amount of money involved, someone or many someones aren’t skimming a little off the top. Or, the financial planners are giving some kickbacks for the union’s business, on top of the commission they charge. The rank-and-file union member has no say in the process and will be told to shut up if they were to start making waves. But to your point, we the taxpayer should not be involved in any sort of bail out.

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