President's Corner

 

December 2019 Fight Back Against Pension Attack

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President’s Corner

Brothers and Sisters,

While some decent fall weather has allowed members to continue working deep into the season, winter layoffs are beginning, and many members are beginning to get into holiday mode. This time of year, when we become focused on gathering with our friends and families to celebrate, relax, and enjoy our holiday traditions seems to have become an ideal time for

Congress to try to sneak through devastating anti-worker policies like phony pension reform. You’ll remember that it was just before Thanksgiving last year when a Joint Select Committee released pension reform suggestions that would provide aid to failed funds by crippling healthy and solvent funds. Because we, along with a small handful of other unions, got mobilized and held our Senators and Representatives accountable, the effort to destroy pensions was stopped.

Well, they are at it again, and I wish I could say that I am surprised.

On November 20th, the chairmen of the Senate Finance Committee and the Senate Health, Education, Labor and Pension Committee released the Multiemployer Pension Recapitalization and Reform Plan (MPRRP). Pushed by Republican Senators Chuck Grassley and Lamar Alexander, the MPRRP would be a death sentence for multiemployer pension funds like ours, even though it comes in the guise of “pension reform” for insolvent funds, like the Teamsters’ Central States Pension Fund and the Mine Workers’ Fund.

In a nutshell, the plan would add massive new fees and rules for healthy, solvent pension funds in order to increase the payouts for retirees in funds that have run out of money. It would punish responsible plans to reward irresponsible ones.

This would be bad enough, if I believed for a moment that this “pension reform” was actually about helping anyone. However, the poison pills slipped into the MPRRP are nothing more than a numbers game to guarantee that multiemployer pension plans can no longer remain healthy, bringing an undeserved end to the pension plans that took unions generations of work to build. And on the way down, the MPRRP would make sure to punish the unions, signatory contractors, and current retirees just for good measure.

The first and most drastic measure is the reduction of what we can assume for our Pension Fund’s investment returns. We currently assume 7.5%, and those of you who attended the Special General Membership Meeting in September will remember that we are on course to gradually lower that assumption to 7% in the years to come, as our funding percentage increases.

The MPRRP would mandate a maximum assumption of 6% annually, with potential for a much lower cap. Under the best scenario, this change would singlehandedly reduce our funding level to 68%, a plunge to the bottom of the Yellow Zone from which we just emerged after a decade of sacrifice. This funding level is nearly 10% lower than what the Great Recession did to our funding level, and it would be mandated by those within our own government.

Think of the “bucket” money, lowered multipliers, and everything else that we did to claw our way back to the Green Zone after the Great Recession. All of it would be undone – and then some – by this one toxic change.

In this scenario where we are back in the Yellow Zone, we would be forced to once again do all the things that we did over the past decade as we implemented a Funding Improvement Plan. We would reserve money, reduce benefits, push back retirement ages, and God only knows what else it would take to plot recovery from that far down.

The MPRRP would also force us to tax current retirees’ pensions and send the money to the federal government. Retirees in a Yellow Zone plan would have their pensions reduced by 3%, and in a Red Zone plan, pension benefits would be reduced by a minimum of 5%. Our fund would withhold this money and divert it all to the Pension Benefit Guaranty Corporation (PBGC), the insurance fund that pays out benefits to retirees of failed plans.

So far, the MPRRP is immediately throwing our plan from the Green Zone into the Yellow Zone and taxing our retirees to increase benefits of failed plans. We’re not done. Not even close.

Every multiemployer pension plan pays annual premiums to the PBGC. Currently, our premium is $29 per participant per year. The MPRRP would push that to as much as $330 per participant per year, more than a ten-fold increase. Last year, our fund paid $820,000 in PBGC premiums, and under the MPRRP, that number would increase to $9.6 million.

A hit like that to our pension fund’s credit balance could potentially put our fund into the Red Zone. That means more taxes to take out of current retirees’ checks, and we would then be required to reduce benefits for current and future retirees. Hold on, we’re still not done.

Instead of just punishing the pension fund, the MPRRP would also go after the union itself and our union contractors by creating a new PBGC fee of more than $375,000 per year to be paid by each group. Our pension fund would be responsible to hire staff to collect the fee from employers and would be penalized if contractors’ fees were not paid.

And just to add a knife in the heart of our employers, the MPRRP also sets up a system where employers would have to assume unfunded liability on pension plans that are fully funded, all the way up to those funded at 139%. That’s right, even for a fund with a surplus, union contractors would be penalized.

Let’s take a breath and see this plan for what it really is. Under the pretense of helping retirees of insolvent plans, it would take currently healthy plans from the Green Zone to the Red Zone, tax the funds, unions, employers, and retirees all the way down, and restrict investment assumptions to a level that would seriously prevent these plans from ever returning to the Green Zone. The insolvent plans still fail, as do the troubled plans, as do the healthy plans. No one survives the MPRRP.

The membership of Local 150 is diverse. We have men and women of nearly every imaginable background and political identity, and while we have always been considerate of our members’ diverse stances and beliefs, I would be negligent not to point out that this attack is being advanced solely by Republican members of the Senate. Last year’s attack was born in the conservative-minded Heritage Foundation and pushed by Republican Senators and Representatives as well. We know that nearly half of our membership identifies as Republican, but we all need to be aware of where these attacks continue to originate. Without the divided government that we currently have in Washington and the checks and balances that provides, I fear that a measure like this could too quickly and easily be forced upon us, and our collective future would be forever damaged.

The first thing we must do is kill this idea – even if only for one more year – by filling Senators’ mailboxes and ringing their phones off the hooks. Senators who weren’t involved in drafting this plan may be led by its creators to believe that it is truly “pension reform,” and it is our job to tell them how devastating this plan would be to our ability to retire. We’ve done this before, and we will always mobilize to stop these attacks.

As I write this, we are putting together a campaign to enable every member to call, write, and email their Senators to send this plan straight to the trash-heap where it belongs. By the time you read this column, you will have received emails and postcards with instructions on how to do your part to win this fight.

Please step up and encourage every other union member you know to do the same. We’ve worked too hard to bring our Pension Fund back to the Green Zone, and we’re not going to sit back and let a bunch of politicians sink the whole thing. No matter your race, gender, religion, or political affiliation, the MPRRP would devastate all of us, and we have to fight back together.

I would like nothing more for our membership to enjoy a holiday season free from worry over political attacks on our pensions. Unfortunately, while we cannot choose the timing of this fight, we can certainly control the strength and swiftness of our response.

Thank you in advance for the activism that you always show when we are faced with a challenge like this. I wish you and your families health and happiness in the upcoming holiday season, and I will keep you updated on this situation in future columns and at monthly district meetings.

United We Stand, Divided We Fall.