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Comparing Union-Sponsored and Private Pension Plans: How Safe are Workers' Retirements?
Comparing UnionSponsored and Private Pension Plans How Safe are Workers' Retirements Author:Diana Furchtgott-Roth, Andrew Brown With union membership down to only 8 percent of private sector workers or 12 percent of employed wage and salary workers unions are doing their best to recruit new members. The advertised benefits of joining a union sound appealing: unions claim time and time again that their members are more likely to have health insurance, defined benefit pens... more »ion plans, and higher wages. What unions do not tell prospective recruits is that there is a widespread pattern of poor performance among collectively-bargained defined benefit pension plans. They perform poorly when compared to plans sponsored unilaterally by single employers for non-union employees. And pensions sponsored by unions that cover many employers (multiemployer plans) fare worse than pensions offered by a single employer under a collective bargaining agreement with a union. This disparity raises an important question: is the promise of a union-run pension plan a valuable one? To put it another way, do union pension plans have provisions to ensure that they remain sufficiently funded to pay the generous retirement benefits that unions advertise as part of the union benefits package? This paper offers explanatory background information on pensions, including sources of information, reporting and disclosure requirements of Congress and the U.S. Department of Labor, and data and analysis that illuminate the causes of the underlying problem of underfunding. The study goes on to analyze the general health of pension plans in the United States and, in particular, documents eight case histories that illustrate issues in pension funding. It also examines the role political interests may play in union membership and pension funding, and it analyzes the link between legislation now pending in Congress, the Employee Free Choice Act, and under-funding of pensions. The paper will present evidence of the disparity between union and non-union pension plans, and call on union members to recognize their leaders responsibility to close that gap.« less