May 26th, 2010, Fairfax, VA—Americans for Limited Government (ALG) President Bill Wilson today urged the Senate Health, Education, Labor and Pensions Committee to reject legislation that would expand pension guarantees to multi-employer pensions that are underfunded by as much as $165 billion.
“Rather than getting their finances in order, the union solution is to get a kickback from the politicians, whose plan it is to subsidize poor investment decisions. This will only incentivize further underfunding of these funds, and open the floodgates for pension bailouts across the board, especially to underfunded public employee pension plans,” Wilson said in a statement.
According to Wilson’s letter to the committee, “[U]nlike private corporations who pay a premium to the Pension Benefits Guaranty Corporation to cover potentially stranded pensioners, these multi-employer pension funds haven’t contributed a dime into this already stressed system threatening its solvency.”
Evaluation of a 2009 report by Moody’s on the solvency of union run multi-employer pension funds revealed that both the MLBPA and NFLPA funds are only 60 percent funded putting them into the government designated “critically underfunded” category, and major unions like the SEIU, LIUNA and the Teamsters have significant underfunding problems, making them all eligible for a bailout under the legislation, which could cost $165 billion.
Wilson wrote that the Casey bill “would require payouts on union pension to every retiree and survivor at 100 percent value until the day they died, all backed by taxpayer dollars.”
“The American people do not support another bailout, this time to labor unions that have grossly mismanaged their own pension plans,” Wilson said in a statement. “This bailout will be paid for by other solvent funds, and when that fails, by taxpayers who are the guarantors of last resort for the Pension Benefits Guaranty Corporation.”
Labor leaders, like the Teamsters James Hoffa, Jr., have made congressional action on legislation to remove their liability for these pension funds a major priority. Wilson said he was not surprised that Teamster union pension plans litter the list of the most insolvent plans in America.
Wilson wrote that the “the big labor unions who run these pension funds have not taken any of the normal steps one would expect them to take to make these funds viable,” citing a lack of “tough decisions like cutting back the benefits paid out, limiting benefit promises to younger employees, requiring their members to pay pension assessments to cover some of the shortfall, or cutting back on spending union member dues on political expenditures.”
The Senate’s Health, Education, Labor and Pensions Committee will hold a hearing on the Senate version of this legislation on May 27th.
Interview Availability: Please contact Rebekah Rast at (703) 383-0880 or at rrast@getliberty.org to arrange an interview with ALG President Bill Wilson.