Unions pay themselves first, rank-and-file second (and less)

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Union officers’ pension plans are significantly better funded than the plans they negotiate for their rank-and-file counterparts, raising questions about whether union members have been manipulated by those they trust to bargain for them.

The average union staff plan is funded at over 95 percent, while the average funding percentage of a rank-and-file member’s pension plan is 79 percent, according to a September study by the Hudson Institute. None of the staff pensions is on the Department of Labor’s list of critically underfunded pension plans, while more than half of rank-and-file pension plans are endangered. (A pension is considered “endangered” by the government when it contains less than 80 percent of the assets needed to cover its liabilities.)

Some are questioning why pension plans negotiated by union leaders on behalf of union members are performing so poorly while the leaders’ pension funds remain healthy.

“Unions are pay and benefits experts — they know this stuff six ways to Sunday, it’s their raison d’etre,” said Brett McMahon, the Vice President of Miller and Long Construction and a member of the national trade association Associated Builders and Contractors. “It’s not as if they can claim some kind of ignorance about this, that by chance or happenstance these are funded better than those. They know exactly what they’re doing.”

Because union officers are usually employees of the union itself and not of any private business, they have their own pensions with rules that are separate from those of their members’ plans.

The higher pension contributions to the staff plans come straight from the dues paid by union members, the Hudson Institute found. In fact, the main reason union leaders are so eager for new recruits, according to the study, was to bankroll the failing collectively bargained pension plans.

“You’re not supposed to pay yourself first, but they do, and they pay themselves quite well, and then they appear to bargain for their membership,” said McMahon.  “If they were really dedicated to what they were doing, which I think at [one] point they were, decades ago, it wouldn’t look like this.”

“The truth is that we feel sorry for [the rank-and-file members],” added McMahon. “I don’t believe that the leaders didn’t see it coming — these people are experts.”

The Daily Caller reported yesterday that new legislation could shift the costs of union pension plans to taxpayers as the problem of union members’ declining pension funds becomes more dire.

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Aleksandra Kulczuga