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What Goes Around Comes Around –

What Goes Around

Our contention is that Greed & Politics played an essential role in the Multiemployer plans that are in trouble today!

Let’s look at some of the latest numbers from the PBGC (the Pension Benefit Guaranty Corporation) the government agency that “insures” our Multiemployer defined benefit pension plans. “INSURES” is in quotation marks because first, this is a misleading word. The PBGC only “insures” what would be approximately $.30 on the dollar of benefits accrued, per their formula, up to a set maximum payment per year – which is currently set at $12,870 annually for 30 years of service.

Secondly, “insures” is a misleading word because, as you will soon see, the PBGC is essentially out of money to even pay that benefit. Primarily because of this problem and other important factors, the Multiemployer Pension Reform Act of 2014 was passed to allow cuts to both existing and future retiree benefits to get a fund back to SOLVENT levels – meaning to a level of payments that the fund can AFFORD vs. what was promised.

From the PBGC directly:

  • As of 9-30-2014 the PBGC expects 144 multiemployer plans will soon need financial assistance from PBGC to pay guaranteed benefits. (NOTE: Again, guaranteed means approximately $.30 on a dollar up to a yearly maximum of $12,870 annually, for 30 years of service; and this is “IF” it has the money. (See below for the latest Multiemployer Program Financials as of 2014

Most of the funds are those on these lists –  http://www.dol.gov/ebsa/criticalstatusnotices.html

  • The present value of the future financial assistance for these 144 plans is $44.2 billion, this is at the approximately $.30 on the dollar – the GUARANTEE!
  • The 144 plans (more are expected in 2015, 2016 & 2017), as of 2014, fall into 3 categories:
  1. Plans currently receiving financial assistance (53 plans, $1.5 B)
  2. Terminated plans that had not yet started receiving financial assistance (61 plans, $1.7 B)
  3. Ongoing plans (not yet terminated) that PBGC expects will require financial assistance in the  very near future (30 plans, $41 B)

Multiemployer Program Financials – 2014:

ASSETS                                                                    $  1.8 billion

LIABILITIES                                                        ($44.2 billion)

NET POSITION SEPTEMBER 30, 2014 -($42.4 billion)

NOTE: to cover all the promised benefits for the 144 and soon to be more pension plans – we are looking at over $80 Billion.

Translation is that soon the PBGC is going to be out of money to even cover $.30 on a dollar and the maximum annual benefit.

Enter why MEPRA 2014 (Multiemployer Pension Reform Act – 2014) was passed. Brothers and sisters, there are NO good choices here for those pensions in trouble. MEPRA was passed to rescue the PBGC because it will default or go insolvent, and, therefore, be of zero use in providing any benefits to funds in trouble. In the simplest form that I can express, MEPRA 2014 can do pretty much whatever it takes to put benefit payments in line with what money is actually going to be in the fund now and into the future.

New Zone Statuses:

  • Green and clean – translation is a pension fund that doesn’t have to shore up the existing plan with new contributions or money from the check, and/or is not cutting prospective benefits – very few pensions funded at this level
  • Green or Yellow or Orange, BUT RED in 5 Years – many funds with the OLD warm & fuzzy Green Zone status of yore may not be Green in 5 years. Yellow and Orange status have even more work to do. Testing will continue on all these Zoned statuses. Also, Trustees need to be questioned on the meeting floor and minutes taken and approved. Good Trustees will be able to answer in specifics how the plan gets back to solid funding. What you do not want to hear is “TRUST US!”
  • Critical & Declining (deeply troubled pension funds going insolvent) – the ones addressed in this Blog today!

Back to what Greed & Politics has to do with many of the 144 plans expected by the PBGC to be troubled to the point of insolvency – let’s use a real live example.

An Illustration of Why Many Funds are in Trouble

I am a proud Ironworker for 37 years. I’ve been in most every position in the union except BM. Here is my bio for Labor Rising for your consideration:  https://onedrive.live.com/redir?resid=20B7C846BD8B8E62!658&authkey=!AMBDn-fvq-wQyNk&ithint=file%2cdoc

I belonged to our LU/DC, which is the Ironworkers Local Union/District Council pension plan for officers and sometimes others!?! It is in addition to my local pension, paid for directly by the membership – remember that point!

I was a BA for 6 years and am receiving a pension benefit from this fund, and it is a solid benefit. Now one can expect that since the membership is paying for this benefit, which they intended as a supplemental pension to reward officers with extra benefits over and above their own, one would think they could trust those elected leaders and trustees to run this plan with honor and efficiency.

Maybe NOT! For decades, the formula for the pension check went something like this. Many junior officers, senior officers and even others had money contributed on their behalf to the pension fund. So far so good. Benefits where accrued consistent with the level of contributions for those respective individuals, times years contributed = additional pension once vested. NOT EXACTLY. We had a hybrid formula – pretty much regardless of the levels of various contributions over years and in many cases decades, our LU/DC had a formula that the recipient of that pension could use a set number of contribution years in the last few years of service of their careers – and use that times the total years of service to calculate their pension – slick!

I remember the LU/DC pension got into trouble with funding when I was just beginning my job as a BA in the early 2000’s. We were at our Agents’ meetings and near the close of business for the day, this subject popped up on the agenda. The motion was to INCREASE the contributions made by the members substantially, relative to the amount then being paid to cover the underfunding. It was supposed to quickly pass. However, I and a couple of other Agents, out of hundreds of BAs/BMs, questioned why – a no-no back then. And it was not received well. After we dismissed the vendor running interference, I and a few others requested that our International President go on the record regarding this motion. Along with that, and after a lot of threats, the motion was changed to reflect a smaller increase and to not raise it again – as in ever. Live within the parameters the Rank & File would expect us to operate in, and no back room deals. Hell I knew then that when you mess with a guy’s check, even when the pension formula and those receiving benefits are BS, you’re done. There are many variations of this thru-out the Multiemployer pension world and that is what we are overwhelmingly seeing being played out NOW for distressed pensions!

That fund had a funding mechanism called membership that our typical Multiemployer does not have. The contributions for the LU/DC flowed from the Local’s general fund, and mostly off the typical member’s radar screen and on their backs! The members are on the hook with this scheme for the unfunded liabilities. It is now run on the straight and narrow. When these types of activities go on behind the scenes, and the Rank & File are told half-truths to flat out lies, funds get into trouble. To be fair, not all funds that are in trouble are in a precarious position because of Greed & Politics; however, as they go thru the kind of scrutiny they are now going to go thru, plus the lawsuits that are going to spring forth, all will be reverse engineered and the chips will fall where they may.

One of the tell-tale signs of Greed & Politics is when senior officers and their hacks have pensions at more than double of a career journeyperson (career journeyperson, not a hack).

As these pension funds fail, along with how soon and fast it will happen, I know firsthand that ALEC, RTW, ABC, etc., and the money behind them, primarily CURT (Construction Users Roundtable) type companies are going on a PR campaign like no other to date. And the national elections will be center stage by then. Who will the Building Trades recruit then? What non-union worker or contractor is going to join the union?

Labor Rising/Labor Combat has the only solution to this – HOURS, and how to get them fast and legally, consistent with our Founders’ heritage. All the BS Value on Display and recruitment are not going to sign the non-union contractors needed to change the Building Trades stars. Massive amounts of hard core organizing can restore benefit cuts and keep funds on the bubble from cutting benefits. However, the clock is ticking and ego and arrogance of leadership is what is standing between failure and winning! Bottom up moves to slow and the path to this level of hours are the clients, credit and social footprint of the heavy weights in construction. Add to that controlling the hiring, opposition research and getting into the 21st century with all things technology and we win! We are on the Razors Edge!

The timetable is set and the clock is ticking to those first substantially reduced benefit checks going out to hundreds of thousands retirees starting in July of 2016.

For the funds with leaders driven by GREED and POLITICS, you sunk yourselves, your membership, your retirees and most likely this version of the Building Trades! Labor Rising/Labor Combat will stand to defend membership and has the only SPECIFIC plan of structured and integrated organizing to raise hours in a way that will bring everyone along.

 What goes around, comes around!

“if you see a good fight – get in it”

Danny L Caliendo
Organizer
Labor Rising/Labor Combat

 

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