The reference for this story is a May 25 article in the Washington Examiner. The article deals with the Pension Benefit Guarantee Corporation (PBGC). Senator Bob Casey, (D-Pa.), introduced S. 3157 in late March. According to Thomas.gov, the bill is currently in committee. The bill is called “Create Jobs and Save Benefits Act of 2010.”
The bill would back union pension funds with federal tax dollars. The article in the Washington Examiner points out that in 2006, before the recession, only six percent of these union pension funds were doing well. In a column in the Washington Examiner in April, Mark Hemingway pointed out that the average union pension plan had only enough money to cover 62 percent of its financial obligations. Pension plans that are below 80 percent funding are considered “endangered” by the government; below 65 percent is considered “critical.” Union membership is declining, which means that less people are paying into these funds.
In July 2009, the PBGC bailed out the pension liabilities of auto parts manufacturer Delphi ($6.2 billion). In 2007, the PBGC had a deficit of almost $1 billion. They are expected to assume $86 billion in liabilities by 2015. This is not good business practice.
I am sorry that the unions cannot cover their pension funds, but maybe it’s time for them to consider taking steps to make their pension funds affordable. I do not think the American taxpayer should be required to save a union pension fund.