Diana Furchtgott-Roth

Casey-Pomeroy Bill Would Bail Out PBGC, Union Pensions

Submitted by Carl Horowitz on Fri, 08/27/2010 - 13:39

bailoutPension Benefit Guaranty Corporation, like Fannie Mae and Freddie Mac, is a case of "too big to fail." At least various members of Congress see it that way. And they are planning a push for legislation designed to shore up underfunded multiemployer private-sector pension funds, but which would put taxpayers on the hook for billions, if not tens of billions, of dollars over the long term. Sen. Bob Casey Jr., D-Pa., and Reps. Earl Pomeroy, D-N.D., and Patrick Tiberi, R-Ohio, the driving forces behind this measure, seek to shift the primary responsibility of keeping pensions adequately funded from unions and unionized employers to the general public. It's another example of the bailout culture in action.

Two New Reports Highlight Union Pension Shortfall

Submitted by Carl Horowitz on Tue, 10/06/2009 - 14:26

For a secure retirement, nothing beats union membership - so say union officials. Yet their respective organizations aren't likely to tell current or prospective members an inconvenient truth: Their pension plans in recent years have been underperforming. Indeed, several major funds may be unable to meet long-term obligations. That's the conclusion of two new reports, one published by the Hudson Institute and the other by Moody's Investors Service. In each case, the authors concluded that union pension assets in most cases fall short of liabilities, and in many cases, way short. This may well be a precursor to a wave of takeovers by Pension Benefit Guaranty Corporation (PBGC), which Congress created some 35 years ago to avoid such a scenario.

New Report Shows Union Pension Shortfall in the St. Louis Area

Submitted by Carl Horowitz on Mon, 02/23/2009 - 00:00

Employees covered by union-sponsored pension plans have had little to cheer about lately.  Those living in and around St. Louis are no exception.  A study released this past December has concluded that current assets of several area labor-sponsored funds are insufficient to meet total liabilities.  Worse yet, the situation has deteriorated since the start of the stock market crash in the fall of 2007.  The report, titled, “The Financial Health of Defined-Benefit Pension Plans:  An Analysis of Certain Trade Unions’ Pension Plans,” and co-authored by John R. McGowan, a professor of accounting at St. Louis University, and a graduate student, Catherine Donovan, concludes that as of around two years ago the pension funds of five major construction unions had only about 70 percent of the assets necessary to cover long-term obligations.  Moreover, the study estimates that by the close of 2008 this figure had declined to less than 55 percent.  Union leaders understandably are critical of the study.  Yet the findings merely mirror nationwide trends.

 

Union-Sponsored Pension Plans May Be Unstable Investments

Submitted by Carl Horowitz on Mon, 07/28/2008 - 00:00

One of organized labor’s strongest calling cards, politically if not economically, is that unions protect the long-term interests of employees.  If workers join, the argument goes, they will be far better off.  Yet rhetoric too often hasn’t matched reality, and perhaps nowhere more so than in the area of retirement plans.  That’s the conclusion of a recent study by Diana Furchtgott-Roth, senior fellow with the Hudson Institute in Washington, D.C.  Furchtgott-Roth, chief economist for the U.S. Department of Labor (DOL) during 2003-05, authored a report released this month by the institute titled, “Unions vs. Private Pension Plans:  How Secure Are Union Members’ Retirements?”  Employer-sponsored pensions, she concludes, deliver more security for nonunion employees than union-managed funds do for their own members.

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