Stress on Multi-Employer Pensions Ease

Thursday, May 27, 2010

LiUNA Headquarters - Stress on Pensions Caused by Wall Street Eases According to New Survey, But Action by Congress Still Urgently Required.

Many multi-employer pension plans have moved back into the so-called
“green zone,” but 46 percent remain below that level,
according to a new survey by the Segal Company of 230 multiemployer
plans with combined assets of over $74 billion.

“The devastating impact of the housing market and Wall Street
crash is still being felt by union pension plans covering hundreds of
thousands of men and women,” LIUNA General President Terry
O’Sullivan said. “While there’s been improvement,
now more than ever every LIUNA leader should let Congress know workers
need pension relief.”

O’Sullivan sent a letter to all members of the U.S. House of
Representatives on May 19 calling for the passage of the
“Promoting American Jobs and Closing Tax Loopholes Act of
2010” (H.R. 4213), which would give plans time to recover from
the crash of investment markets in 2008 and the downturn in our
economy. In addition, LIUNA members have been encouraged through the
LIUNA Action Network to call their member of Congress to urge passage
of the bill.

“If you haven’t already, I urge you to call your member of
Congress in support of this bill,” O’Sullivan said.
“Working men and women are not asking for a bail-out. What we
need, and what this bill would provide, is simply more time to recover
from the excesses of Wall Street.”

The Bill recognizes problems caused by the market crash and recession
and allows funds to amortize - or spread out - losses in
2008-2009 for 30 years, and extends the time for plans to improve
funding levels.

According to the Segal report, 54 percent of funds surveyed were in
the green zone as of January 1, 2010, an increase from 39 percent a
year earlier. Prior to the recession in 2008, more than 83 percent of
Multiemployer pension plans were in the green zone. The survey also
found that average funding under the Pension Protection Act of 2006
increased to 86 percent - however, prior to the recession,
average funding was 97 percent. The Segal report states that much of
the improvement in zone status is the result of investment gains made
in 2009, as well as “the hard decisions undertaken by some
boards of trustees on plan design and funding changes.”

Virtually all pension funds are struggling to recover from the Wall
Street collapse. Multiemployer plans, particularly in the construction
industry, face a “triple hit:” the recession triggered
stock market losses of as much as 50 percent, unemployment in
construction remains at more than 20 percent resulting in lower
pension fund contributions, and new funding requirements under the
Pension Protection Act placed additional pressures on funds at exactly
the wrong time.

“Multiemployer plans are still facing formidable challenges and
will continue to do so as long as unemployment remains high. Even when
the economy improves, it will take months if not years to recoup 2008
investment losses,” O’Sullivan said. “It is crucial
that Congress act to give us time to recover.”