As Wisconsin becomes the 25th state to criminalize mandatory union dues in the private sector, questions have arisen over negotiated pension plans.
Paul Secunda, director of Marquette University’s Labor and Employment Law Program, says some unions have bargained for multi-employer pension plans.
“For instance, there is a teamster’s pension plan, or sometimes they refer to these plans as the pension fund. It basically pools all the money from all the Teamsters in a particular industry, and they are providing deferred compensation in the form of retirement payments at the normal retirement age,” Secunda says.
In some cases workers can or must make additional contributions. But employers primarily fund the pooled pensions, by contributing the amount of money agreed to, in labor contracts.
Secunda says the amount is generally based on the number of employees the contract covers and the hours they work. So, if unions lose members because workers opt-out under right-to- work, contributions could change. Or if unions lose clout at the bargaining table, employers could alter pension plans.
Secunda says concerned workers should know that certain plans are insured by a federal agency called the Pension Benefit Guarantee Corporation.
“They historically have provided a buffer. They don’t provide all the pension benefits that you would have gotten, but they provide a percentage up until a certain amount, the statutory limited to provide some protection,” Secunda says.
The problem, Secunda says, is that the agency is horribly underfunded because so many businesses have folded.
“The PBGC is hundreds of billions of dollars in debt and people are wondering what to do,” Secunda says.
Right-to-work laws don’t guarantee that private sector pension funds will deteriorate, and some employers may find themselves offering an attractive retirement plan, to lure the workforce they want.
Yet Secunda says a shrinking pool of union workers could drain the ponds supporting many retirees.