There are 114 multi-employer pension funds covering 1.3 million union members that are projected to fail in the next 20 years, according to a new report.
Unionized workers who are relying on a union pension fund to help pay for their retirement may need to start saving now.
“As many as 114 multiemployer pension plans covering nearly 1.3 million workers are severely underfunded and headed toward failure within the next 20 years,” reports the Society of Human Resources Management.
The forecast, from a new analysis by actuarial consulting firm Cheiron Inc., draws on the latest annual financial reports filed by multiemployer pension plans with regulators. The troubled plans have total assets of $43.5 billion and liabilities of $79.9 billion, leaving unfunded liabilities—future benefit payouts promised to retirees and beneficiaries for which reserve funds have not been set aside—of $36.4 billion.
Multiemployer pension plans, also known as Taft-Hartley plans, cover unionized workers and pensioners. Employer contributions are determined by collective bargaining, and the plan is governed by a joint labor-management board of trustees. Failing multiemployer plans must inform regulators that they are in “critical and declining” status, in keeping with the Multiemployer Pension Reform Act. The law requires pension plans to notify regulators annually if their financial condition is worsening and they expect to fail within 20 years.
Just three of the pension plans account for $22.8 billion—or more than 62.5 percent—of the $36.4 billion in unfunded liabilities of failing multiemployer plans, Cheiron found. The Teamsters’ Central States, Southeast and Southwest Areas Pension Plan (usually shortened to “Teamsters’ Central States”) has the most unfunded liabilities at $17.2 billion, followed by the Bakery and Confectionary Union’s plan ($3.2 billion) and the United Mine Workers’ ($2.4 billion).
Read the more from SHRM here.