Is A Dangerous Pension Bailout Precedent On The Way?

by | Dec 22, 2016 | Uncategorized

Unions have been allowed to operate by a set of rules that if used by any other enterprise, would land the executives of those enterprises in prison. A common example is the immunity from violence allowed by unionistas during strikes, protests and other “protected concerted activities.” For the most part, unless you are a target for such violence, this disparity doesn’t affect you. However, perhaps a more dangerous rule immunity applies to the math that unions are allowed to use in managing (or mis-managing) their pension funds. Non-union private pension plans must use a government-prescribed and realistic interest rate when managing their funds. Unions are under no such restrictions and may use whatever interest rate assumptions they want when running their pension plans. umwa-logoAs the recent Mine Workers of America pension debacle illustrates, this regulatory favoritism creates a fiscal train wreck, and a win-win for unions: the union delivered significant pension benefit promises for its members, and coal industry employers did not have to contribute enough to actually fund those promises. The UMWA now faces a devastating sinkhole of $5.6 billion in unfunded pension promises. Unfortunately for the rest of us, Senators from the coal-mining states are threatening to “use whatever means necessary” to lay the burden of union malfeasance at the feet of American taxpayers in the form of a government bailout – the first of its kind of a private pension fund. Should this occur, more than a thousand other private union pensions, with over $600 billion in unfunded liabilities, will be lining up to feed at the federal trough.

This 2009 YouTube video attempted to give some perspective to how much money $6 Billion represents.

This 2009 YouTube video attempted to give some perspective to how much money $6 Billion represents.

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