Failing Union Pension Funds Getting Huge Influx of Money from PBGC - American Society of Employers - Michael Burns

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Failing Union Pension Funds Getting Huge Influx of Money from PBGC

pension fundsFans of mafia cinema know the movie Casino follows the mob’s latter-day activities in Las Vegas and how they funded their Las Vegas investments through loans from various unions in the 1960’s and 70’s – a fact used by the moviemakers to show the mafia-labor union corruption back in the day. The Teamsters' connections to the mafia include Teamsters Presidents Frank Fitzimmons and of course Jimmy Hoffa leading the way. One subplot in the movie Casino was based on actual financing derived from the Teamsters’ union pension funds that was not made up by screenwriters.

Fast forward 30 years and to some extent we may be seeing the results of those suspect loans. Then again perhaps the failing pensions are just the result of the union’s inability to organize enough new members, the aging out of union members into retirement, a couple of stock market crashes and the impact lower union membership as well as employers not wanting to join the funds when bargaining with the Teamsters. All these circumstances have had a deleterious effect on maintaining funding to those pensions. Another fun fact – some union pension funds are still under federal court supervision from those old loans.

In any case, union pension funds are now benefiting from the Biden Administration’s billing as being the “most labor friendly administration ever.” Under the Biden Administration, the Pension Benefit Guaranty Corporation (PBGC) which is charged with maintaining the health of pension funds is giving various unions billions to replenish their failing pension funds. And the list of unions getting this influx of money reads like the screen credits from the movie Casino.

  • New York State Teamsters Conference Pension and Retirement Plan - $963.4 million
  • Teamsters Local Union No. 52 - $84.9 million
  • Freight Drivers and Helpers Union No. 57 - $192.8 million
  • Plasterers Local 82 - $20.5 million
  • Alaska Ironworkers Plan - $53.5 million
  • Graphic Communications Union Local 2-C - $59.1 million
  • Local Union No 466 Painters, Decorators and Paperhangers Pension Plan - $7.1 million (2022 & 2023)

And Detroit got some too!

  • GCIU Detroit Newspaper Union 13N (Detroit Newspaper Union Plan) - $136.2 million (2022 & 2023)

The PBGC is supposed to get its funding from four sources and not general tax revenues. These sources are insurance premiums paid by defined benefits plan sponsors, assets held by the pensions it takes over, recoveries of unfunded pension liabilities from sponsor’s bankruptcy estates, and investment income.

The PBGC now needing to be bailed out has not been an unforeseen event. Back in 2014 the Congressional Budget Office projected that the PBGC itself would run out of money keeping union pension funds afloat. They projected back then the federal insurer of pension plans would run out of money in seven years. Almost to the day in comes the Biden Administration with the $1.5 trillion American Rescue Plan signed last year. Some of this massive spending law will be used to support the PBGC.

Being bailed out is not the way the PBGC is supposed to work. The PBGC normally takes over failing single employer plans far in advance of it failing to use the existing assets to defray future costs. But with multi-employer plans such as the Teamsters Central States Pension fund they cannot get help from the PBGC until the fund has no money.

These failing and failed multi-employer pension funds will get re-funded by taxpayer dollars.


Sources: New York Times- Though Secure, Pooled Pensions Teeter and Fall (4/12/14); Labor Union News - Second Bailout Within a Week, PBGC Gives Failing Ohio Teamster Pension Plan $85 Million (11/25/22) PBGC Bails Out Five More Union Pensions Last Week (1/30/23); Pension Benefit Guaranty Corporation -Wikipedia


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