Fundamental tenet of conservatism: A deal is a deal, AKA "rule of law."
When one party can't keep its part of a financial deal the rule of law sends them to bankruptcy court. When they won't keep their deal and are found in contempt for not complying with a court order they go to jail. At least that is the idea and the ideal.
Google "Unfunded pension liabilities." Lots of private multiemployer union pensions are severely underfunded. That means that the net present value of monthly pensions promised to both current and future pensioners exceeds the value of the pensions current net worth. Many union construction pension funds are underfunded, including national Plumbers and Pipefitters, Sheetmetal Workers, Carptenters, etc... There are other multi-employer pensions plans also, like the teamsters, which is also underfunded.
There is a legal definition of a calculation that pensions had to calculate at the end of their fiscal year. They would then publish that calculation. It would state if they were underfunded or overfunded and by what amount. The public employees pension fund in Detroit, in those years they were overfunded, would make payments in the amount of the overfunding to their retirees once per year. It was called a "thirteenth check." The method for calculating overfunding and underfunding was changed about the time of the Great Recession stock market crash and that pension became severely underfunded, both because the stocks and bonds it owned were down and because the law changed and the new funding calculation was more conservative. But over the years the union pension fund trustees had sent all the cushion out to the retirees so the fund had a negative net worth. This was addressed in Detroit's bankruptcy. The pensioners didn't lose their Detroit pension but they took a haircut, to-be-retirees took a bigger haircut.
The problem with most of those public, private, and private multi-employer pensions is that they were all defined benefit. Also the multi-employer plans at least were backed up by a quasi government pension insurance corporation PBGC (like the FDIC) that guaranteed those pensions to the pensioners. So when stocks and bonds were going up the pension funds promised bigger and bigger fixed monthly payments to their beneficiaries. When the returns from stocks and bonds went negative they were underfunded. But PBGC hadn't collected enough from the pensions over the years to cover those pensions that were underfund. Almost almost every company that provides retirement benefits has gone to "defined contribution plans" where their contribution is agreed to with their unions or their employees but no set monthly amount is promised when the employee retires. Business has discovered that "defined benefit plans" are a trap.
Two decades ago Carl Icahn and people like him were buying companies that had overfunded pension plans (single employer pension funds) and then stripping out the overfunded portion of the pension plan (along with other assets) and then selling the company. In the next iteration of that process they not only stripped out the overfunded portion of the pension but they formed a company that insured the base portion of the pension funds. So they took out all of the cash of the pension fund and replaced that part that was needed to meet funding requirements of the law with an insurance policy from a company that they owned. Then they sold that formerly overfunded pension plan company. Then the company they owned that was insuring that pension went broke. Oh my! PBGC, the taxpayers, and the pensioners were left holding the now empty bag.
I think I earned my social security check (when I start drawing one). I think those public employees earned their pensions. I think the plumbers, pipefitters, and sheetmetal workers that worked for me all those decades earned theirs. I think the teamsters earned theirs. I think the teachers earned theirs.
I think the publication of negotiations with public unions is a great idea.
About five years ago I paid the equivalent of three years of my "take home pay" to an underfunded multi-employer union pension fund. The notification and demand came exactly seven years after I dropped a "hiring hall agreement (right to work state)" between a construction union and my small contracting business. I had to pay the money immediately, then mediate, then arbitrate, and then I could go to a real court. This was all under administrative law until I got to federal court. I spent much time and money talking to lawyers, accountants and actuaries, and googling pension law, pension case law, pension funding, underfunded pensions, pension accounting, and the history of those things. This particular pension fund had pissed off much of their assets on a resort hotel and golf course in Florida, along with much inside dealing and insider profits for most of the union pension trustees. The pension was not disputing that I had sent in every dollar required of me by my agreement with the union. They pissed off the money. They were short. The law said I had to make up my pro-rata share of the shortfall. If you happen to know where Martin Maddaloni lives please shit through the sun roof of his Ferrari for me if you get the chance.
There are a bunch of thieves, scoundrels, scalawags, hucksters, shysters, confidence men, and rascals out there. I always keep my hand on my billfold and never trust people with my money unless I absolutely have no choice (say my bank, my wife, and social security).
And I strongly favor sunshine laws.
Last edited by AmarilloMike; 05/28/15 03:14 PM.
