Pensions

UMWA to Seek Relief From Congress for Overburdened Pension Fund | The State Journal

With a health-care battle behind them, leadership of the United Mine Workers of America is asking retirees to flood Congress with demands to protect the union’s pension plan.

In a message to retirees earlier this month, UMWA President Cecil Roberts told retirees they will receive letters urging members of the U.S. Senate and House of Representatives to uphold promises they have made to the UMWA.

Letters will be staggered for maximum impact on Congress, with West Virginia and Virginia members receiving their letters last.

“Brothers and sisters, your voices made a huge difference in our fight to secure retiree health-care benefits. That is what will win the pension fight, as well. I urge you, when you get the letter, please make the call to your senators and representatives. Together, we will win this fight!” Roberts said in his message.

Phil Smith, director of communications and governmental affairs for the UMWA, said the solvency of the UMWA pension plan has been an issue since the recession of 2008-09. Before the recession, the UMWA pension plan was 94 percent funded. Since then, it has lost more than $2 billion in value and is only 60 percent funded and could be insolvent by 2022 “if not before,” he said.

At the moment, as the plan is at its highest level of payout, 12 retirees or widows are receiving benefits for every active worker, Smith said.

The UMWA pension fund pays out about $600 million in benefits, Smith said. About 40 percent of people receiving pension benefits are widows of miners. More than 60 percent of beneficiaries receive less than $600 a month. The average benefit is $586 per month.

Coal companies that had been paying into the fund, such as Patriot Coal and Alpha Natural Resources, were able to shed those obligations in bankruptcy.

“It’s not going to dig its way out of this hole through contributions,” Smith said.

“This is an issue Congress needs to deal with,” he added.

The problem of underfunded pension and health-care benefits came before Congress earlier this year. Smith said Congress chose to address the health-care problem but did not take action on pensions.

Smith said the UMWA pension fund is not the only multi-employer pension fund facing collapse. The Central States fund, operated by the Teamsters, is larger than the UMWA fund and could collapse sooner.

Smith said some members of Congress want to deal with underfunded multi-employer pension funds as a group. Others have an ideological opposition to any governmental aid for private pensions, he said.

“We’re a little afraid of getting lost in that shuffle, and we want to make sure that we don’t,” he said.

It’s a pretty big shuffle. The UMWA pension system is one of several thousand multi-employer pension plans in the U.S., many of them operated by unions. About 10 million people are covered by them, and about 10 percent of those are in plans the Pension Benefit Guaranty Corp. labels as critical or declining. That designation means they face insolvency within 20 years.

As industries with multi-employer plans reduce employment, fewer people or companies are paying into the plans. Sometimes plans are unable to collect contributions. Some plans are upside down, meaning there are more recipients than people paying into them.

The National Coordinating Committee for Multiemployer Plans lobbies on behalf of multi-employer plans. On July 11, its board of directors approved a three policies it will pursue in the coming year.

One is legislation to fully fund legacy plans while creating a new type of plan that includes features of both defined benefit and defined contribution plans.

Second is ensuring the Kline-Miller Multiemployer Pension Reform Act of 2014 is used to restore troubled plans to solvency and protect beneficiaries from the even larger benefit reductions that they will see when their plan becomes insolvent and subject to the PBGC guaranty.

Third is opposing PBGC premium increases, especially those that could destroy the viability of multiemployer plans.

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