dancinmama
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Post by dancinmama on May 14, 2011 17:25:15 GMT -5
DH and I know a couple who are retired. The husband worked as a union sheet metal worker for years. When his body gave out he was fortunate enough to get elected as a union rep. I don't know what he gets in pension, but by the way they live, I think it's probably pretty good. They live well, but are not spendthrifts.
His wife told me something yesterday that surprised me. I guess she bought something that cost $100 and her DH got a little ticked off at her. When I commented on the fact that they weren't exactly hurting for money, she said that they had gotten a letter stating that the pension fund that her DH draws from is at risk. When I asked her why, she stated that because there is not much work these days, there is very little being contributed to the pension fund. I did not want to pry so I didn't ask any more questions.
I had always thought that union employees paid into a pension fund and that those funds were invested and those investments provided the pensions. Based on what she said, now I'm beginning to wonder.
Does anyone know the true story regarding the nature of union pensions and where the money comes from when they are drawn? Do union retirees really rely on the pension contributions of current workers to provide any part of their pension payments?
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Post by lakhota on May 14, 2011 17:36:01 GMT -5
I don't know, but it sounds unlikely to me. My first instinct is to question her DH's explanation. However, her DH's pension fund may have taken a severe downturn during the financial crisis.
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vonnie6200
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Post by vonnie6200 on May 14, 2011 17:42:18 GMT -5
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handyman2
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Post by handyman2 on May 14, 2011 17:42:21 GMT -5
It depends on the union agreement. Some put the money into a investment vehicle others may keep control and invest the funds themselves. This is how the teamsters union lost a lot of money years past by investing in land development that did not pan out.
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dancinmama
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Post by dancinmama on May 14, 2011 17:53:20 GMT -5
Well, I can see two union pension funds that he likely draws from: Sheet Metal Workers Pension Plan of Northern CA (55.10% funded). He would draw on this fund from when he was an actual sheet metal worker. AND Sheet Metal Workers National Pension Fund (38% funded). He would maybe draw on this fund from when he was a union rep.
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vonnie6200
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Post by vonnie6200 on May 14, 2011 17:55:42 GMT -5
I think a lot of pensions might be in trouble -
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EVT1
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Post by EVT1 on May 14, 2011 18:06:57 GMT -5
Pensions, 401ks, Social Security, etc. I think retirement in general is in trouble.
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vonnie6200
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Post by vonnie6200 on May 14, 2011 18:25:32 GMT -5
Pensions, 401ks, Social Security, etc. I think retirement in general is in trouble. I have the same, very uneasy feeling
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dancinmama
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Post by dancinmama on May 14, 2011 18:55:15 GMT -5
I googled the Sheet Metal Worker's Pension Plan of Norther CA and apparently contributions by current Plan participants are a factor.
"While our goal is to remain on track with the Plan's funding schedule, there are several variables beyond our control, which our advisers will monitor yearly, including investment market volatility AND CHANGES IN HOURS WORKED BY PLAN PARTICIPANTS."
So there ya have it. Well, it's no wonder that it's in the red. There has been very little construction work for three years.
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Post by lakhota on May 14, 2011 19:13:52 GMT -5
Great job! Sounds like you got to the bottom of it. So, maybe DH was being sincere.
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Deleted
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Post by Deleted on May 14, 2011 19:29:40 GMT -5
"I had always thought that union employees paid into a pension fund and that those funds were invested and those investments provided the pensions. Based on what she said, now I'm beginning to wonder."
Often companies either delay investing their contribution to the fund or "borrow" from it, leaving the pension underfunded. This is what they mean when they say the pesion fund was looted. You will notice they never delay paying the CEO bonuses or "borrow" that money.
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EVT1
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Post by EVT1 on May 14, 2011 19:52:16 GMT -5
Of course not- the CEO is going to get his even if it requires bankrupting the company and defaulting on the pensions of the employees. Think United Airlines.
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ugonow
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Post by ugonow on May 15, 2011 7:52:16 GMT -5
It is not just union pensions,but most pensions,whether by being intentionally underfunded for operating expenses, the economy, bad investments, or raided by aquiring companies. Also,I don't know if they have tightened things up,[or loosened them more to help companies out],but in the past,it was relativly easy for a company to their pension obligations by showing they could not afford it anymore,and the PBGC would then pick up the tab,sometimes at a percent of what was due the retiree. The company sheds tons of liability and carry on their merry way.
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