News Story

A Union Pension Bailout During the Lame Duck Season in Congress?

While private companies are having a problem funding the full cost of pensions for their union retirees, they may have some help - from taxpayers. Two bills in Congress would use tax payer dollars to bailout private union pension funds, which face a shortfall of as much as $165 billion, according to Vincent Vernuccio, labor policy counsel at the Competitive Enterprise Institute.

Vernuccio said one of the main reasons for the pensions being under-funded is that there are far more union retirees than workers.

"We are just on the road to catastrophe," Vernuccio said.

Senate Bill 3157, the Create Jobs and Save Benefits Act of 2010, was introduced in March. House Bill 3936, the Preserve Benefits and Jobs Act, was introduced in October of 2009. Both have been referred to committee.

More than 100 private associations sent a letter to President Barack Obama asking him to enact legislation to help out the struggling pension funds.

"Without funding relief, many jobs will be lost and the economic recovery will be significantly slowed," the Dec. 22, 2009 letter read.

As reported by Michigan Capitol Confidential in May, Michigan Congressman Thad McCotter, R-Livonia, is one of just nine Republicans in the entire nation to co-sponsor HB 3936 (see

Paul Kersey, director of labor policy at the Mackinac Center for Public Policy, believes that it's "doubtful" the bills will get passed.

"As much as one might sympathize with workers who are at risk of losing their pensions, it would be wrong to let the union officials who mismanaged these pension funds get off the hook," Kersey wrote in an e-mail. "There should be no bailout of union pensions until the unions themselves have been held accountable, and steps have been taken to prevent fraud and abuse by union pension trustees.  If we're going to bail out pensions it should be with that understanding that the unions involved are out of the pension management business, permanently."

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.