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Central Pension Fund U.S.
Employers cutting pension contributions A recent report issued by the Economic Policy Institute in Washington, D.C., reveals that over the last five years employer contributions to pension benefits have declined 4.4% each year. Specifically, on an hourly basis, employer contributions to pensions averaged $.95 per hour in 1995 but fell to just $.74 per hour in 1999, that is a 22% decline in just five years. While the Economic Policy Institute did not attempt to identify the reasons for this decline, undoubtedly the foremost reason is the fact that there has been a wholesale abandonment of traditional defined benefit pension plans by corporate America. Where defined benefit plans have not been terminated entirely, they have been replaced by cheaper “cash balance” plans or 401(k) plans where employees become completely responsible for funding their own retirements. The findings of the Economic Policy Institute forcefully prove a point that every union member understands: when employers can unilaterally choose whether and how to provide pensions, they will choose the lowest cost alternative every time. When, however, employers are required to negotiate pension coverage with a union, the outcome is quite different. Based upon the most recent statistics of the U.S. Department of Labor, Union members are 64% more likely to have pension coverage than are non-union workers. More importantly, while the Economic Policy Institute report shows that employers in general have been cutting back on their hourly pension contributions, the experience of the Central Pension Fund is exactly the opposite. During the same period covered by the Economic Policy Institute report, 1995 through 1999, the rate of hourly contributions to the Central Pension Fund increased an average of 6.5% per year; growing from $1.65 per hour to $2.15 per hour. The increase in CPF's contribution rate reflects the fact that members, young and old alike, recognize that pension security is more important now than ever before. With the Social Security system under increasing stress, and real pension plans disappearing, IUOE members recognize that the traditional, rock-solid defined benefit plans of the International Union of Operating Engineers are a valuable, and increasingly scarce, commodity. Accordingly, while corporate America has been cutting its commitment to retirement security, members of the International Union of Operating Engineers have been enhancing theirs. This is a true testament to the power of free collective bargaining in the United States, and the power of membership in the International Union of Operating Engineers. Originally
published in the International Operating Engineer |