Government

Pension Reform Bill, How Does The UAW Feel About It?

December 2, 2005 ⋅  E-Mail Article ⋅  Print Article ⋅ Post a comment

House Bill 2830 is causing a lot of commotion on Capitol Hill as well as a lot of stir from various unions. Many have not paid much attention to 2830, some think its another strain of the H5N1 bird flu, others think its just another tax bill they will be getting hit with. If you work in a unionized shop, or factory, you may want to dig a little deeper into the details of this bill that is going to the House of Representatives for approval, it could have a drastic affect on your livelihood.

The Pension Protection Act of 2005 (H.R.2830) is legislation that has resulted from Congress’s belief that the retirement security of American workers who are covered by defined benefit pension plans is seriously at risk. Congress feels that many of the pensions are under-funded because the pensions do not have enough money to pay all of the benefits they have promised. Congressmen have deferred to the recent United Airlines pension disaster as an example of the importance of this bill. Congress has also mentioned the Government Accountability Offices’ report that detailed the under-funding of the 100 largest defined benefit pension plans between 1995 and 2002.

A similar copy of the Bill being circulated easily passed through the Senate, many did not take notice. However, when Bill 2830 got delivered to the House for approval, many unions took notice. The premise of the Bill is very good; it appears to have good intentions. The Bill is supposed to provide safety and assurances for American workers. However, there are issues with the Bill that many UAW officials disagree with.

Many UAW members are vehemently lobbying against House Bill 2830. The UAW has cited sources from the U.S. Chamber of Commerce, and the American Benefits Council, as groups that will testify against a section of the bill that they feel could negatively affect workers and employers if this Bill is approved.

The UAW reportedly opposes H. R. 2830 because of how it goes about shoring up the PBGC, and, the impact the Bill would have on workers at General Motors, Ford, DaimlerChrysler and many other companies with defined benefit plans. The UAW has stated that H.R. 2830 accomplishes the goal of protecting pensions for workers in part by taking away employee benefits and in part by unfairly changing the calculation of how well funded a pension plan is.

One of the main issues the UAW is upset with is a stipulation in the Bill which will affect the accounting of company pension funds. A new credit balance subtraction rule proposed in the House bill would subtract from a company’s pension fund balance any contributions that are above the bare minimum required by law. That would cause these pension plans to be declared under funded even if they were close to the 100 percent level of funds necessary to pay all pension commitments.

The UAW has advised that this would cause employers to freeze all pension credits and benefits. Therefore, a worker close to the 30 and out retirement date may not get that extra year he or she needed for early retirement. The UAW also advises that pension benefits would not be adjusted to keep pace with wages and prices.

The UAW has advised that Ford and DCX have credit balances that, under the terms of H.R. 2830, would bring their pensions’ funding level below 80%. This would trigger the bill’s provision that would prohibit any pension improvements for Ford or DCX workers.

The UAW website stated that, “H.R. 2830 provides that if a pension plan is below 80% funded, a company and a union may not negotiate any improvements to the plan. “Improvements” include adjustments in the flat-dollar amount to simply keep pace with inflation! H.R. 2830 provides that if a pension plan is below 60% funded, benefit accruals are frozen. A worker with 15 years of service would not accumulate credit for any more than 15 years; a worker with 29 years service could not earn the final year to become eligible for retirement based on 30 years of service. This bill would, in effect, eliminate 30-and-out retirement provisions.”

Regardless of where you fall on this debate you should take the time to learn about the facts and educate yourself on the far reaching ramifications this House Bill could have on your life and your future retirement plans.

pension reform bill

Related Posts