By Evan Grossman / September 2, 2015
Pennsylvania labor union leaders accrue lucrative pensions while their own employees are offered inferior retirement plans.
In the state’s ongoing pension reform battle, labor leaders like Philadelphia Federation of Teachers President Jerry Jordan have strongly opposed using 401(k) retirement plans as a way to curb skyrocketing pension costs, begging the question why 401(k) plans are good enough for his own employees but not for PFT members or Jordan himself.
Jordan and other PFT leaders have been accruing a public pension since they stopped teaching more than 30 years ago, but their own office staff is not offered a defined-benefit pension plan.
The PFT did not respond to requests for comment, but labor leaders have not been shy about going on the record to take their cuts against pension reforms and 401(k)s for public workers.
Pension reform is a major issue in Pennsylvania, which funds two main retirement packages that have become increasingly burdensome for taxpayers. The $51.7 billion Pennsylvania Public School Employees Retirement System and the $27 billion State Employees Retirement System combine for an unfunded liability of more than $60 billion. There are more than 370,000 public employees working towards a pension.
Earlier this year, Senate Bill 1 called for stopping traditional pension plans for teachers and other public employees and moving them into a 401(k)-style retirement plan as a way to get rising fixed costs under control. Union leaders blasted the bill, which passed the House and Senate before it was vetoed by Gov. Tom Wolf in July.
“Senate Bill 1 is just plain bad policy,” AFL-CIO Pennsylvania President Rick Bloomindale testified earlier this year before state lawmakers. “All the while, a solution is ready at hand: the General Assembly mustering the fiscal discipline to make the necessary payments into the state’s pension systems. Provided legislators do as much, they can preserve retirement security for generations to come.”
Some have called the unions hypocritical in opposing 401(k) plans for state workers while offering them to their own employees.
The state’s largest teachers union, the American Federation of Teachers-PA, as well as the PFT, do not offer employees — mostly office workers — a defined-benefit retirement plan. In recent contract negotiations between its clerical staff and the PFT/AFTPA, a proposal to institute a defined benefit pension plan was opposed by leadership.
The United Food and Commercial Workers Union also does not offer a defined-benefit plan to its employees. UFCW Local 1776 President Wendell Young IV did not return a call seeking comment.
A defined benefit pension plan is a type of plan in which an employer promises a specified monthly benefit on retirement that is predetermined by a formula based on the employee’s earnings history, tenure and age, rather than depending directly on individual investment returns.
Jordan has also called moving employees into a 401(k) “bad policy,” but there are 34 PFT office workers enrolled in its Office Employees 401(k) plan, 44 employees participating in the AFT Local 3 401(k), and 10 more AFT-PA employees enrolled in the AFT-PA Field Staff plan.
“Under a defined-contribution plan, new teachers, college faculty and state and school employees would have to save substantially more during their careers to achieve the same level of retirement security,” AFT-PA President Ted Kirsch testified before the House State Government Committee Hearing on Pension Reform.
Other unions offering their own employees a 401(k) include the Pennsylvania State Education Association, Service Employees International Union, American Federation of State, County and Municipal Employees and American Federation of Labor and Congress of Industrial Organizations.
“The working men and women of the Pennsylvania AFL-CIO support defined-benefit pension plans and reject efforts to expand defined-contribution plans within our state and the nation,” AFL-CIO Pennsylvania President Rick Bloomindale testified in Harrisburg earlier this year. “Switching our employees to a 401(k)-style retirement plan would be fiscally irresponsible and unfair to workers.”
If 401(k)s are not good enough for union members and leaders, then why are they good enough for the union’s own employees?