As public pension schemes in states like California and Rhode Island continue to collapse, union pension funds in the private sector are also facing massive shortfalls. A new Credit Suisse report finds that managers of multi-employer pension systems have overestimated their plans’ funding at 81 percent; the bank’s calculation, based on new reporting standards, is a more dismal 52 percent. As the FT reports, the overall funding gap now stands at a startling $369 billion.
For years, workers in private sector companies covered by collective bargaining agreements have thought that their pensions were secure. They aren’t, if these new studies can be trusted.
I've never understood the logic behind a belief that a defined benefit plan was a secure retirement strategy. Is it really a good idea to assume that a company, a union, or even a governmental entity will still be flourishing and well-managed decades from now? A worker in his 30s today might very well live to be 100. Is there any company today that you would want to bet will still exist six decades from now? Given the long history of corruption and mismanagement by union bosses, are union pensions a better bet? Or dependence that politicians won't screw things up as we see happening is states and localities all over the country? Or the world?
I'd just as soon give a hamburger to Wimpy in exchange for his promise to pay on Tuesday, than give my labor to a business, union, or government in exchange for a promise to pay me a half century from now. http://www.youtube.com/watch?v=NJ6xBaZ92uA