Construction Pension

Pension Plans in the Construction Industry   Scaffolding one day; demolished the next

----------------------------------------------------------------

"Everyone in the trade knows there's no such thing as a retired carpenter. I've got more people calling me now, asking me to do work, than I ever did when I was 'working.'”

-- “retired” Illinois carpenter on a pension
     LaSalle Times, September 29, 2006

" 'Do you know how much I'd have to charge on bids if my guys were on an official payroll?' He estimates that his bids would have to increase some 55-65 percent if the workers he paid were legitimate employees. 'I couldn't compete because all the other contractors are doing the same. I'd lose my business.'

-- a construction company owner
    Think&Ask.com, September 2006

“Teamsters were protesting “red zone” provisions [in the new legislation] that would reduce early retirement benefits for workers in seriously underfunded multi-employer plans. “

-- The NewsTribune.com, August 11, 2006

“We also must improve the accuracy of measurement of plan assets and liabilities and make plans more transparent to workers, retirees, investors and regulators through better disclosure. Workers and retirees have a critical need – and a right – to know the true status of their pension promises so they can plan effectively for retirement.”

-- Asst. Sec. of Labor Ann L. CombsJanuary 6, 2006

“For every employer that goes out of business or leaves the plan,” he adds, “the remaining employers have to pick up the slack, until fewer and fewer have to pay more and more, and the plan spirals down into termination.”

 -- NECA Executive Director Bob White, March, 2006

-----------------------------------------------------------------

What’s New . . .

Some building trades unions have what is known as a "30 and Out" plan. Such plans typically allow tradesmen who are at least 55 years old with 30 years in the trade to retire and take their pensions. “I’ve paid my dues and I’m out,” is the way these younger retirees phrase it. Many, however, continue to work well past their official retirements. "It's a pretty common thing," one union official said.  “Experience is really hard to replace on a job site." He noted some have continued working well into their 70s. Union pension rules vary, but retirees can often work 39  “official” hours per month while collecting full pensions.

Some of the largest companies that contribute to multi-employer pension plans are opposing a movement among financial rating organizations like Moody’s Investors Service that could lower such companies’ investment “grade” based on full-disclosure of their long-term pension obligations. Even though many of their pension plans are underfunded, they argue that pension benefits are a short-term “cost of labor” rather than a long-term, debt-like liability. Under current accounting rules, companies treat their contributions as an annual expense and do not have to disclose projections of their long-term obligations, which can fluctuate significantly. In fact many companies do not even maintain internal projection of such obligations. Pension accounting – especially projections of future numbers that can be reasonably backed down into current financial statements -- remains a hot, negotiable issue even with the new pension legislation in place.

* * *

On Thursday, Aug. 17, President Bush signed into law the Pension Protection Act of 2006, which he called the "most sweeping reform" of US pension law since the enactment of the Employee Retirement Income Security Act (ERISA) in 1974. The compromise measure will have broad impact on the way future pension plans are structured and funded. It will affect pension outcomes, not only for tens of thousands of employees whose plans are currently hanging on the contents of the bill, but for millions of Americans who do not follow pension issues closely.

Affected groups everywhere are weighing in with commentary. With some 44 million Americans covered by private pension plans, bipartisan support for private sector reform was made possible by not stirring up a hornet’s nest of debate about stricter funding guidelines for public employee defined-benefit plans, which remain generous and are woefully underfunded. In any case, the bill may well signal the end of the era private defined-benefit pension plans. As recently as 25 years ago, more than 80 percent of large and medium-sized companies offered such plans. Today, fewer than a third do.

* * *

On August 3, the Senate approved a compromise Pension Reform Bill and sent it on to the White House. It tightens rules for employers with defined-benefit pension plans and clamps down on companies that have fallen behind in meeting their funding obligations.

Multiemployer plans common in the construction industry involve some 60,000 to 65,000 employers. Many have fewer than 100 employees, but some are large companies with potentially large liabilities.

Underfunding of Defined Benefit plans is now estimated at $450 billion. The bill requires that companies bring their plans to 100 percent funding within seven years, although certain major airlines are given a longer period. Plans that are seriously underfunded face restrictions, such as a ban on increasing benefits, and must make accelerated catch-up contributions. President Bush, who has taken a tough stance on forcing full funding of company promises, is expected to sign the legislation shortly.

* * *

Airline pension funding remained a major sticking point in Congressional proposals to strengthen the nation's employer-based pension system and ensure the retirement benefits of tens of millions of people. It’s possible that a deal may be reached soon, passing to Congress for a vote and then on to the President for signature. If passed, an agreement would likely go into effect in January of 2008 as the result of months of slow-moving talks between the House and Senate. It would impose stricter funding rules on companies that fall behind in contributions to defined-benefit pension plans, which are important source of retirement income for 44 million people in the United States.

Recent Construction IndustryNews

Immigration Workforce Displaces Younger Workers

Construction inspectors stack paychecks

Road construction hit hard in Pennsylvania

Private-Sector Anger Builds as Public Pension Costs Rise

Congress Reforms Corporate Pensions

Varied Response to Passage of Pension Bill

Building Trades Praises House Passage of Pension Reform Bill

Plan may hasten shift away from pensions

Final Push To Secure Multiemployer Pension Reform

As Construction Booms, So Do New Job

Overview of DOL pension reform agend

Letter from Republicans opposing pension cutbacks

Letter from Democrats opposing pension cutbacks

Pension conferees still deadlocked

Billion Dollar Labor Sponsored Gulf Coast Revitalization Program

So you’re a construction worker...
You work for one of the approximately 667,000 construction companies in the United States. You may or may not be unionized, but chances are you “follow the cranes,” moving from job to job in pursuit of the best opportunities. That’s why multi-employer plans are widespread in this dispersed and partially seasonal industry. The industry as a whole is healthy, but individual, often-leveraged companies come and go week by week, season by season – which can affect your pension. So you should keep a close eye on your retirement nest egg.

For up-to-date information about events affecting your pension right now, take a look at our Recent Articles section.

Back To Top

Does my pension have a solid foundation?
The typical m ulti-employer plan is a construction of a number of individual companies which come and go. So contributors and contributions change. Pension liabilities – the shares and percentages due from each company – have to be constantly reworked. The failure of one substantial employer can threaten others in the plan, leaving them – and perhaps you – holding the bag for losses your company had nothing to do with.

Back To Top

Who’s overseeing my pension?
If you belong to a union, that union will negotiate pension issues with builders and contractors, providing some continuity and oversight. The union will also most likely play a large role in how your pension funds are invested. If you aren’t in a union, your company’s HR department should be able to tell you who is looking after your pension.

Back To Top

Where do I go to find out about my pension?
Construction workers should know and periodically check their plans’ setup and investment performance. If you aren’t up-to-date on how your pension is doing, our easy-to-follow “ Understanding Your Pension ” section can help you understand your pension plan and get more information.

The best place to start learning about your specific pension is with your Human Resources Department, which usually has information on your benefits.

If Human Resources is unable to give you detailed information, contact your local union, which should be able to help you. You should also contact the Pension Benefits Office of your national union. Click here to access contact information for specific trades.

Back To Top

Contact information for various trades
Here is a list of contact information for specific construction-trade unions. Where possible, we have included direct numbers or web addresses to the relevant pension, benefits, or human resources departments:

---------------------------------------------------------------------

Visit our Pension Legal Help section were you will find a listing of the six regional pension counseling and information projects sponsored by the Administration on Aging (AoA). 

Back To Top