Five years ago retired coal miners traveled to Washington, D.C. to lobby lawmakers to put in place a federal safety net in case the United Mine Workers of America (UMWA) pension fund fails. Coal plant closures and company bankruptcies have sent the pension fund to the edge of collapse. In October, 2019 Murray Energy, the last major company propping up the dwindling fund, also went bankrupt and the prediction was insolvency in FY23.
By the April 15, 2022 deadline, the plan submitted their 5500 form for the year ended 6/30/21 showing only 68 active participants remaining and providing an idea of how much more taxpayers will now be on the hook for on top of what appears to be the $330 million that came in during the plan year.
The June 30, 2021 actuarial reports for the New Jersey Retirement System are now all out and there are a few numbers therein that can be taken seriously (none involving liabilities or even the market value of assets considering all those self-valued alternative investments). The main purpose of these official actuarial reports is to determine the ‘required’ contributions which practically all parties have a vested interest in understating so we get a bunch of fanciful numbers where possible. However, these numbers you can’t pretty up:
All 1,298 pages of the Central States, Southeast and Southwest Areas Pension Fund bailout application is on the SFA website but, for me, it is these two pages that tell the tale of the fall of this and many other union pension plans.
Funded ratio: 21.91%
Unfunded Liabilities as of 1/1/20: $43,878,930,013
Asset Value (Market) as of 12/31/20: $10,409,490,502
A book to educate labor people to argue for keeping their underfunded defined benefit plans with sprinklings of propaganda.
Yet pension plans cost governments less than 401(k)s for the same benefit amount. Most public pension plans are in sound financial shape despite media focus on the few that are not. (page 10)
At one point, I commented to a pension attorney that I didn’t think there were more than twenty-five people in the state who understood how the state employee pension plan worked. He agreed and then added that there were a lot more people who thought they did, especially politicians who were proposing reforms to it. (page 16)
Unless your doctor has told you you’re about to die, receiving a lump sum payment is almost always a terrible idea. (page 110)