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Sunday, January 29, 2017

A local union is cutting pension benefits

image credit: aarp

Yesterday, Jazz Shaw at the blog Hot Air reported (via the WaPo) on a development in Ohio:

In Cleveland, the Iron Workers Local 17 union has approved cuts to their pension plan to avoid having it become insolvent. The cuts will affect different workers by varying amounts depending on their individual circumstances, but everyone will be feeling the pinch.
. . .
The first thing to remember is that we’re talking about a private sector labor union, not one for government workers. The effects on retirees are going to be serious to be sure, but what are the other options? The union made promises to the workers which it wasn’t able to keep. This is a system which is much like any sort of general entitlement program in that it always requires growth, or at least stability. You have to have more people paying into the system than drawing out of it and if the numbers contract, the math immediately ceases working. (It’s the old question of how many people can ride in the cart as opposed to the number who are pulling it.)

[Shaw] pointed out the private sector aspect of this because the premise of the government guaranteeing these pension funds was always dubious at best. How is it that the taxpayers are on the hook for these shortfalls when the system becomes insolvent? I realize that’s not a solution, but the problem wasn’t created by the government in the first place and the taxpayers had no seat at the table when the deals were originally negotiated. But that’s not stopping Ohio Senator Sherrod Brown, who is still pushing for a federal bailout of the plan.

The problem gets even more complex when we look at state pension plans which are hung around the necks of taxpayers.

Read the rest of the report here
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