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STRIKE NEEDS FACT, NOT FRICTION

Posted On: Aug. 17, 1997 12:00 AM CST

REGRETTABLY-but perhaps inevitably-the Teamsters' strike against United Parcel Service of America Inc. has produced more rhetoric from both sides than reality, especially on pension issues.

The Teamsters have described UPS' proposal to create a new, single pension plan and withdraw from several dozen multiemployer pension plans-at a price of about $700 million-as a "greedy pension grab." A Teamsters' news release, for example, quotes one union member as saying that if there is extra pension plan money, it will be put in the pockets of UPS executives.

For its part, UPS has charged that the Teamster multiemployer plans are notorious for their bad management.

Both sides have it wrong.

If the Teamsters think company executives can pocket surplus pension funds, they are mistaken: Federal law bars removal of monies from an ongoing pension plan except to pay benefits.

Employers, to be sure, can terminate pension plans, but only after all promised benefits have been paid to participants. Any surplus that remains after that and federal and state taxes have been paid is likely to be very small.

The UPS charge of mismanagement of Teamster pension funds would be valid-had it been leveled years ago. Indeed, in the 1970s, the words "scandal-tinged" often preceded description of several Teamster pension plans. But that was a long time ago, and we don't think that tag is accurate anymore.

Amid the rhetoric, one fact in the debate is that the union workforce has changed dramatically in recent years.

The percentage of workers who are union members has dropped to less than 15% today from about 20% in 1983. That has to be alarming to organized labor, which needs new employers and new employees contributing to multiemployer pension plans to help fund the benefits of a growing pool of retirees.

In the trucking industry the changes have been particularly wrenching. Deregulation of the industry led to the bankruptcy or folding of dozens of companies with organized workforces. At the same time, deregulation gave rise to thousands of smaller trucking firms, whose workers typically have not been organized by the Teamsters.

UPS, though, is a dramatic exception within that industry. It is a rapidly growing company, adding 46,000 jobs in the past few years.

Given its situation, the shipper has taken a look at demographic trends and concluded that it makes far more economic sense-even at a cost of $700 million in withdrawal liabilities-to have its own pension program rather than contribute to multiple plans with growing benefit costs.

While it may make sense for UPS to withdraw from the Teamster funds, its move should not be interpreted to mean multiemployer pension plans are in some sort of death spiral.

To be sure, many multiemployer plans will face greater economic pressures in the years ahead as the baby boom generation retires. But many single-employer plans-as well as Social Security-face those same pressures.

For all types of plans, those future problems can be minimized by responsible funding today to assure that pension money will be available to pay for the next generation of retirees without the need to seek massive future contributions as obligations come due.

In addition, funding problems can be alleviated if promised benefits are kept in line with what a pension plan and its sponsors can support.

Multiemployer plans have made huge progress on these fronts. Their funding has vastly improved since 1980, when Congress enacted tough legislation giving employers a powerful economic incentive-a withdrawal liability payment if they left underfunded plans-to improve plan funding.

For smaller firms, multiemployer plan participation can relieve them of the expense and bother of administering their own pension plan. And for employees-especially those in transient industries where workers hop from job to job-a multiemployer plan may be the only way they ever will earn a decent pension benefit.

Multiemployer pension plans can have their problems-as the UPS situation illustrates-but they should continue to be a vital part of the nation's pension system.