Mason contractors reject Bricklayers’ offer to eliminate pension liability

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BUILDING A WALL around themselves in a stubborn refusal to move contract negotiations forward, the Mason Contractors Association, management trustees of Bricklayers Local 1’s pension fund have rejected union trustees’ offer to waive past pension liability, but keep the current pension fund and benefits in place. Instead contractor negotiators area insisting the union’s current pension plan be terminated and benefit levels frozen. In its place, they propose creating a new 401(k) type pension plan.

Union shocked at decision that could have solved contractors’ concerns

By ED FINKELSTEIN

Publisher

In a shocking and hypocritical move in current contract negotiations with Bricklayers Local 1 and the Mason Contractors Association, management trustees of the union’s pension fund rejected the union trustees’ offer to solve the contractors’ major hang-up: the fear of unfunded pension liability.

The union’s four-year contract expires May 31. The mason contractor pension fund trustees have demanded that the union’s current pension plan be terminated and benefit levels frozen. In its place, they propose creating a new 401(k) type pension plan.

The reason for this change, management trustees say, is that sometime in the future, should the current pension plan not have enough funds to pay benefits, signatory contractors would have to pony up additional funds. In pension terminology, this is called an “unfunded liability.”

UNION MAKES CONCESSION

To solve that problem, Local 1 offered a proposal that would keep the current pension plan in place but guarantee there would be no past liabilities for contractors, solving the contractors’ hang-up.

The union trustees offered a “Fresh Start” amendment to the current pension plan, which under federal pension law is an option for an existing plan when that plan has no unfunded liabilities.

The “Fresh Start” would guarantee that NO employer would have any withdrawal liability.

The Bricklayers pension plan it is economically strong—97.5 percent funded, a most unusual situation in pension plans nationwide, said Local 1 Business Manager Don Brown. Moreover, the pension plan’s actuary has certified that it has no unfunded liability.

The Bricklayers have pointed out in previous articles in the Labor Tribune, that the contractor’s unfunded liability argument for killing the current plan was all wet in the first place simply because there were NO unfunded liabilities to worry about, now or for the foreseeable future.

LAWSUIT COULD IMPACT ALL UNIONS

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After rejecting Local 1’s “Fresh Start offer” which would have solved their concerns, the management trustees forced a vote on killing the plan and replacing it with a new 401(k) style plan. When the vote was defeated, the contractor trustees filed a lawsuit to force the issue into arbitration and put what is a traditional collective bargaining issue into the hands of a single person – an arbitrator.

The management trustees’ attempt to force arbitration has potential negative long-term consequences for unions across America, Brown pointed out.

If a court rules in the management trustees’ favor, contractors would be able to undermine the collective bargaining process and obtain through arbitration what they could not achieve through negotiations, potentially negatively impacting the retirements of millions of workers in pension plans.

“Our position is quite simple,” said Brown. “The pension plan is an issue of collective bargaining, period. We have no intention of letting one person determine the fate of our members’ retirement.”

ISSUE AT HAND

The demand by management trustees is to take the current $4.60 an hour that goes to fund the pension and split it into two parts:

First, the current plan would cease to exist. However, $1.38 of the bricklayers’ money would continue to flow into the dead plan whose benefits would be frozen at today’s levels. This money would, in effect, be an insurance fund exclusively to protect the contractors if, at some point in the distant future, the plan was underfunded requiring contractors to pony up more money.

As Brown pointed out, the hypocrisy of the contractor argument is that the Bricklayers Pension Fund is 97.5 percent funded and has no unfunded liabilities now or into the foreseeable future.

“This may be needed to protect the contractors decades into the future, but hurts our members and apprentices now and forever into that same future,” Brown said.

Second, the remaining $3.22 would go into a new 401(k) type plan. This type of plan guarantees no benefits at all but creates a pot of investment money in each person’s name that is controlled by the fund’s investment advisors. If the economy were to sour again, there could be substantial losses in the fund which means there will be less money available for a bricklayer’s retirement.

“In other words,” Brown said, “Our members take all the risk and the contractors none.”

INSULT TO INJURY

Adding insult to injury, the management trustees submitted bills to the pension fund for thousands of dollars in legal fees they incurred to date in the lawsuit.

In effect, they are attempting to use the members’ own pension money to destroy the pension plan. The union trustees have refused to pay these bills, reasoning that it is not a proper expenditure of fund assets.

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