[The following may be found in .pdf at: http://thf-reports.s3.amazonaws.com/2016/IB4600.pdf . In its original form, the charts are readable and the format is reader friendly. Now, as to why it is here:
As already explained in its proper place in the document, if the UMWA pension fund is bailed out, then more money that that spent on the entire defense budget will be spent bailing out underfunded union pension plans. This will lead to the bailing out of public sector pension plans, like the teachers in all of the states, especially California, Illinois, New York, and Massachusetts. Also the various police, fire, administrative staff, clerks, janitors, and any and all public employees. It means that those states who have voluntarily bankrupted themselves, will be bailed out.
Consider the following:
1. the deals made to fund these pensions was made by the properly elected union leaders, and the managers of the various industries;
2. As in the UMWA situation, consider how the interference of the various government entities, especially the EPA and FDA, have ruined so many businesses that those businesses cannot fund their pensions. Notice how the various regulations ruined the automotive industry and contributed to the failed UAW pension fund and how that contributed to the Clinton/sub-prime HUD meltdown in 2008;
3. consider how this violates constitution article IV ( might be VI, I don’t have a copy to hand ) prohibiting federal government messing with contracts; and,
4. did YOU have anything to do with these various contractual commitments? I did not. Under what legal or moral proposition should we be held to a contract that we were not party to? What is the difference between this and someone who buys a car and gets a lemon? Isn’t that person’s remedy to sue the dealer with whom he had that contract for sale? What legal or moral concept drags me into that problem?
Y’all need to contact your federal legislators and demand that they commit to NOT bailing these people, or any others similarly situated, out!]
Why a Coal Miner Pension Bailout Could Open the Door to a
$600 Billion Pension Bailout for All Private Unions
No. 4600 | August 15, 2016
Congress is looking to pass legislation that would
use taxpayer dollars to bail out the overpromised,
underfunded pension plan of the United Mine
Workers of America (UMWA). Such an unprecedented
move would send the message that Congress
will stand behind sending trillions of dollars in overpromised,
underfunded public and private pension
obligations across the country. The federal government
already provides a backstop for failed union
and other private pension plans by insuring them
through the Pension Benefit Guaranty Corporation
(PBGC). Congress should avoid bailing out select
pension plans at all costs and should instead reform
the PBGC so that it can meet its obligations without
a taxpayer bailout.
Coal Miner Bailout Just Tip of the
The UMWA pension plan is massively underfunded.
It has promised $5.6 billion more in pension
benefits than it will be able to pay.1 Although
the UMWA pension plan is among the worst-funded
pension plans, it represents only one of more than
1,300 multiemployer (union) pension plans across
the U.S. Almost all of these plans have made promises
they cannot keep.
According to the PBGC, a whopping 96 percent of
all multiemployer plans have funding ratios of less
than 60 percent—meaning they have less than 60
percent of the funds necessary to pay promised benefits.
2 In total, multiemployer plans have promised
over $600 billion more than they are estimated to be
able to pay.3
If Congress passes legislation to bail out the
UMWA pension plan with nearly a half a billion dollars
a year, what will stop it from passing legislation
to bail out the other 1,200 plans that have more than
$600 billion in unfunded promises? If Congress
forces taxpayers to bail out private union plans, why
not also private non-union plans that have $760 billion4
in unfunded liabilities, and public plans that
have as much as $4 trillion to $5 trillion5 in unfunded
UMWA Is Not Unique
Some policymakers argue that the UMWA is
unique—that the federal government was somehow
involved in the promises made to UMWA workers
and that the bailout would come from a coal-related
fund. The only thing unique about a UMWA bailout,
however, is that it would mark the first time in history
that Congress would force federal taxpayers to
bail out the unfunded pension promises of private
The notion that the government was somehow
involved in promises made to mine workers comes
from President Harry Truman’s intervention in
a 1946 coal-mining strike, including the government’s
involvement in an agreement that established
the UMWA health and welfare programs.
While the federal government helped to facilitate
This paper, in its entirety, can be found at
The Heritage Foundation
214 Massachusetts Avenue, NE
Washington, DC 20002
(202) 546-4400 | heritage.org
Nothing written here is to be construed as necessarily reflecting the views
of The Heritage Foundation or as an attempt to aid or hinder the passage
of any bill before Congress.
ISSUE BRIEF | NO. 4600
August 15, 2016
the establishment of the UMWA’s health and pension
plans, it was the union and its plan trustees—
not the federal government—that vigorously fought
to pay out benefits to retirees who did not earn
those benefits. And, it was the union and its plan
trustees—not the federal government—that consistently
promised pensions and health care benefits
as part of employees’ total compensation packages
and then failed to collect the funds necessary to pay
The Money Will Come from Taxpayers,
Not Just a Coal Fund
Neither policymakers nor the public should be
fooled by the claim that the $490 million per year
UMWA bailout would be paid by the existing Abandoned
Mine Land (AML) reclamation fund (AML).
The AML fund was established in 1977 exclusively
to cover the clean-up costs of damage caused by coal
mines prior to the federal government’s increased regulation.
6 The proposed UMWA pension bailout would
allow the UMWA to use interest from the AML fund
not only for its unfunded retiree health care costs (as
already allowed), but also for its unfunded pensions.
As Senator Mike Enzi (R–WY) pointed out in a recent
floor speech, this would be akin to allowing the massively
underfunded pension plan of the Central States
trucking union to access the highway trust fund.7
Regardless, it is unlikely that much, if any, of
the $490 million per year in pension bailout costs
would come from the AML fund. In recent years, the
entirety of interest earned on the AML fund, plus
hundreds of millions more in taxpayer dollars, has
gone to the UMWA for its unfunded, yet gold-plated,
retiree health care costs, leaving nothing for a
potential pension bailout. Moreover, the Administration’s
most recent budget included a request for
$363 million in taxpayer funds to “strengthen the
health care and pension funds” of UMWA retirees.8
Clearly, taxpayers—not a coal fund—would be on the
hook for the nearly half-billion dollars a year UMWA
A Pension Backstop Already Exists
When a multiemployer pension plan runs out of
funds, it turns to the PBGC, which provides financial
assistance to the plan to cover insured benefits
as well as the plan’s expenses. Virtually all private
pension plans are required to purchase PBGC
insurance. The PBGC covers up to $12,870 per year
in pension benefits for a worker with 30 years of
In 2015, the PBGC paid $103 million to about
54,000 retirees of failed multiemployer pension
plans.10 This pales in comparison, however, to what
the PBGC’s liabilities will be over the coming decade
1. According to the UMWA’s form 5500 filing for the year ended December 2014, the plan has $5.6 billion in “current value” unfunded liabilities,
with assets of $4.165 billion and liabilities of $9.735 billion.
2. Pension Benefit Guaranty Corporation, “Data Book Listing,” Table M-13, Plans, Participants and Funding of PBGC-Insured Plans by
Funding Ratio (2013) Multiemployer Program, http://www.pbgc.gov/documents/2014-data-tables-final.pdf?source=govdelivery&utm_
medium=email&utm_source=govdelivery (accessed July 19, 2016).
3. Ibid., Table M-9, Funding of PBGC-Insured Plans (1980–2013) Multiemployer Program.
4. Ibid., Table S-44, Funding of PBGC-Insured Plans (1980-2013) Single-Employer Program.
5. Joe Luppino-Esposito, “Promises Made, Promises Broken 2014: Unfunded Liabilities Hit $4.7 trillion,” American Legislative Exchange Council,
November 12, 2014, https://www.alec.org/article/promises-made-promises-broken-2014-unfunded-liabilities-hit-4-7-trillion/
(accessed July 21, 2016).
6. Office of Surface Mining Reclamation and Enforcement, “Reclaiming Abandoned Mine Lands: Title IV of the Surface Mining Control and
Reclamation Act,” May 21, 2015, http://www.osmre.gov/programs/AML.shtm (accessed July 25, 2016).
7. Mike Enzi, “Supporting Pensions with Taxpayer Dollars Is a Slippery Slope,” speech on the Senate floor, July 12, 2016,
(accessed July 21, 2016).
8. Office of Surface Mining Reclamation and Enforcement, “The United States Department of the Interior Budget Justification and Performance
Information Fiscal Year 2016,” https://www.doi.gov/sites/doi.gov/files/migrated/budget/appropriations/2016/upload/FY2016_OSMRE_
Greenbook.pdf (accessed July 21, 2016).
9. The PBGC’s multiemployer program provides benefits based on a formula including earned benefits and years of service. This translates into
maximum benefits of: $4,290 per year for workers with 10 years of service; $8,580 for workers with 20 years of service; $12,870 for workers
with 30 years of service; and $17,160 for workers with 40 years of service. The levels are not indexed for inflation.
10. PBGC, 2015 Annual Report, http://www.pbgc.gov/documents/2015-annual-report.pdf (accessed July 21, 2016).
ISSUE BRIEF | NO. 4600
August 15, 2016
and beyond as an increasing number of multiemployer
pension plans—including some very large
Under ordinary circumstances, when the UMWA
plan becomes insolvent sometime within the next
decade, the PBGC would begin making payments to
the plan to cover its insured benefits and expenses.11
If Congress intervenes by bailing out the UMWA
pension plan, its beneficiaries would receive 100 percent
of promised benefits, instead of the lower PBGC
guarantee. And, the UMWA would get off scot-free—
with taxpayers and other coal-mining companies
footing the bill for their unfunded promises.
Meanwhile, other multiemployer plans that
become insolvent and do not receive special-interest
bailouts would first receive cuts down to the PBGC’s
11. The UMWA estimates it will be insolvent in 2025, but more reasonable assumptions project an earlier insolvency.
IB 4600 heritage.org
SOURCES: Author’s calculations based on the UMWA’s pension benefits for a 62-year-old worker who retires in 2016 with 30 years of work
history. Data on UMWA’s pension eligibility are from UMWA Health and Retirement Funds, Pension Eligibility Requirements,
http://www.umwafunds.org/Pension-Survivor-Health/Pages/Eligibility-Requirements.aspx (accessed March 9, 2016). Data on pension benefit
cuts are based on PBGC’s guaranteed level and U.S. Government Accountability Oce, “Private Pensions: Multiemployer Plans and PBGC Face
Urgent Challenges,” testimony before the Subcommittee on Health, Employment, Labor and Pensions, Committee on Education and the
Workforce, U.S. House of Representatives, March 5, 2013, http://www.gao.gov/assets/660/652687.pdf (accessed March 10, 2016).
Mine Worker Bailout Would Unfairly Preserve UMWA Pensions
While Other Pensions Face Massive Cuts
By bailing out the
pension plan, the
full benefit would
remain intact at
$24,246 per year.
However, if another pension
plan that oers similar benefits
becomes insolvent, the PBGC
would take over payments and
benefits would be cut to a
maximum of $12,780 per year.
And if the PBGC itself becomes
insolvent, as is projected to occur
by 2025, pensions paid by the
PBGC would be cut by an
additional 90 percent or more,
leaving only $1,278 per year.
UMWA BAILOUT OTHER SIMILAR PENSION PLAN
ISSUE BRIEF | NO. 4600
August 15, 2016
guaranteed level, and then, when the PBGC becomes
insolvent at its estimated date of 2025, benefits
would be cut even further, down to mere pennies on
the dollar in promised benefits.
Congress’s Priority: Reforming the PBGC
Congress has no role in fulfilling the unfunded
promises of private pension plans. It does have a role,
however, in providing private pension insurance
through the PBGC. While the PBGC is a government
entity, it is not taxpayer-financed. It operates with
the premiums that it collects from participating
employers and unions. To prevent taxpayers from
bailing out private pension promises, it must remain
The PBGC is supposed to protect pensioners
from a total loss of promised benefits if their company
or pension plan becomes bankrupt, but its current
financial situation offers little insurance. For
a whole host of reasons, the PBGC’s multiemployer
program is massively underfunded and is projected
to run dry in 2025. Without significant reforms, or
a taxpayer bailout, of the PBGC, its multiemployer
beneficiaries would quickly see their benefits cut by
90 percent or more, leaving those retirees with less
than $100 per month in pension benefits.
Instead of protecting the promises of private
union pension plans, Congress should focus on protecting
the promises it has made through its own
entity, the PBGC. This can be done by ending the
preferential treatment (including funding rules
and assumptions) of multiemployer pension plans;
granting greater authority as well as liability to
plan trustees to encourage proper funding; structuring
the PBGC like a private insurance company,
allowing it to set its own premiums and to charge
variable-rate premiums; allowing the PBGC to take
over failed multiemployer plans as it does failed single-
employer plans; and subjecting multiemployer
pension plans to the same rules as single-employer
—Rachel Greszler is Senior Policy Analyst in
Economics and Entitlements in the Center for Data
Analysis, of the Institute for Economic Freedom and
Opportunity, at The Heritage Foundation.
12. Rachel Greszler, “Bankrupt Pensions and Insolvent Pension Insurance: The Case of Multiemployer Pensions and the PBGC’s Multiemployer
Program,” Heritage Foundation Backgrounder No. 3029, July 30, 2015, http://www.heritage.org/research/reports/2015/07/bankruptpensions-
2000 2005 2010 2015
IB 4600 heritage.org
SOURCE: Pension Benefit Guaranty Corporation, Table M–1,
“Net Financial Positions of PBGC’s (1980–2015)
Multiemployer Program,” http://www.pbgc.gov/documents/
2014-data-tables-final.pdf (accessed August 3, 2016).
NET FINANCIAL POSITION OF PBGC’S
The PBGC’s multiemployer
provides insurance to
private union pension
plans, but it faces
massive deficits and
will be unable to pay
PBGC’s Multiemployer Program:
Massive and Growing Deficits