On its website, the SEIU argues that traditional defined contribution 401(k)-type pension plans are bad for workers because defined contribution plans: 1. Place the burden of fund management on workers; 2. can fail workers if the market performs poorly or the worker does not properly estimate his retired lifetime; 3. do not provide supplemental benefits; and 4. have lower returns than defined benefit plans.

The union also claims that “the purpose of a defined benefit fund is to provide employees who retire with as much replacement income as possible for as long as they live.”  It would seem reasonable, therefore, for SEIU to work very hard to ensure that its now 2 million members receive generous, well funded pensions.

That is not the case – at least for rank-and-file workers. In 2006, the SEIU National Industry Pension Plan, a plan for rank-and-file SEIU members covering 100,787 workers was 74.9% funded. A separate fund for employees of SEIU had 1,305 participants and was 90.6% funded. The pension fund for SEIU officers and employees had 6,595 members, and was 103.3% funded. This inequity was not always the case. In 1996, the SEIU National Industry Pension Fund had close to 110% of the funds it would need to pay all promised pensions to its workers.

Why are the officers pension plans overfunded at 123% and the rank & file union members plans are near "endangered status" at 82%?

Of course, market performance has faltered since 1999, and the performance of the fund reflects that. In 1998, the fund had slightly more than enough assets to pay its obligations. In 2000, it had approximately 85% of needed funds, and it has not risen higher than 90% since.

The SEIU in general blames the poor performance of private pensions on “the weak economy, poor investment returns, and outdate[d] IRS rules” .

The argument for the effects of a weak stock market loses ground when the performance of the National Pension Fund is compared to the performance of the two staff and employee pension funds. Admittedly, they both lost ground from 2005, but they are performing well despite poor market performance. The officers and employees pension plan, being overfunded, had room to decline in value without hurting its beneficiaries.

The problem of poor funding is not only in the national pension plan. Research by the U.S. Chamber of Commerce revealed that 13 SEIU local pension plans were all less than 80% funded. Six of them were less than 65% funded. In 1996, all of them were more than 65% funded, and half were more than 80% funded. While those who were in poor shape back in 1996 are worth significant concern, the Massachusetts Service Employees Pension Fund is perhaps of greater concern. It fell from nearly 110% to 70% funded in 10 years, and the SEIU 1199 Upstate Pension Fund fell from 115% to 75% since its inception in 1999. The chart below shows the degeneration of these funds’ strength from 1996 to 2006.

Part of the problem in local pension management could be the more secure futures of the leadership. Participation in the officers and employees pension plan (the overfunded plan) is mandatory for the officers and employees of local SEIU unions. As a result, these union members, even if they consider themselves dedicated, have less incentive to protect the pension plans of the locals.

The only hope the SEIU has is to force other employees to fund these multi-employer defined benefit plans. Under the Employee Free Choice Act (EFCA), which the SEIU strongly supports, government arbitrators are given complete control over labor-business contract disputes. The employer and employees hands will be tied in negotiations leaving the workers powerless over their own employment fate.

• Government arbitrators could force workers into underfunded pensions, putting their retirement at risk
• The average union pension has resources to cover only 62% of what is owed to participants
• Less than one in every 160 workers is covered by a union pension with required assets
• Under EFCA, government arbitrators can force businesses to fund failing pensions
• The PBGC already supports upwards of 30,000 pension plans
• Pension Benefit Guarantee Corporation (PBGC), the governmental pension insurer, will assume $86.7 billion in liabilities by 2015
• The PBGC limits the benefits in multi-employer plans to $13,000 a year per retiree, compared with roughly $52,000 for single-employer plans.
• In 2007, the PBGC reported a deficit of $955 million, a $216 million increase from the previous year
• On July 23, PBGC agreed to take on $6.2 billion in pension liabilities from bankrupt auto supplier Delphi Corp

Why is the SEIU supporting a bill that will force more and more union members into these failing plans?