WHEREAS:
Both public and private pension systems are increasingly vulnerable in today's uncertain financial world; and
WHEREAS:
In the 1980s, $20 billion in public and private pension funds were removed from retirement systems to finance mergers, acquisitions, hostile takeovers and leveraged buy-outs, which often resulted in lost jobs, corporate bankruptcies, erosion of local tax bases, economic disruption to local communities, and lost and reduced pensions; and
WHEREAS:
The assets of state and local government pension plans, which exceed $800 billion, represent the deferred wages and future financial security of public employees and belong to plan participants only, not to their employers or the taxpayers; and
WHEREAS:
Several public employers -- such as the states of New York, New Jersey, West Virginia and California -- have recently taken actions that could destabilize employee pension plans, including raiding pension fund assets and altering plan accounting methods for the sole purpose of reducing employer contributions; and
WHEREAS:
Congress has recently considered pension rule changes that would put at risk billions of dollars in pension funds and make it easier for private and public employers to raid the funds, leaving them with insufficient assets to protect current and future retirees; and
WHEREAS:
Removal of these funds from pension plans increases the risk of loss to workers, retirees and their beneficiaries, jeopardizing retirement security for millions of Americans; and
WHEREAS:
Retirement security is also threatened by the law currently governing public employee deferred compensation plans (known as IRS Code Section 457 plans, the equivalent of 401(k) plans in the private sector), since the law states that plan assets are the property of the employer until paid to the employee, thereby subjecting them to the claims of creditors in cases of public-jurisdiction bankruptcy; and
WHEREAS:
In the example of Orange County, California's bankruptcy, the court actually reduced the vested value of Section 457 accounts for county employees and retirees; and
WHEREAS:
Increasingly workers especially in the private sector are covered by only defined contribution plans, if they have any retirement plan at all.
THEREFORE BE IT RESOLVED:
That AFSCME, in the strongest possible manner, reaffirm its opposition to private and public employer raids on pension plan assets on moral, ethical and legal grounds; and
BE IT FURTHER RESOLVED:
That AFSCME International urges Congress promptly to enact a Public Employee Retirement Income Security Act (PERISA), which would protect and insure public employee pensions in a manner similar to the protections that are enjoyed by private sector employees under the Employee Retirement Income Security Act (ERISA); and
BE IT FURTHER RESOLVED:
That AFSCME urge Congress and the President to resist any efforts to eliminate existing safeguards designed to protect employee pension assets; and
BE IT FURTHER RESOLVED:
That AFSCME urge Congress and the President to oppose any legislation that would let companies and employer groups use so-called "excess" pension funds-money they hold in trust for workers and retirees-for non-retirement purposes; and
BE IT FURTHER RESOLVED:
That AFSCME support portability of defined contribution pension plans so that workers moving between jobs can continue to build up their retirement assets; and
BE IT FINALLY RESOLVED:
That AFSCME support legislation to change the law governing public sector deferred compensation plans under IRS Code Section 457 and require all assets in these plans be held for the exclusive benefit of plan participants, just as federal law currently requires for all assets in private sector plans under Section 401(k).
SUBMITTED BY:
INTERNATIONAL EXECUTIVE BOARDGary Waterhouse, President and Delegate
Curtis Searle, Secretary
AFSCME Council 15
Connecticut