Health Union Takes Hard Line on $3 Billion in Pension Losses
That vote to protect the fund’s remaining $6 billion in assets by not “going green” is the exact opposite of a vote Wednesday, March 25, regarding the status of a much smaller pension fund for nurses that was in the same predicament.
If a fund is in the red zone (with losses) but in the previous year was in the green zone (without losses), a new federal law allows trustees to freeze that green status for one year.
During that year, the pension fund’s trustees can review options for stabilizing the plan and allow investment markets to recover. Alternatively, trustees can accept the certified red status and develop a default schedule that reduces adjustable benefits.
In recent months all pension funds have been hit hard by Wall Street’s meltdown. Both the 1199 SEIU and nurses’ fund sustained losses of more than 30 percent in 2008. Statewide, many more private pension funds could move into the red zone after March 31, the deadline for actuaries to certify their accounts.
“The unprecedented downturn across all sectors of our economy has adversely affected the funding status of all pension funds,” said a joint statement from the League of Voluntary Hospitals and Homes and the 1199 SEIU Health Care Employees Pension Fund, which covers more than 145,000 retirees and members who work in hospitals and nursing homes.
The league and 1199 SEIU have agreed to collaborate on ways to nurse the pension to health.
A plan must be submitted by the fall, and in an unusual step, the parties may open up and modify their current collective bargaining agreement. That decision will probably be made in a few weeks, noted Bruce McIver, the league’s president.
“Now is the time to take bold action to protect our members’ future,” said George Gresham, president of 1199 SEIU United Healthcare Workers East. “Rather than pushing off this problem to a later date, this allows us to take immediate action to protect our members’ pension assets during these difficult times.”
The joint effort reflects “real commitment from both sides to protect our pension fund, and we commend the league for their leadership and cooperation,” he added.
Cooperation was much less evident in the negotiations between a pension fund for nurses in the New York State Nurses Association and the union.
Nurses held a rally this week to push their plan to keep in the green zone. When it came to a vote, the trustees of the NYSNA Pension Fund reluctantly agreed, in order to avoid lengthy and costly arbitration with NYSNA.
“Winning arbitration over this issue would not be in the best interests” of the fund, said the trustees in a statement. The fund trustees representing employers said they “believe that in an ideal world, the preferred course would be to remain red and develop a rehabilitation plan … so the collective bargaining parties can begin to address the funding problems this year.”
Since the union objected to that plan, the trustees instead went green.