As public pension schemes in states like California and Rhode Island continue to collapse, union pension funds in the private sector are also facing massive shortfalls. A new Credit Suisse report finds that managers of multi-employer pension systems have overestimated their plans’ funding at 81 percent; the bank’s calculation, based on new reporting standards, is a more dismal 52 percent. As the FT reports, the overall funding gap now stands at a startling $369 billion.For years, workers in private sector companies covered by collective bargaining agreements have thought that their pensions were secure. They aren’t, if these new studies can be trusted.This could deal a serious blow to a private sector labor movement that is already fighting for its life. Private sector unions derive their support from their ability to promise members better wages, benefits and working conditions in return for their union dues. At their peak, private-sector union members represented more than a third of American workers; today’s numbers are down to a meager 6.9 percent (see the chart below, h/t AEI’s The American). If workers lose confidence in their unions’ ability to deliver on pension promises, it’s hard to see why that number couldn’t fall even more.
Pension Squeeze Hits Private Sector Unions