We’ve mentioned this fact before here on the blog, but a New York Daily News article is worth repeating. Union bosses all across the country have so mishandled their member’s pensions and few of them are in good shape as a result. Most are underfunded and in need of help. But that is the worker’s pensions. When one investigates the union bosses pensions one finds a very different story. In fact, from one union to the next, union bosses have fully funded and quite ample pensions plans that show none of the signs of mismanagement that the common worker’s pensions do.

Here is a piece by Diana Furchtgott-Roth that chronicles the selfish attention to their own needs exhibited by union bosses as the needs of their membership goes unsatisfied.

Union bigs get the best deals: A sour Labor Day lesson on pensions

By Diana Furchtgott-Roth

This Labor Day, unions are once again seeking to recruit new members with promises of higher wages and generous pension benefits. These promises are made despite pension funds’ reports to the U.S. Labor Department showing that collectively bargained pension funds are underfunded when compared with other pensions.

In contrast, pension funds for unions’ own staff and officers have been doing just fine.

In 2006, the latest year for which full data are available, only 17% of union-negotiated plans were fully funded, compared with 35% of nonunion plans.

Under the Pension Protection Act of 2006, funds with less than 80% of assets are in “endangered” status. In 2006, 41% of union funds were “endangered,” compared with 14% of nonunion funds.

Thirteen percent of union funds had less than 65% of required assets, also called “critical” status by the Labor Department, while only 1% of nonunion plans were in critical shape.

Unions have separate pension plans for staff and officers of national and local unions because usually officers and staff are employees of the union. These pension plans are doing far better.

A sample of 30 staff pension plans among unions that sponsor the largest 46 rank-and-file plans shows that whereas the collectively bargained plans had 70% of the funds needed to satisfy their obligations, the officers’ own plans were 93% funded.

Take the Service Employees International Union National Industry Pension Plan. This plan covers 103,693 rank-and-file members. In 2007 it was 74% funded, and in 2009 it filed under critical status with the Labor Department.

Yet a separate fund for the union’s own employees, such as support staff, had 1,371 participants and was 85% funded. The pension fund for SEIU officers had 7,064 members, and did even better: 102% funded.

A comparison of the pension funds of ordinary SEIU members with the pension funds for officers and staff shows that neither poor market returns nor the weak economy explain the national pension’s underfunding. The three plans are managed within a single trust, separately, but by the same people.

The major difference is that the decisions regarding contributions to the officers’ funds are made by the officers of the SEIU alone, instead of by several large employers pursuant to collective-bargaining contracts.

The success of the officers’ funds shows the heads of the national organization know how to fund a pension plan properly, if they choose to. If the SEIU leaders can do that, there is no excuse for their inability to push their corporate partners to do likewise. They are on the boards of the pension funds and, therefore, have influence.

Why the different funding rates of rank-and-file and officer pension plans? Most officer pension plans are perks of the job and are not collectively bargained. Rather, they are dictated by the union’s bylaws. Furthermore, they are single-employer pension plans. Both of these distinctions have biases toward better funding.

Union officers make most of the business decisions for the union. They are aware of the financial status of the union, and therefore what pension benefits are affordable. When a single entity is responsible for determining pension benefits, its exclusive responsibility and its flexibility allow it to keep the pension well-funded.

Union officers manage their own pensions. That may give them a greater incentive to ensure that their own pensions are managed well. The members’ pensions then become less of a priority. The outcomes suggest that union leaders are more diligent in protecting their own futures.

It’s a moral outrage that unions are wooing workers with the dubious promise of comfortable retirements even as many collectively bargained pensions are in financial difficulty. It’s even uglier that unions manage to produce well-funded pensions for their own officers and staff from the dues payments made by workers out of their hard-earned wages.

Diana Furchtgott-Roth is a columnist with RealClearMarkets.com and the coauthor, with Andrew Brown, of “Comparing Union-Sponsored and Private Pension Plans: How Safe Are Workers’ Retirements?”

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