CHALLENGES IN PENSIONS EDUCATION FOR UNIONS

1
CHALLENGES IN PENSIONS EDUCATION FOR UNIONS

• Elaine Bernard Larry Beeferman
• Pensions Capital Stewardship Project, Labor
  Worklife Program,
• Harvard Law School
• PENSIONS AT WORK OISE
• University of Toronto
• October 14, 2005

2
Outline

• Union Context of Pension Stewardship
• Credentialing/Professionalization Challenge and
  Opportunity
• University/union collaboration/partnership on
  capital stewardship
• Policy challenges pensions, unions and
  retirement security

3
UNIONS PENSION STEWARDSHIP

• UNION CONTEXT OF
• PENSION STEWARDSHIP
• General union membership education of retirement
  security
• Union Strategy Policy setting the goals for
  pension stewardship
• Assess Develop union pension power
• Role of trustees

4
UNIONS PENSION STEWARDSHIP

• General union membership education on retirement
  income
• Knowledge about CCP/Social Security employment
  pension benefits
• Significant worker misinformation about type of
  pension, value of what is due, when employee is
  eligible - DB, DC, CB
• Need for general union pension education
  essential context for active stewardship

5
Harris Poll What the Public Doesnt Know about
pensions(June 2/05)

• U.S. Nation wide sample of 2,322 adults found
• Only half (49) of all adults know that Social
  Security guarantees payment for life.
• Only 24 know that private pension plans also
  (usually) also do this.
• 22 believe (wrongly) that private defined
  contribution plans such as 401(K) plans do this.
• Only a quarter (23) of adults know that Social
  Security guarantees protection against inflation.

6
Harris Poll What the Public Doesnt know about
pensions(June 2/05)

• U.S. Nation wide sample of 2,322 adults found
• Only about half of all adults know that Social
  Security provides life disability coverage for
  spouses or children of workers who die or are
  disabled
• Only about one adult in every six know that
  Social Security has lower administrative costs
  than private pension and retirement plans
• Almost half of adults do not know that Social
  Security has never failed to pay benefits

7
UNIONS PENSION STEWARDSHIP

• General union membership education of retirement
  security
• Articulated Union Strategy Policy adopt goals
  for pension stewardship (secure retirement
  income seek to influence corporate behavior,
  influence corporate governance, SRI, maximize
  ROI, window/relationships in investment
  community, union leverage on employers for
  organizing/bargaining) relevance relation to
  other union work goals

8
UNIONS PENSION STEWARDSHIP

• General union membership education of retirement
  security
• Union Strategy Policy setting the goals for
  pension stewardship
• Assess Develop Union Pension Power type
  size of pension plan, role of board role of
  union and other trustees on board (also, union
  policy structure)

9
UNIONS PENSION STEWARDSHIP

• General union membership education of retirement
  security
• Union Strategy Policy setting the goals for
  pension stewardship
• Assess Develop union pension power
• Role of trustees

10
UNIONS PENSION STEWARDSHIP

• 4. Role of Trustee
• selection (elected/appointed by union or by
  fund participants) accountability/responsibility
  to union and/or fund participants, active role in
  ongoing reporting/education of members/participant
  s
• preparation (amount of time to devote to board
  role pension issues vs other union/work
  responsibilities, reimbursement and/or time off)
  caucusing independent discussion
• education (basic rules on role, procedures
  fiduciary responsibility who does the training?
  Problem of trustee capture by staff and/or
  professional)
• empowerment education (aimed at ability to move
  union policy into board action, managing
  relationship with fund staff, professionals, etc.
  not attempting to create another expert but
  an informed steward

11
CREDENTIALING CHALLENGE

• Credentialing/Professionalization Challenge
• UK Pensions Act 2004 move towards creating a
  statutory duty for trustees to be conversand with
  key aspects of trusteeship, including scheme
  documentation, pension law, funding, and
  investment principles
• US Federal Retirement Thrift Investment Board
  retained Center for Fiduciary Studies to provide
  training on investment fiduciary responsibility
  to board directors
• MA Public Employee Retirement Administration
  Commission recommended mandatory education for
  board members
• Colorado PERA commission recommends requiring
  education/profession experience

12
CREDENTIALING CHALLENGE

• Demand for Credentialing/Professionalization
• Recent scandal, unfunded liability
• concerns over competence of trustees (because of
  growing complexity of decision making and funding
  and investment types and opportunities, new
  regulations such as requirement to vote
  proxies)
• distinguishing between legitimate concerns for
  competence and politically motivated attack on
  labors new interest in exercising its trustee
  power
• new version of leave it to the professionals

13
CREDENTIALING CHALLENGE

• Demand for Credentialing/Professionalization
• Success of unions in gaining voice on pension
  boards
• Increase in union trustee activism has led to
  assault on union trustees (and political and
  corporate attempt to limit union voice and power)

14
CREDENTIALING CHALLENGE

• Demand for Credentialing/Professionalization
• Opportunity
• Can unions (working with others) help set
  standards for credentialing (prevent total
  industry capture, professionalization)
• Establish guidelines and rules for best practice
  for boards and trustees
• Can unions lead a wider struggle for right of all
  pension plan participants to have
  voice/representation on pension boards

15
University/Union Collaboration

• Advantage of University Collaboration
• Labors right to access university resources
• Multidisciplinary nature of pensions issues
  (finance, accounting, public administration, law,
  political economy, demographics, etc.)
• Legitimacy (with members public)
• Convening role
• Connection with investment community
• No substitute for labors own education, strategy
  development must be within context of broader
  union approach to pension stewardship

16
University/Union Collaboration

• Three types of activities
• Education (why target union public fund
  trustee, develop materials and/or delivery,
  credentialing, education for empowerment)
• Research (multidisciplinary research, engage
  researchers with union pension stewards)
• Practitioner engagement, networking, convening
  role (helps inform research ideas, assure
  relevance of research, build relations with
  activist community)

17
Policy Challenges Pensions, Unions, Retirement
Security
18
Policy Challenges Pensions, Unions, Retirement
Security

• The shrinking employment pensions universe
• What we demand for ourselves we desire for all
• J.S. Woodsworth

19
U.S. Workers and Pensions
69 of union workers have guaranteed
pensions 14 of nonunion workers
Source BLS, Employee Benefits in Private
Industry, 2000
20
U.S. Workers and PensionsUnions Density 2004
12.5
40 35 30 25 20 15 10 5 0
195435

200312.9
21
Canadian Workers Pensions
22
Policy Challenges Pensions, Unions, Retirement
Security

• Building a stronger coalition for democratizing
  capital - other partners including advocates for
  shareholder power (participant voice in mutual
  funds), community development community
  investment advocates, environmental community,
  human rights community

23
Policy Challenges Pensions, Unions, Retirement
Security

• Seeking a public role/mission in pensions (even
  private pensions receive public assistance
  taxes, etc)
• Developing benchmarks in addition to financial
  performance
• In defensive of public pensions (thinking about
  investment not just earnings)

24
Conclusion

• Past results are no indication of future results
  
• however
• the best way to predict the future is to create it