Multiemployer Pensions Are Mostly Doing Well, Thanks

Regarding your editorial "The Union Pension Bomb" (May 15): Since 1947 federal law has required all multiemployer plans to be jointly managed by a board of trustees with equal representation from both labor and management. These plans are typically found in industries characterized by mobile work forces such as construction, trucking, retail food and entertainment where employment patterns preclude workers from ever achieving benefits eligibility under typical corporate rules. Portability is an important factor for most workers in these predominantly low- to moderate-wage industries where, contrary to the dismissive conclusion that such plans should be replaced by much less efficient company-specific defined-contribution plans, disposable income is generally inadequate to accumulate account balances sufficient to ever permit them to retire.

It is incorrect to describe the Credit Suisse analysis as "fair value" and the Department of Labor figures as "actuarial" because both use actuarial projections. Actuaries measure pension liabilities using two distinct approaches. The first (Credit Suisse) approach captures the cost of settling the pension liabilities as though a plan termination were imminent by purchasing a dedicated bond portfolio. The second approach captures the cost of supporting an on-going plan with a diversified asset portfolio. This approach is more appropriate for multiemployer plans because they are not dependent on the fortunes of any single company. Unlike Credit Suisse's analysts, Congress recognized these distinctions in crafting the funding and reporting rules contained in the Pension Protection Act of 2006 on which the DOL requirements are based. Settlement calculations depend on the current interest-rate environment, while ongoing funding calculations do not.

Multiemployer plans provide cost-effective retirement security to millions of working-class Americans. They are responsibly managed, and despite the devastating events of 2008, most are on sound financial footing.

Randy G. DeFrehn

Executive Director

National Coordinating Committee for

Multiemployer Plans

Washington

As actuaries, we strongly disagree that the Credit Suisse approach is more realistic because it is based on the current, historically low bond yields. In our opinion, over the next 30 or 40 years a well-diversified portfolio of stocks, bonds, real estate, private equity and other investments, will most likely outperform an all-bond portfolio by 200 to 300 basis points or more. For many funds a 7.5% assumption represents, as the law requires, the actuary's best estimate of the long-term expectation.

If interest rates rise 100 basis points, Credit Suisse would say that these plans are now much better funded. We disagree.

Your editorial seems to blame multiemployer funds for mismanagement because the stock market crashed and the funding levels of the plans declined. Most of these plans have cut benefits and/or raised contributions, and often the contribution increases have come at the expense of wages. Most will survive, barring another market collapse. They will survive because the trustees, the participating companies, along with the nurses, electricians, laborers, engineers, drivers, plumbers, roofers, clerks, meat cutters, carpenters, entertainers, athletes, writers and others they employ have tightened their belts and have acted responsibly.

Stan Goldfarb

Cary Franklin

Larry Weitzner

Horizon Actuarial

Services, LLC

Washington

Multiemployer plans provide regular monthly income and retirement security to over 10 million Americans. The Western Conference of Teamsters Pension Plan alone has provided benefits to more than 500,000 retirees and family members for more than 50 years.

The finances of the Western Conference Fund are transparent. Our website at www.wctpension.org includes the full range of the fund's financial statements for all to review.

The Credit Suisse report claims there are systemic and hidden weaknesses in multiemployer plans. Our finances are open to the public and show that our fund is strong. The Credit Suisse report overstates potential withdrawal liabilities for our contributing employers—very few of whom withdraw—because our fund doesn't use artificially low interest rates to determine those liabilities.

All of our fund's employer and union trustees work diligently to fulfill their fiduciary responsibility to protect the benefits owed to the fund's participants and beneficiaries, and to keep our fund healthy. We have achieved this goal since 1955, and we look forward to continuing to do so in the decades to come.

Richard Dodge

Chairman, Employer Trustees

Chuck Mack

Chairman, Union Trustees

San Ramon, Calif.

There Are Some Good Reasons for Licensing Barbers

I wonder if Dick Carpenter and Lisa Knepper are aware of why barbers attend school and are tested for licenses ("Do Barbers Really Need A License?," op-ed, May 11)? These schools teach, among other things, hygiene and sanitation, proper use of chemical dyes and how to give a straight razor shave without slitting the throat of the client. With the rise of MRSA and other antibiotic-resistant bacteria, HIV, hepatitis and head lice, no one should trust an untrained, unlicensed person with his hair or skin.

Learning a trade and becoming licensed may require a time and testing commitment, but there are federal grants available to low-income students. With current economic conditions, how many other opportunities are available to disadvantaged individuals to enter the middle class?

Trained barbers don't just give a good haircut and shave, they give a good haircut and shave without the risk of a call to an EMT later. What's next? Unlicensed medical technicians drawing blood?

Joe Wortell, Licensed Barber

Glencoe, Ill.

Some professions need licensing and some don't. Of course, many professions seek licensure to limit practitioners, sometimes under the guise of protecting the public. In March 1996 Gov. Evan Bayh of Indiana vetoed a bill that would have licensed hypnotists in Indiana saying, "Until there is specific evidence of rogue hypnotists wreaking havoc in our communities I do not be believe the only possible response to this concern is to create yet more government."

Despite lack of subsequent evidence, a later governor signed a similar bill which has led to hypnotists from other states applying for licensure in Indiana so that practitioners could advertise in the Yellow Pages that they are "state licensed."

Fred Nation

Terre Haute, Ind.

I have a stepson who just finished barber school, and it's quite clear to me that the longer the educators keep license seekers in school, the more tuition money that rolls in, along with those freely provided student cuts for which the school also gets $5 from clients.

Greg Jensen

Euless, Texas

U.S. Carries Some of Sweden's Load

I chafe at statements such as Swedish Finance Minister Anders Borg's, "We have nearly three times as high [GDP] growth in Sweden as in the U.S." ("The Swedish Reform Model, Believe It or Not," by Anne Jolis, op-ed, May 19) When will someone who is comparing the Swedish and U.S. economies take into account the fact that Sweden makes almost no investment in its national security because that cost is borne by NATO (of which Sweden is not a member) and, more specifically, by the U.S.? The Swedish defense budget is less than $7 billion annually, the U.S. budget more than $700 billion. Swedes spend 1.2% of their GDP on defense, Americans 4.8% of theirs. The Swedish army comprises fewer than 6,000 soldiers and 37,000 home guard; the U.S. equivalents are about 760,000 and 360,000.

Isn't it time to calculate what it costs the U.S. to provide a defensive umbrella for Sweden and then to bill for that service? Were the U.S. to work out a similar arrangement with all the countries it shelters, each might continue to enjoy U.S. military muscle while investing no more than, say, 2% of GDP in its own defense. Imagine what the resultant $415 billion annual savings might do for the U.S. economy.

John Drayton

Norman, Okla.

Walker Is Wisconsin's Chief Collective Agent

The photograph with Christopher M. Toner's "What's at Stake in the Wisconsin Recall Election" (Cross Country, May 19) is telling—a woman holds a sign that reads "Collective Bargaining Rights Should be for Everyone!" I agree.

The essence of representative government is that the government, which Gov. Scott Walker heads in Wisconsin, speaks for the collective bargaining of the taxpayers of that state. He also represents the nontaxpaying segment. The people are, for all practical purposes, members of the Wisconsin residents' union. And their union president is Mr. Walker.

So what's it going to be? Does everyone get collective bargaining or only a select few?

Joseph Horton

Lafayette, La.

CUNY's 'Pathways' Are Well Done

Mark D. White's criticisms of CUNY's general education initiative "Pathways" (Letters, May 16) are not only incorrect but preposterous in many ways. The Pathways structure was developed by dozens of tenured faculty members, and many hundreds more tenured faculty from across CUNY's 19 undergraduate colleges are deciding which courses should be offered and the learning outcomes to be achieved by each.

The general education framework was unanimously approved by the university's board of trustees, which has the responsibility under New York state education law to ensure that CUNY, as one university, has clear transfer paths and curricular alignment across its colleges. The resolution calls for a "commitment to the highest academic standards and to the faculty's special responsibility for courses and curriculum."

The goals of ensuring quality coursework, clearly defined learning outcomes and the reduction of artificial barriers to student progress have driven the initiative since its inception. The general education framework is now consistent with national norms and flexible enough to enable faculty at individual colleges to emphasize lab science and instruction in languages other than English if they choose. The initiative allows students who take any portion of their general education requirements at any CUNY college to transfer all those credits to any other CUNY college, graduating without excess credits and expenditure.

Far from being an imposition, the work of articulating high learning standards and facilitating student progress must be our highest priority.

Benno Schmidt

Chairperson

CUNY Board of Trustees

New York