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In a recent New York Times article discussing the high risk of bankruptcy regarding unionized, multiemployer defined benefit pension plans and the employers who fund these plans, Aliya Wong, the executive director of retirement policy at the U.S. Chamber of Commerce, stated “The biggest issue is where do you get the money from? Every source seems to be tapped out.”

As the second-generation owner of a 57-year-old, single-store supermarket business, I have unique experience with unionized, multiemployer defined benefit pension plans. From my perspective, there are several steps that should be taken if taxpayer assistance is needed to solve the funding issue for these plans.

  1. Any taxpayer assistance would require a conversion document where pension benefits are converted from defined to contribution for all employees at some number of years from retirement age – to make an impact, possibly 10 years. These calculations need to be made to the benefit of the pensioner. There could be no legal method available for the plans to convert back to defined benefit.
  2. The retirement age for any plan seeking this taxpayer assistance would match the age of retirement to earn Social Security benefits, and would be tied to this age for any future age of retirement increases.
  3. Before receiving any taxpayer funding, the plan in question would have to reduce plan expenses to assist in the outcome of the pensioner’s benefits. The savings would stay in the plan and be used for retiree benefits.
  4. Any plan applying for taxpayer assistance would be placed into receivership. This newly appointed bankruptcy trustee would ensure all excess funds collected from member dues after paying for the union’s business would be deposited to the pension plan that their members are enrolled. In effect, rather than buying political clout, the member’s dues money would benefit the retirees of the pension plan directly. This is another huge source of revenue that, when compounded over time, would significantly and positively impact every union current and future retiree including my employees.  
  5. The laws that protect retirees over the going concern of employers must be eliminated 
The above funding sources may seem radical, but desperate times require desperate measures. And the boards that manage these funds are indeed desperate.

John Zagara is the president of Zagara's Marketplace (a family-owned and operated supermarket), located in Cleveland Heights, Ohio.
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