Recently, this blog highlighted the continuing decline in union membership. There are likely many explanations for that decline. Nevertheless, unions have some selling points to recruit new members. One is the promise of a stable pension in retirement. But this promise doesn’t always bear out. Take, for example, the main pension plan of the Retail, Wholesale, and Department Store Union (RDSWU).
On its website, the RWDSU states that “union workers are 54 percent more likely to have employer-provided pensions…” And indeed, most RWDSU members are part of the Retail, Wholesale & Department Store International Union and Industry Pension Fund (Pension Fund).
But there’s a bit of a problem. The Pension Fund is considered in “critical” status by the federal government. It is just 68.4 percent funded. And has a nine-to-one ratio of retirees to active employees—meaning simply that more people are taking out than are putting in. Finally, union pension plans typically have a five-year vesting window, in an industry where workers switch jobs frequently. So a worker could put money in without a chance to take it out at retirement, unless they take a job at another company that is part of the same pension plan.
These problems are not unique to the RWDSU, of course. To understand why, a little context will help.
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