Ironworkers union in Baltimore wants to cut pension benefits to save fund

Graham "Butch" Henry Jr. says the cuts to The Ironworkers Local 16 pension benefits is "tragic" but thinks the union "is doing the best they can to save what they can." (Lloyd Fox/Baltimore Sun video)

Before the 40-story Transamerica Building became Baltimore's tallest skyscraper in 1973, it was a skeleton of steel beams and concrete that Graham B. Henry Jr. helped flesh out.

Henry, now 71 and retired, worked on the Key Bridge, the second Bay Bridge, and too many other projects to name. He and his contemporaries built Baltimore's modern skyline.


It was backbreaking, dangerous work, balancing on beams 30 stories above the sidewalk or high on incomplete bridges. Henry loved the work, even though he once fell 40 feet while working on an overpass on Interstate 83.

"It gave you freedom to be a human being," he said. "You could just be free."


Now Henry finds himself out on a ledge again, but not by choice. Ironworkers Local 16, the union that represents Henry and more than 1,100 other retirees and workers in the Baltimore area, has asked the federal government for permission to cut pension benefits.

It is a move designed to save, or at least extend the life of, the union's severely underfunded pension fund. With about 620 retirees drawing from the pension and only about 300 workers paying into it, the union estimates that the fund will run out of money in 2032 unless it takes action.

Long considered taboo for unions, cutting benefits to retirees is allowed now under a recent federal law that aims to extend the life of private pensions running out of money. Union leaders think the move could keep the pension funded for 30 more years, long enough to bring in a new generation of workers who can support it in the long run.

"If we continue to put money into this pension plan [at the current rate], we're going to put ourselves out of business," said Thomas Brune, the union's business manager. "And then they'll get nothing for it."

While some of Local 16's members, like Henry, begrudgingly understand the need for shared sacrifice, others are angry and wonder whether they should get out now. Their response exposes the significant challenge ahead for the union in retaining members and attracting newcomers to contribute to a pension that, even if the cuts are approved, has no guarantee that it won't go broke in their lifetime.

It is a predicament shared by dozens of pooled retirement funds, called multi-employer funds. These pensions, largely covering trade unions, promised to provide members a certain amount of money each month, so long as they worked enough years and contributed their share.

But times changed. Fewer young people want to be construction workers, miners and welders, and advances made jobs more efficient, requiring fewer workers. Pensions built on assumptions of steady growth are becoming unstable.

The federal government has deemed 33 such funds, including Ironworkers Local 16's, in "critical and declining" condition, meaning that they risk running out of cash, lack a way to bring in new money and, under a 2014 law, may apply to cut benefits.

"That's the hardest part of this — I don't think anyone did anything wrong. All these things just came together to prevent us from delivering on what we said we would deliver," said Ted Goldman, a senior pension fellow at the American Academy of Actuaries. "There's only two ways out of this: Come up with more money somehow or cut benefits."

Since 1974, pension plans that run out of money have relied on federal pension insurance. But that fund, too, is expected to run out of money for such pooled plans by 2025. In an effort to protect the federal fund, Congress passed legislation that gives the worst-off pensions the ability to take action themselves.

Under the law, plans can seek federal permission to cut benefits to retirees if doing so would extend the fund's life by 30 years. Proposals must leave intact benefits for retirees over age 80 and cannot cut payments to less than what would be offered by federal pension insurance.

Opponents say the law is unfair to retirees, many of whom have little means to make up the lost income.


Karen Ferguson, director of the activist Pension Rights Center, called cutting retiree benefits "unconscionable." She fears the new rules could pave the way for cuts to other programs that support retirees. Her group is pushing for a better legislative solution.

"It's an issue far greater than the 1,106 participants in this Local 16 plan," Ferguson said.

While dozens of pensions are eligible to seek benefit cuts, Ironworkers Local 16 is among the handful that have applied. Under its proposal, cuts would be based on a retiree's age and years of service, with the youngest retirees and those with the fewest years in the union facing the most severe cuts.

Henry expects his $1,559 monthly checks to be cut by about $300, or 20 percent, if the plan is approved. He isn't happy about it, but he understands.

"If the young people working have to take a hit, so should we," he said.

If the U.S. Treasury Department approves the plan, the union would have to take it to members for a vote.

Brune has gone over the numbers dozens of times and figures that to support its pension, the union needs to reverse a years-long trend of declining work hours, nearly doubling its 2015 total of 338,000 hours to 650,000. That means bringing on new members and landing more projects to put them to work.

The union's leaders not only must attract new workers, but they have to convince existing members like Dustin Pritchett to stay.

The 30-year-old welder does not want to leave a union he considers family, but isn't sure how much longer he can afford to stay.

"I have to look out for myself," said Pritchett, of Fallston. "No one else is going to."

As it is, after union fees and $200 he pays to support his 7-year-old daughter, Pritchett's take-home pay is about $500 a week. And he questions whether the pension would even be there when he retires.

That he could earn more without his union membership is tempting, but he likes the flexibility the union gives him in selecting projects. Still, the union has lost at least a dozen members this year.

Brune thinks the union's goals are plausible, with the Treasury's help. Big redevelopment projects on Baltimore's horizon, such as Sparrow's Point and Sagamore Development's $5.5 billion Port Covington, are expected to provide a surge in construction jobs that will put more union members to work.

But whether the Treasury will approve the plan remains to be seen. It did not approve the one plan it has reviewed. The Central States Pension Plan, which represents more than 411,000 people, sought to cut retiree benefits to avoid running out of cash in 2025.

The Treasury said the union did not meet its obligation to prove how the cuts, which were to be distributed unevenly among retirees, would salvage the fund for decades to come.

It is unclear how the Central States plan will respond, what will become of the federal pension insurance fund — which would be crushed under Central States' weight — and what the Treasury decision means for those, like the Ironworkers, who are still awaiting their fate.



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