There's exception to the depiction that some unions as not doing very well in the investment management field for their membership and that the conservative bent of the union prevented the type of return necessary to enhance pension benefits.
One union, however, the Graphic Communications International Union, has done quite well for its membership, and I believe it is more reflective of the majority of unions than what was suggested in your editorial.
The GCIU has four major pension plans, three of which are Taft-Hartley plans and one that is best described as a 401(k) plan.
The Taft-Hartley plans are all diversified to the point where they include within their portfolios equities, fixed income, real estate, guaranteed investment contracts, equity index funds, both small-and large-cap stocks, and, in recent years, the introduction of international investments.
Improvements in benefits have been a hallmark of the plans rather than a stabilization of benefits, and these improvements have been accomplished with a minimum of risk and volatility within the portfolios.
While we quite agree that funds relying on direction from their trustees rather than professional managers may be too conservative, the average union pension fund has modernized itself since the 1970s and, for the past three decades, has recognized the prime responsibility of having pension funds available for their members at their choice of retirement age.
They have been equally responsible in keeping assumption rates in the achievable area and thereby resisting the "rollercoasting" of the 1980s.
Organized labor has quietly but efficiently, in cooperation with their employer trustees, brought about the balance of good benefits, professional guidance and temperance of volatility in Taft-Hartley plans without sacrificing anything for participants. There are fewer and fewer union pension plans having to resort to the necessity of having a "bail out" from the Pension Benefit Guaranty Corp.
Three out of the four plans provide for "full benefits" at age 60.
Regretfully, we heartily concur with your editorial that our ability to communicate these successes, "especially among the younger members of the workforce," has tempered the influence of organized labor, but we are trying to improve that.
A prudent approach, coupled with the professionalism of money managers and a constant reminder of the obligation to have these assets available to their retirees, is a more accurate description of labor's paternalism. Being a subscriber to Pensions & Investments is yet another.
James J. Norton is president of the Graphic Communications International Union in Washington.