The United Steelworkers of America, the United Auto Workers and the International Association of Machinists and Aerospace Workers will have to reconcile diverse approaches on pension issues, including institutional shareholder activism, as they carry out their proposed merger.
Both the Steelworkers and Auto Workers have been involved in corporate governance issues through their membership in the Council of Institutional Investors, according to Mary Crane, director-administration for the Washington-based pension fund group.
Both unions belong to the council through their staff pension funds. Officials of the Steelworkers and Auto Workers could not be reached on how much in assets their staff pension funds have. But according to the Money Market Directory, the Steelworkers national headquarters staff pension fund, based in Pittsburgh, totals $313 million, and the Auto Workers national headquarters staff, based in Detroit, has several pension funds totaling $372 million.
The Machinists union, which has a $2.5 billion multiemployer pension fund and is the only union of the three with such a major role as trustee, does not belong to the council.
"We take a more traditional posture" on corporate governance, said Alan W. Skolnick, fund director for the Washington-based I.A.M. National Pension Fund, whose assets rank it among the 200 largest pension funds in the country.
The fund gives its money managers discretion to vote all proxies. The fund receives quarterly reports on the proxies, although it doesn't provide any guidelines to the managers for voting.
"Our managers are fiduciaries to the plan and have to treat proxies like any other asset," Mr. Skolnick said. "They vote the proxies in the way they think is in best interest of the plan, the same way they manage the assets in the best interest of the plan."
"It seems to be working very well," he added.
Some 1,300 companies, mostly smaller ones, belong to the I.A.M. multiemployer plan, he said.
The I.A.M. plan doesn't cover members who work for larger companies, like Boeing Co., who tend to belong to those companies' single-employer sponsored plans, Mr. Skolnick said.
Nearly all members of the Steelworkers and Auto Workers unions are covered by pension plans sponsored solely by their employers, such as Inland Steel Co. and General Motors Corp.
But the Steelworkers and Auto Workers, although they have no role in corporate governance issues of the company-sponsored plans for their members, have pension plans covering their staffs, through which they have been active in the council.
Steelworker and Auto Worker officials couldn't be reached for comment.
Mr. Skolnick said the I.A.M. trustees might have been deterred from joining the pension fund council because of a perception of the council as predominantly composed of public pension funds.
Public funds do dominate the council in numbers and in playing a more publicly outspoken role. The council has 99 full-paying voting members, including 20 Taft-Hartley pension funds, four union staff funds, 51 public funds, 22 corporate funds, and two endowment funds. In addition, the council has five major corporations that sponsor pension funds as non-voting members.
The leaderships of the three unions haven't discussed how the merger will affect pension issues.
"It's a bit early" in the merger process, said Reg McGhee, spokesman for the United Auto Workers, Detroit.
The proposed merger, which is designed to take effect in five years, will join together three strong supporters of defined benefit plans.
"Collectively they will be stronger in supporting defined benefit plans," said Jack Marco, president, Marco Consulting Group, Chicago, a major consultant to jointly trusteed pension funds.
He said the unions have been opposed to making defined contribution plans the primary pension vehicle.
"They like them as a supplement to defined benefit plans," he said. "They don't like them as a replacement to defined benefit plans."
Like everyone else interviewed, he is uncertain about the impact of the merger on pension issues.
"The merger is five years away; we don't know where it will go from here," Mr. Marco said.
"I wouldn't suspect (the merger) means much for pension plans, because the history of these union mergers doesn't lead to mergers of pension plans."
The merger of unions in the printing trades didn't cause a merger of their pension funds, which tend to be multiemployer, he said, pointing to one example.
"Even their (union) staff plans are still separate," he added.
In the proposed merger of the unions, no one interviewed could say whether it will lead to the amalgamation of the staff plans.
