United States Pension Benefit Plan Design Innovation: Labor Unions as Agents of Change
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Labor unions played an historic role creating the occupational pension system in the private and public sectors in the post-World War II era. That system, which was dominated by defined benefit pension plans, is in decline. The transition to a new system is economically and socially painful, and has been accelerated by two financial crises in the past decade. This paper uses a case study of a private sector union to demonstrate how labor unions can influence the renegotiation of the pension contract for American workers. The case study describes how one union evaluated the pension crisis from a sustainability viewpoint, and responded pro-actively by developing a hybrid pension plan that attempted to align the interests of all stakeholders through equitable risk sharing. The hybrid plan developed by this union eventually had a broader influence on the pension community at large and the public policy debate around the pension crisis.
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All opinions, errors, findings, interpretations, and conclusions of this paper represent the views of the author and not those of the Wharton School or the Pension Research Council. © 2014 Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.
Date Posted: 26 June 2019