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Resolutions & Amendments

38th International Convention - San Francisco, CA (2008)

Preserving Retirement Security

Resolution No. 10
38th International Convention
Moscone West
July 28 - August 1, 2008
San Francisco, CA

All workers want to retire in dignity, with a reliable income that enables them to maintain their standard of living and not fall into poverty in old age; and

Social Security provides a modest retirement income for most Americans, but it was never meant to be more than an income floor that would be complemented by an employer-sponsored pension and personal savings; and

Many AFSCME members do not participate in Social Security and rely on a pension as their only secure form of retirement income; and

Most AFSCME members can expect to receive an employer-sponsored pension when they retire--a traditional defined benefit (DB) plan that is based on wages and years of service, that guarantees the vested worker monthly benefits for life, includes options to extend benefits to the worker’s spouse or survivor and to which both the worker and employer contribute; and

DB pension plans are professionally managed, in order to get maximum return on investments, and are highly diversified--with investments in everything from stocks and bonds to real estate--in order to balance gains and losses and to place all financial risk on the employer rather than on workers and retirees; and

Professionally-managed pension funds keep fees low and consistently beat the market with their return on investments, giving employees and employers--and taxpayers--the best possible return on their contributions; and

Conservative legislators and organizations are waging a campaign across the country to eliminate DB plans and replace them with defined contribution (DC) plans--essentially individual retirement savings accounts that shift the risk of financial losses from the employer to the workers and retirees; and

These forces have already succeeded in converting Alaska’s DB plan to a DC plan--even though Alaska public employees don’t participate in Social Security and their pension plan is their only safety net; and

AFSCME and other public pension advocates have formed a new group called the National Public Pension Coalition to aid state-based fights to preserve DB plans and have already  mobilized members and stopped efforts to eliminate DB plans in California, Colorado, Kentucky, New Hampshire,  Rhode Island and San Diego; and

DC plans offer much less security to workers. Individual accounts do not provide a known benefit and are subject to market fluctuations.  Accounts must pay steep management fees that come directly from account assets and account proceeds cannot be supplemented by post-retirement cost-of-living adjustments.  Market downturns that cause retirement account losses may force older employees to work longer; and

DC proponents are not being honest with taxpayers when they claim DC plans will cost them less, because most funding for public-sector DB plans comes from employee contributions and investment returns, with only 26 percent coming from the sponsoring jurisdiction. Merrill Lynch concludes that a well-managed DB plan usually costs employers less in the long run; and

Claims that DB plans are severely under-funded are untrue, with asset growth outpacing growth in liabilities for most plans.  DB plans that do show a large unfunded liability are generally in that predicament because the sponsoring government failed to fund them consistently and not because workers failed to make contributions; and

Public employees have shown their preference for their DB plans by overwhelmingly rejecting DC accounts where a choice is available--in such states as Florida, Michigan and Ohio; and

Many public employees enjoy employer-sponsored retirement savings plans (457, 403(b) or 401(k) plans) in addition to their DB pensions, but need objective investor education to help them learn how to avoid paying large fees, how to start investing and how to make smart choices that will enable them to augment their pension and Social Security benefits in order to create a prosperous and secure retirement; and

AFSCME, with a grant from the FINRA Foundation, has created a program to educate members on investments.

That AFSCME do everything possible to defeat efforts to replace reliable DB pension plans with risky DC plans; and

That AFSCME continue to provide investor education to members through web-based and in-person training sessions and workshops; and

That AFSCME  continue to support the efforts of the National Public Pension Coalition and  work with other public employee unions and support state, county and municipal campaigns to inform taxpayers that there is real value in providing dependable benefits for public employees, that pensions are a valuable recruiting and retention tool, that public employers can set an example for private employers by providing dependable benefits and that all workers stand to gain by sticking together and defending our right to a decent retirement.
SUBMITTED BY: Fred G. Brown, President and Delegate
Michael R. Williams, Secretary and Delegate
Yvonne Jacobson, Delegate
Val Kenny, Delegate
Sue Layton, Delegate
Chris Pace, Delegate
Stephen Wright, Delegate
Gordon Glaser, Delegate
Bernie Person, Delegate
Susan Carpentino, Delegate