Taveras Keeps Double Pension for City Union
Thursday, April 07, 2011
Providence’s largest union has scored big in its new labor contract with the city—keeping a decades-old double pension deal along with other extra benefits that had been targeted for a possible cut earlier this year.
Under the new contract, members of Local 1033 of the Laborers’ International Union of North America will receive a second, union-administered pension in addition to their regular city pension. That applies to just about everyone in city government who is not a firefighter, police officer, teacher, or department manager—a total of about 780 employees.
In the current fiscal year, the city is contributing about $1.2 million into the pension fund and roughly another $2 million towards the other benefits, according to a review of budget records.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTThe double pension is unique to Local 1033—neither the police nor the firefighter union has anything like it. Local 1033 members also receive Social Security benefits. Firefighters and police officers, on the other hand, typically don't even receive Social Security.
Second pension was eyed for budget cuts
Donald Iannazzi, the business manager for Local 1033, said the union is simply looking out for the best interests of its members. “If we don’t look out for our future, there’s nobody to look out for our future,” Iannazzi said.
He said the union wants its members to be able to retire with dignity. “So we have a second pension fund,” he said.
Much of the money the city pays towards the second pension and other benefits is taken out of the wages of the workers. According to the new contract, the city will continue to withdraw $2.76 out of the hourly wage of all Local 1033 employees and contribute it to the Union Benefit Trust Funds.
Also, the city will pay an additional two cents for every hour worked into the union pension fund—something that is a new feature of the contract, according to Iannazzi.
He brushed off questions about how a double pension might be perceived by the public. "People are going to say what people are going to say," Iannazzi said. "I don't care about that. I care about doing what's right by our membership."
The union pension fund is one area where the Providence Municipal Finances Review Panel said the city should consider making cuts. In 2010, payments to the union pension cost the city $3.1 million, according to the panel. (Click here to read its report.)
Iannazzi said panel members did not realize the full implications of their recommendation. “They were some fine people who did their job of accounting and reporting and making their recommendations but operate in a vacuum,” he said.
In order to stop participating in the union pension fund, the city would have had to make a one-time payment of $1.1 million to the fund within 60 days—a requirement of federal law, according to Iannazzi.
Overall, city saves $26 million in contract
Asked why Mayor Angel Taveras kept the second pension intact, a spokesman pointed to the deep savings that the city was able to achieve elsewhere in the contract—a total of $26 million over four years. The city had set out to cut about 10 percent of the estimated $50 million annual cost of the contract—something which it achieved through a combination of surrendered pay raises, pay cuts, increases in health insurance co-shares, and a reduction in longevity.
“We are very pleased with the agreement and with the $26 million in savings that will be generated,” said Taveras spokesman David Ortiz. “Local 1033 made a number of significant compromises that address structural aspects of the labor contract both short- and long-term.”
Councilmen Kevin Jackson and Miguel Luna agreed that the contract would help the city deal with its fiscal crisis. They said they did not have a problem with the second pension and other benefits. “I don’t have an issue with that,” Jackson said.
Both councilmen noted that members of Local 1033 typically are not earning six-figure salaries but instead are closer to $30,000 to $40,000 a year. (Click here to read their other comments on the contract.)
Union benefits extend beyond second pension
The pension fund is formally known as the Labors’ International Union of North America National (Industrial) Pension Fund. Unlike the city pension fund, which is less than 40 percent funded, Iannazzi said the national union pension system is 80 percent funded. He said it is governed by strict federal regulations designed to ensure that it remains solvent.
Besides the pension, members of Local 1033 also receive a number of other benefits that are funded by the money withdrawn from their wages.
Those include prescription drug benefits, vision care, and life insurance. Another program covers the cost of training city workers in everything from GIS and Microsoft Word to workplace safety.
Members also are offered free legal services for anything that is not job related—ranging from divorce cases to tax issues, according to Iannazzi. He confirmed that one of the law firms that works for the union is Coia & Lepore, which has a long history with Local 1033.
He declined to disclose the other two law firms that provide legal services. “I don’t see why I should share that confidential information with you or any other member of the press,” he said.
He also could not provide a breakdown of how the $2.76 that is withdrawn from workers’ wages is split among the various programs and benefits the union offers members.
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