seiu-1199-5954963Two pension funds affiliated with 1199 SEIU, the state’s largest and most influential union for health-care workers, recently disclosed that they are in “critical” status due to funding or liquidity problems for an 11th straight year.

The affected funds are the 41,201-member 1199 SEIU Greater New York Pension Fund, aimed at nursing home workers in the New York City region, and the 8,987-member Service Employees Pension Fund of Upstate New York for hospital and nursing home workers, which is jointly sponsored by 1199, SEIU Local 200 United and UNITE HERE Local 150.

The two plans’ fiscal woes date back to the aftermath of the Great Recession in 2009, when stock market losses took a toll on the assets of many pension systems. Since then, stocks prices have climbed at a historic pace and the number of fiscally troubled pension plans has dropped by more than half.

As of 2019, 98 multi-employer pension funds, or about 7 percent of all such plans, were listed in “critical and declining,” “critical” or “endangered” status, down from 232 in 2019.

The Greater New York fund said in a notice to members that it was in critical status because of “an accumulated funding deficiency for the current plan year.” The Upstate fund said it is “projected to have an accumulated funding deficiency at some point during the current plan year or the nine succeeding plan years.”

Funds in critical status may reduce adjustable benefits and are barred from issuing lump-sum distributions in excess of $5,000.

There are a total of five 1199-affiliated pension funds operating in New York, with $11 billion in assets and 421,000 participants, both active and inactive or retired. The 1199SEIU Health Care Employees Pension Fund, serving 264,517 current and former hospital workers, was the sixth largest in the nation as of 2015.

Based on their 2017 filings, all show signs of common ailments affecting defined-benefit pension systems, including low ratios of active to inactive members and substantial unfunded liabilities (see chart). The issues are similar to those affecting New York’s largest construction union pension plans, as E.J. McMahon blogged in this space last week.

screen-shot-2019-06-11-at-8-57-27-am-8723279
*Fund in ‘critical’ status. Source: U.S. Department of Labor. (Click to enlarge.)

For the five 1199 plans taken together, 44 percent of members are actively working – and thereby generating employer contributions to their respective pension systems.

By the funds’ own actuarial standards – which assume generous rates of return on investment, ranging from 7 percent to 7.75 percent – the systems’ assets are only 81 percent of the amount needed to guarantee future benefits.

Using the more conservative standard spelled out out in the Retirement Protection Act of 1994, the five systems are only 41 percent funded – leaving an unfunded liability of $16.2 billion.

If they are to make good on their commitments to retirees, the plans must ultimately close that gap through a combination of investment returns and contributions from their 588 participating employers, which are hospitals, nursing homes and other health-care providers across the state.

 

About the Author

Bill Hammond

As the Empire Center’s senior fellow for health policy, Bill Hammond tracks fast-moving developments in New York’s massive health care industry, with a focus on how decisions made in Albany and Washington affect the well-being of patients, providers, taxpayers and the state’s economy.

Read more by Bill Hammond

You may also like

New York’s health benefits remain the second-costliest in the U.S.

New York's health benefit costs increased faster than the national average in 2020, leaving it with the second-least affordable coverage in the U.S. The state's average total cost f Read More

DiNapoli bolsters pension fund stability—and cuts tax-funded costs

Comptroller DiNapoli has taken a big step to bolster the financial stability of New York State's largest public-sector retirement system Read More

The Gov’s pension

There are several (dozens? hundreds?) of unanswered questions as the fallout from Andrew Cuomo's resignation earlier today continues. Among those are questions related to his pension, some of which can be answered, sort of. Read More

The Health Department’s FOIL Responses Signal an Indefinite Wait for Pandemic Data

The quest for comprehensive data on New York's coronavirus pandemic hit a bureaucratic roadblock this week Read More

Health Research Inc. Turns Over its Payroll Records Despite Claiming To Be Exempt from FOIL

The full payroll records of more than 2,400 de facto state employees are available to the public for the first time after being released by Health Research Inc. Read More

New York’s Medicaid Rolls Kept Pace with a Nationwide Surge During the Pandemic

New York's Medicaid and Child Health Plus programs added three-quarters of a million enrollees during the coronavirus pandemic, roughly matching the pace of a national surge in sign-ups. Read More

New York’s State Share of Medicaid Spending is Due to Jump 22 Percent This Fiscal Year

The state share of Medicaid spending is projected to jump 22 percent under the recently approved state budget, an unusually steep one-year jump for what is already one of New York's biggest expenditures. Read More

New York’s Hospital Industry Ranks Near the Bottom of Two Quality Report Cards

New York's hospitals remain near the bottom of two quality report cards. The state's hospitals received the lowest rate of any state except Nevada and DC. Read More

Subscribe

Sign up to receive updates about Empire Center research, news and events in your email.

CONTACT INFORMATION

Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100

General Inquiries: Info@EmpireCenter.org

Press Inquiries: Press@EmpireCenter.org

About

The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.

Empire Center Logo Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!