FASB Group Urges Board to Address Unfunded Multiemployer Pension Plans

The Financial Accounting Standards Board’s Small Business Advisory Committee said on June 5 that unfunded pension liabilities of multiemployer pension plans is one of the financial reporting issues the board needs to address.

SBAC members told FASB that this issue has become a national epidemic since companies that have multiemployer pension plans have had their funds decimated by the market during the last 18 months.

The construction industry has been hit particularly hard as a result of its union ties, SBAC members said.  “A [known] example is the Roofers Union in Syracuse, New York, that lost 97 percent of its assets with Bernie Madoff, and across New York their funds got decimated by the market in 2008 as well as this swindler,” said Richard Forrestel Jr. of Cold Spring Construction Company. “This would be an issue in which sureties also would be interested,” Forrestel said.  “I can assure this board that Sureties care about that potential liability,” he said.

FASB’s Lawrence Smith questioned what multiemployer plans have been doing with respect to the funding requirements of the participating companies.

“The solutions vary across the map,” Forrestel said.  “In West New York, we have observed that the pay raises going forward to our union brethren are going into the fringe benefits and not into the base.” FASB Chairman Robert Hertz said staff is researching the issue, which he stated was what caused the demise of car companies.

Source:  Construction Labor Report, Vol. 55, No. 2724, June 11, 2009