AFL-CIO Targets ‘Excess’ Pension Assets

The AFL-CIO executive council Tuesday called on Congress to enact legislation preventing companies from terminating pension plans without sharing all of the proceeds with workers.

“The long-term economic security of 2 million workers has been jeopardized by management appropriation of more than $17 billion” of terminated pension fund assets since 1980, the executive council said in a resolution it adopted at its annual mid-winter meeting here.

In recent years more than 1,500 pension plans have been terminated and so-called “excess” assets recaptured by employers, according to figures from the federal Pension Benefit Guaranty Corp. “Excess” assets are defined as the surplus in a pension fund beyond what an employer is required by law to distribute to pension plan participants, and it frequently amounts to millions of dollars.

‘Used by Corporate Raiders’

In many cases these pension fund liquidations “have been used by corporate raiders and buccaneers in their hostile takeover adventures, to the detriment of the work force,” AFL-CIO President Lane Kirkland said at a news conference at the Sheraton Hotel here.

Kirkland said the surpluses “should be considered as deferred wages and therefore ought not to become the property of the employer.”

Fred Feinstein, counsel to the House subcommittee on labor-management relations said that within the month legislation calling for a one-year to 15-month moratorium on pension fund liquidations will be introduced in the House and Senate. He said the purpose of the moratorium would be to protect pension fund assets while further study of the issue is undertaken. He said that while the moratorium was in effect so-called “excess” assets in terminated funds would be held in escrow accounts.

Opposes Moratorium

Business organizations largely oppose such legislation. “You have a fundamental philosophical difference over these assets,” said Fred Krebs, director of the employee relations policy center of the U.S. Chamber of Commerce in a telephone interview.

“Labor thinks they’re entitled to the growth in these funds. We think if they’re over-funded the employer is entitled to the excess,” Krebs said. He asserted that if restrictions were placed on liquidations it would encourage inadequate funding of pensions, but labor leaders disagreed.

In other action, the executive council called for changes in trade laws that have encouraged the transfer of production to Mexico as part of the maquiladora program.

Replaces Bracero Program

The maquiladora or “twin-plant” program was launched in 1965 as a bilateral effort to bring prosperity to both sides of the U.S.-Mexican border, primarily along California and Texas, after the Mexican government asked for assistance in alleviating unemployment programs for thousands of workers who lost jobs when the bracero program was ended.

The program has grown rapidly in recent years, and by the end of 1986 there were almost 1,000 maquiladora plants in Mexico employing about 270,000 workers. The AFL-CIO contends most of these persons earn substandard wages and toil under poor working conditions. And the 14.1-million member labor federation said the program has resulted in the loss of “tens of thousands of U.S. jobs” and harmed the economy of U.S. border cities.