UMW warns of major pension funding problems

Read more in Coal TattooCHARLESTON, W.Va. A pension plan covering 120,000 United Mine Workers retirees is facing insolvency without action to resolve major funding problems, UMW officials and Rep. Nick J. Rahall, D-W.Va., warned Wednesday.The pension plan lost 22 percent of its assets in 2008 and 2009 because of the financial crisis. It faces a dwindling number of coal operators paying into it, and is at risk of being labeled "seriously endangered" or "critical" by federal regulators when an analysis is completed in September.Rahall, the House Natural Resources chairman, has proposed shifting money from the federal Abandoned Mine Land, or AML, program to shore up the union pension program, which covers about 38,000 West Virginians.UMW President Cecil Roberts and the Bituminous Coal Operators Association, made up of most unionized coal operators, testified in favor of the legislation during a congressional hearing Wednesday morning."I think any reasonable observer would agree that coal miners work in harsh conditions that endanger their lives in many ways," Roberts told lawmakers. "They should not have to worry about the modest pensions that have been promised them after they retire."But Rahall's bill ran into opposition from the Obama administration.Department of Interior officials "recognize the importance of ensuring miners receive their pensions," but have "serious concerns" about the Rahall legislation."We believe the AML program should remain focused on reclaiming high priority abandoned coal mine sites, and further, this bill is inconsistent with the President's Budget and goals of ensuring greater fiscal responsibility during today's challenging economic times," said Alfred Whitehouse, chief of the reclamation division at Interior's Office of Surface Mining Reclamation and Enforcement.
The Rahall bill would expand existing programs that funnel money from the AML program to help finance the UMW's retiree health-care plan.Initially, those transfers were begun as a way to ensure that coal industry money -- in the form of interest on the production tax that funds abandoned mine cleanups -- would fund the union health-care benefits. Before the transfers were approved, the UMW health-care funds faced insolvency because spiraling health-care costs and the rising number of companies that went belly up or abandoned the union's national coal contract.When the AML program was reauthorized in 2006, lawmakers expanded the use of AML fund interest on the union's health-care program. But they also began paying for some of the benefits with money transferred to the AML program from the general treasury. That was part of a provision that also began sending money from the general treasury to states that have already cleaned up their abandoned coal mines, instead of continuing to funnel AML tax money paid for coal production in those states back to those states for other projects.Transfers from the AML program's general treasury funds have never exceeded the $490 million statutory cap, so Rahall and the UMW want to use "excess" money from those transfers to shore up the union's pension plan. Estimates put the potential transfer to the pension plan at between $75 million and $283 million a year."The problems which plagued the UMWA health program in the past are now afflicting their pension plan," Rahall said. "At present, well over half of the current retirees never worked for the coal companies currently participating in that plan. This situation, as well as the recent economic downturn, has placed the pension plan on the road to insolvency."Roberts said his union would oppose any cuts in pension benefits, which currently amount to $590 per month for retirees and $304 per month for surviving spouses. Dealing with the plan's financial woes could force coal operator payments to be increased from the current $5 per hour worked to $20 per hour worked or more, officials said.
With the expiration date of the union's current contract coming up at the end of 2011, Roberts cautioned lawmakers that companies could seek to drop out of the pension plan, a move he said could cause "disruption in the nation's coalfields.""It may well be that conflict in the coalfields cannot be avoided, but we believe that H.R. 5479 offers a better way forward," Roberts said.Roberts noted that the government has used taxpayer dollars to bail out banks and other financial institutions he said caused the financial crisis, but the "victims of the crisis such as pension funds have been left to their own devices."Reach Ken Ward Jr. at or 304-348-1702.
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