Virtually all of the major unions in the U.S. have joined Vice President Al Gore in a well-orchestrated campaign against any proposal that would to allow workers to invest a portion of their Social Security taxes in personal retirement accounts that they control. Like Gore, the union bosses say that personal retirement accounts will undermine Social Security and put workers’ retirement “at risk” to the uncertainties of the stock market.
If the stock market is so risky, then why does virtually every union pension fund in America invest the bulk of their assets in the “risky” stock market? Gone are the days when America’s major union pension funds invested most of their money in Las Vegas and Atlantic City. They are doing the smart thing by investing workers’ pension funds in real assets that will grow in value over time and be there when its time to pay workers’ retirement benefits.
According to the Federal Reserve, state and local government employee pension funds alone have nearly $3 trillion in assets, 66 percent of which is invested in corporate equities (i.e.: stocks). Indeed, 30 of the nation’s 50 largest pension funds are public employee pension funds. According to Pensions and Investment Magazine Online, these 30 funds have $1.5 trillion in assets, 60 percent of which is invested in the stock market. Remarkably, 13 percent of their assets are invested in foreign stocks. So much for “buy American.”
Most of the trade unions have made similar investment decisions:
The Western Conference of Teamsters Pension Trust has 40 percent of its $22 billion in assets invested in domestic stocks.
The United Mine Workers Retirement Fund has more than 44 percent of its $7.5 billion in assets invested in domestic stock and 8 percent invested in foreign stocks.
The Bakery and Confectionery Union Pension Fund has 57 percent of its $5.2 billion in assets invested in domestic stocks and 7 percent invested in foreign stocks.
How about federal employees, who can choose where to invest their money through the Federal Thrift Savings Plan – the government workers’ version of a 401(k). The TSP now has more than $85 billion in assets, 59 percent of which is invested in the stock market. Although federal employees can also choose to invest in government bonds, they’ve chosen to invest only 5 percent of their TSP funds in government bonds. Meaning, when given the choice between the stock market and government bonds, federal employees overwhelmingly choose the market.
Al Gore and the union leadership are out of touch with their own rank and file: a recent Zogby poll showed that more than 66 percent of union members would “support Social Security privatization if it allowed you to take your Social Security money and invest it in a retirement account of your choosing.”