In the article, "The Check's in the Mail" and in Mr. McDevitt's testimony before Congress last year, there is a Congressional Research Report referenced in both cases. A couple of highlights from this report are reproduced below.
An excerpt from Mr. McDevitt's testimony, found on page 32 of the transcript:
"According to a report from the Congressional Research Service released last week, 1 the dire financial condition of many multi-employer plans illustrates the need for meaningful reform. All seven transportation industry plans referenced in that report would fail to meet a minimum 90% funding standard if they were subjected to the same funding standards that apply to single-employer company plans today. The two worst plans barely cover half of their liabilities (54% and 48% funded, respectively). UPS has 42,000 employees in those two plans alone."
1 Trucking: Structure of the Less-than-Truckload (LTL) Industry and Legislative Issues, Congressional Research Service Report RL32257, March 5, 2004. Updated April 19, 2004
From page CRS-14:
"The unfunded liabilities in these multiemployer plans create two types of problems for participating employers. First, the unfunded liabilities represent substantial contingent liabilities for the participating firms. These contingent liabilities are particularly troublesome because the companies responsible for these liabilities assert that they cannot quantify how substantial they might be. 49 Second, the unfunded liabilities create substantial withdrawal liability. 50 Withdrawal liabilities occur when a carrier no longer has employees participating in a plan. The size of these potential liabilities is so large that carriers note that a withdrawal could materially harm their financial position. 51 The size of potential withdrawal liabilities discourages additional employers from joining a multiemployer plan and prevent firms with a small number of participants from taking action that would precipitate a withdrawal."
49 In its 2002 Annual Report, UPS's description of its obligation to multiemployer plans illustrates this problem. "We also contribute to several multi-employer pension plans for which the above disclosure information [information on assets, liabilities, and annual payments as well as assumptions used to calculate these figures] is not determinable." United Parcel Service, 2002 Annual Report, p. 39.
50 For example, Yellow Transportation described the impact of withdrawal as follows: "Under current legislation regarding multi-employer pension plans, a termination, withdrawal or partial withdrawal from any multi-employer plan that is in an under-funded status would render the company liable for a proportionate share of such multi-employer plans' unfunded vested liabilities. This potential unfunded pension liability also applies to the company's unionized competitors who contribute to multi-employer plans. Based on the limited information available from plan administrators, which the company cannot independently validate, the company believes that its portion of the contingent liability in the case of a full withdrawal or termination would be material to its financial position and results of operations." Yellow Transportation, 2002 Annual Report, p. 70.
51 Ibid.
"Black's Law Dictionary," Seventh Edition, defines
contingent liability. A liability that will occur only if a specific event happens; a liability that depends on the occurrence of a future and uncertain event. In financial statements, contingent liabilities are usu. stated in footnotes.
