This just in: Newly released financial documents reveal that SEIU-UHW negotiated a massive pension cut for 15,000 SEIU-UHW members at Catholic Healthcare West in California. SEIU-UHW's deal eliminated workers' defined-benefit pension plan and replaced it with a 401(k)-style plan. According to CHW, the change has already stripped $217 million from workers' retirement benefits.
Here’s what happened: Last year, SEIU-UHW and CHW inked a deal that ended workers’ defined-benefit pension plan and pushed workers into a “cash balance plan,” a cheap retirement plan that’s like a 401(k). Notably, SEIU-UHW's Dave Regan accepted the giant cut even though workers are in the middle of a contract. Cash balance plans have sparked huge controversy across the U.S., where some long-time workers have lost 30% of their retirement as companies like Coca Cola and IBM converted workers’ pensions to cash balance plans.
Earlier this month, CHW spelled out -- for the first time -- the dollar value of SEIU-UHW’s pension cut. The details were disclosed in a 300-page document that CHW officials sent to bondholders. Here’s an excerpt of multiple pages. Below is just a snapshot of the key language.
While the deal stripped hundreds of millions of dollars out of workers' pockets, CHW is literally rolling in truckloads of cash. In a report issued last month, Standard and Poor’s said CHW’s “favorable pension adjustments” helped boost the company’s financial performance by $1.3 billion:
CHW's unrestricted net assets improved tremendously in fiscal 2011, soaring by $1.3 billion due to good bottom-line profitability, strong unrealized investment gains, and favorable pension adjustments. (Source: Standard and Poor’s, Ratings Analysis of CHW, October 19, 2011, p. 5)
$1.3 billion? Well, it doesn’t take a rocket scientist to figure out why Kaiser Permanente's execs wanted a piece of SEIU-UHW’s action. And Tasty hears that SEIU-UHW’s Dave Regan was only too happy to oblige. Last year, Regan accepted a similar deal to eliminate Kaiser workers’ pension plan and replace it with a 401(k). That’s the so-called “secret deal" that’s now openly discussed by top Kaiser execs like Henry Diaz.
Unfortunately, there are many dirty details to the story about how SEIU-UHW officials betrayed CHW's workers. So stay tuned. It’s a lesson that other healthcare workers – especially at Kaiser – better learn quickly unless they wanna watch high-paid officials from the Purple Palace flush their pensions and other hard-earned benefits down the toilet.