Risk and Disruption

Risk and Disruption

Is your plan's reputation at risk?

As the government weighs increased pension plan oversight, regulatory risks and uncertainty mount for plan sponsors. Layer on the increasing potential for political unrest and cyberattacks the complications for DB plans are clear.

Janus vs. AFSCME: The Supreme Court decision could have a far-reaching impact on the future of state retirement plans

There is a general consensus among experts and advocates that public sector unions may lose members and face diminished revenues.

On June 27, 2018 the Supreme Court ruled in favor of Janus.

    Invesco analysis of Supreme Court ruling

  • Public sector unions may no longer compel nonmembers to pay agency fees
  • This decision will have a direct impact on public sector union finances
  • We believe the decision will not accelerate the shift from defined benefit plans to defined contribution plans
  • The passing of right-to-work-laws does not directly correlate to a move from DB to DC plans

Loss of agency fees may reduce union services.

  • Agency fees are typically 85% of union dues
  • Several states have announced their intentions to stop collecting agency fees from state employees
  • With lower agency fees and potentially reduced membership maintaining current levels of union services could be challenging
  • Unions may adapt by altering how they negotiate for benefits or broaden the employment services they provide
  • Some unions have begun to push for the privatization of government operations so they would not be subject to the Supreme Court decision
  • Other unions such as the Service Employees International Union (SEIU) are seeing this as a recruitment opportunity

Share of employed residents who are members of public-service or private-sector unions.

Union membership is generally lower in the 28 right-to-work states highlighted in red.


Source: FiveThirtyEight, US Bureau of Labor Statistics, National Conference of State Legislatures. Published June 2018.

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