The union striking at five Connecticut nursing homes has a well-funded pension according to one measure reported to union members, but a much less favorable position according to federally-mandated calculations.

Service Employees International Union 1199 New England, which represents healthcare workers, has been striking against nursing-home operator HealthBridge at five Connecticut locations since July 3.

Last week HealthBridge accused 16 Connecticut strikers of trespassing at its New Jersey headquarters. Previously, the company accused workers of sabotage that put nursing home residents at risk immediately before the strike began.

Meanwhile, union officials point to six National Labor Relations Board complaints against HealthBridge for failing to negotiate in good faith and other violations.

The union workers are striking over pay, health insurance and HealthBridge contributions to their pensions.

According to HealthBridge, the union is unrealistic to expect the company to pay 8.5 percent of salary toward employee pensions. Instead, HealthBridge has proposed giving employees a one-time raise and transferring them to a 401(k) plan.

The union and employers of its members share control of the board that oversees the New England Healthcare Employees Pension Fund.

In a 2010 report to beneficiaries, the fund’s trustees said it has more than enough assets to meet its long-term obligations, but different pictures of the fund’s status emerge in filings with the Internal Revenue Service.

The IRS requires multiemployer pension plans like 1199NE’s to file annual forms, including information about their financial health calculated two ways.

First, pension fund actuaries are allowed to report their financial health using their best estimates. Second, actuaries have to report the fund’s financial health using a standardized method so that pension funds using different methods in the first calculation can be compared fairly.

The standardized method is also, according to economists, a more accurate reflection of a pension fund’s finances.

In a report to members, the NEHEPF trustees show a 111 percent funded ratio, meaning the investments in the fund are worth 11 percent more than the payments the fund owes current and future retirees.

The amount of liabilities reported to members never appears on the IRS form for 2010, the most recent year available. The lowest estimate of the amount owed to members is 15 percent higher.

Using this number, the fund appears 97 percent funded, or nearly completely funded.

However, the actuaries for the trustees use a “smoothed” value of assets that overstates their real value by nearly $100 million.

Using this number the fund is only 77 percent funded.

Finally, the IRS requires multiemployer pension funds to calculate liabilities using another method less favorable to plans.

The funding ration using this calculation doesn’t have a legal significance unless it reaches a very high level, in which case it could jeopardize a funds tax-exempt status with the IRS, but some experts believe this number is a better reflection of a fund’s financial health.

Using this calculation, the fund is only 54 percent funded.

Spokesman for 1199NE Deborah Chernoff said the trustees told the Internal Revenue Service on its most recent filing it was 63.25 percent funded.

“This figure is not used to determine the health or stability of the Fund in regards to ‘zone status,’” Chernoff said. “It would be misleading in the extreme to use this percentage to make any claims about the financial health or stability of any pension fund.”

Chernoff said the fund is in the “green zone,” meaning it is well-funded from a regulatory perspective.

The IRS-mandated calculation allows for easy comparison with other funds.

“That’s a number based on rates that the IRS wants see so they can compare plans using a benchmark rate,” said John Bury, an actuary based in New Jersey. “The zone status is based on liabilities that use the actuary’s ‘best’ estimate which they’re free to pick and always results in a lower liability value than the IRS rates.”

Bury said the financial health of the NEHEPF is “bad but not an immediate disaster.”

“It’s not as bad as most I’ve seen,” he said.

Bury said the fund paid out $16 million in 2010 but received $25 million in contributions “so they should be able to ride this plan for another 10 years.”

A study of 1,354 multiemployer pension plans, Crawling Out the Shadows, by the investment bank Credit Suisse found that, as a whole, the plans are only 52 percent funded, or underfunded by $369 billion.

In 2010, the NEHEPF was 54 percent funded or slightly above average.

Research analysts David Zion, Amit Varshney and Nichole Burnap wrote the report.

“With the plans in bad shape, companies could get hit from a number of angles, including increased contributions to the plans resulting in a drain on cash flows and a hit to earnings,” the authors wrote. “Some companies may be facing more difficult labor negotiations as they try and negotiate cuts to wages and/or benefits to help pay for higher pension contributions.”

Zion, Varshney and Burnap criticize normal actuarial methods for artificially inflating funding levels, making pension funds look healthier than they are. “Presto change-o it’s a healthier pension plan,” they wrote.

The more favorable method tends to overstate assets and understate liabilities.

“In other words the funded status doesn’t reflect the actual health of the pension plan, its actuarial make believe,” Zion, Varshney and Burnap said.

The main difference between the two calculations on the IRS form is the discount rate, which is the price a pension plan puts on having money today instead of tomorrow.

Single-employer pension plans are required by the federal government to use low discount rates, a practice endorsed by financial economists.

Governments and multi-employer plans use higher discount rates, basically saying they will pay less today for a dollar tomorrow, a practice economists criticize.

“There is no relationship whatsoever between the funding percentages of the pension fund and the strike,” Chernoff said. “It has no substance or grounding in fact.”

“Certainly our members oppose the company’s position on terminating contributions to the fund among the many severe cuts and concessions they were demanding – cutting paid hours by 6.25 percent weekly, making health insurance premiums unaffordable while making the plan itself inferior to previous coverage, cutting sick days, holidays and vacation time, slashing starting wages and benefits and a long list of other cuts that add up to a financial loss that averages $8,000 per year for six years for each caregiver,” she said.

1199NE is also the union organizing home healthcare workers, but Chernoff said there was no relation between the pension fund and the organizing drive. (Full disclosure: The Yankee Institute for Public Policy, publisher of this website, is suing Gov. Dannel Malloy to stop the unionization of these workers.)

“These are workers who are at once highly in demand and desperately undercompensated and who, until now, have had no way to address these issues,” she said. “The workers joined the union to gain that voice in the terms and conditions of their employment. There is no relationship to the very healthy funding of our pension fund.”