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The Teamsters’ Sinking Ship: Central States Pension Fund Is “Headed For Financial Failure…”

Teamsters Sinking Ship

A recent letter sent to Teamsters who are collecting, or expect to collect, a pension from the union’s troubled Central States Pension Fund reveals that for every $1 collected, the fund pays $3.46 to pensioners, leaving the plan “headed for financial failure” if immediate action isn’t taken.

At the end of 2013, according to the last publicly available reports, the Central States Pension Plan had $17.7 billion in assets. However, it needs $53.2 billion to pay its present and future liabilities–leaving a $35.5 billion shortfall.

The fund’s Executive Director and General Counsel Thomas Nyhan explained in his letter to Teamster members:

…like many of our nation’s multiemployer pension funds, Central States Pension Fund has become severely underfunded and is headed for financial failure if we do not take immediate, decisive action. Baby Boomers are retiring in record numbers and the union workforce has been steadily declining for years. As a result, the Fund currently has more than three times as many retirees as active members — so fewer contributions are coming in than benefits being paid out. To put this into perspective, for every $3.46 that the Fund pays out in pension benefits, only $1 is collected from contributing employers, which results in a $2 billion annual shortfall. Clearly, that math will never work. [Emphasis added.]

Although Nyhan did not provide details, he states that “significant and painful retirement benefit reductions must be considered for both active workers and current pensioners.”

This, however, was not possible, according to Nyhan, until last year when the MultiEmployer Pension Reform Act was signed into law.

Signed into law by President Obama at the end of 2014, the MultiEmployer Pension Reform Act has many Teamsters fretting over their future as cuts to existing pension payments seem to be a certainty.

CSPF 2013

Teamsters Central States Pension Plan Letter by LaborUnionReport.com

5 comments

  • In about 1999, the trustees of the Central States Fund created a new benefit known as the 2% pension. The time required to be vested in the fund was reduced to 5 years and gave newest members a much larger benefit per year than Teamsters who had many more years in the fund. This was a blatant, in my opinion criminal, decision by the trustees to use the fund as a recruiting tool in the Teamsters failed effort to organize employees of Overnite Transportation. The 2% pension benefit was terminated shortly after the effort to organize Overnite ended but the damage was done.

  • I have been retired for twelve years and central states was going broke then. Why was that they could of fixed it then.But these companys should of payed if they going broke what ever the reason. The reason was that they made there own deal with the unions for pensions and contracts.They should of made them have the same.I signed the paper to have the gov to protect are pensions 1974.I been a member for 35 years and it is a shame that all of us that worked all these years have to deal with this.I should of taken all my pension with 703 to make 70 dollars more. The teachers pensions are broke the gov will bail them out.

  • I feel that every retires Teamster has already taken a cut seeing we never receive a raise. We only receive what we have the day we retire. Who ever let UPS out of our fund should be fired. Who ever let the employers stop paying into the fund should be fired. All employees in the local union halls and at Central states fund should receive the same reduction in wages as the retires are being forced to take.
    No one should be receiving multiple pensions from the fund and the pension should cap the maximum pay out at $3000 per month per member then look things over again.

  • My letter advised a 47% reduction in my pension. I will not be able to cover my rent let alone food and out of pocked medical cost. I am one month shy of the 75 year age when it goes into effect next July. There has to be a better solution. Why not a flat 10% for all this way not just a few will carry such a burden in already bad times. I have been physically sick with worry over this and if it does go thru and the Teamsters will get back all my pension as I’ll be DEAD from the stress.

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