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The Teamsters Have A New Pension Scheme For A Taxpayer Bailout

A decades-old problem is coming home to roost and the Teamsters want taxpayers to bailout their sinking ship.


Every year that passes, the trustees of the International Brotherhood of Teamsters’ pension funds get more and more desperate.

With several pension funds already going belly up and their biggest one—the Central States Pension Fund—losing $2 billion per year, time is running out.

Now, the Teamsters has come up with a new scheme that the union is trying to sell to Washington lawmakers—one that may require Americans to, ultimately, foot the bill.

Two years in the making, the draft proposal from the Teamsters is the latest attempt to prevent as many as 130 union-negotiated multiemployer plans from going insolvent in the next 20 years. More than 3.5 million workers participate in these plans.

The proposal calls for Congress to create a nonprofit private-sector corporation tasked primarily with making loans to poorly funded plans or to employers that participate in such plans. Money for the loans would come from bond purchases by investors. Payments on the bonds would be guaranteed by the full faith and credit of the U.S. Treasury.

The Teamsters proposal calls for taxpayer support for multiemployer plans and “that’s something a Republican Congress and administration won’t even consider,” Joshua Gotbaum, guest scholar at the Brookings Institution in Washington, told Bloomberg BNA May 26. He previously was the director of the Pension Benefit Guaranty Corporation.

The proposal is “complicated and the draft lacks full details, but it looks like a government bailout that isn’t being acknowledged as a bailout,” Jeremy Gold, a retired pension actuary and economist in New York, told Bloomberg BNA May 26. [More here.]

A decades-old problem…

In 1980, when President Carter (a Democrat) signed the Motor Carrier Ac–which deregulated the nation’s trucking industry–into law, trucking companies that were unionized by the Teamsters began to falter and close.

As those companies went out of business, the payments that went into the Teamsters’ pensions stopped.

As a result, the remaining companies were on the hook to continue putting moneys into the pension pot as more and more Teamsters retired.

By 1997, United Parcel Service (UPS), with its 185,000 employees, was the single largest contributor to the Teamsters’s Central States Pension Fund, which covers 400,000 active and retired Teamsters in 38 states and was once known as the “mob’s piggy bank.”

Knowing that the pension was on a trajectory of failure, UPS tried to get out of the plan in 1997. However, the Teamsters could not allow that.

So, the union, calling UPS’ pension proposal “corporate greed,” a nationwide strike against UPS that lasted for three weeks.

At the end of the strike, the union maintained control of the pension with UPS still contributing to a failing plan.

The back-room deal…

Nearly 10 years after the UPS strike, UPS had acquired Overnite Transportation, which was a non-union carrier. UPS renamed Overnite Transportation UPS Freight.


The Teamsters, not wanting to see its primary employer operate union-free, desperately wanted to unionize UPS Freight’s 15,000 employees.

At its 2006 union convention, Teamster President James P. Hoffa—the son of notorious Teamster boss Jimmy Hoffa—announced with great fanfare that a deal was struck with UPS management that gave the union the ability to unionize UPS Freight.

A year later, in 2007, the Teamsters and UPS announced that UPS would be withdrawing from the Teamsters’ Central States Pension Plan. For its part, UPS would pay a one-time $6 billion withdrawal liability—which the Teamster trustees then invested.

By 2008, when the economic meltdown occurred, much of the Teamster pension plan investments had evaporated prompting the Teamsters’ Hoffa to ask members of Congress to consider a pension bailout.

Since then, the topic of taxpayers bailing out failed union pension funds have come up repeatedly.

No easy fix…

To be certain, there are no easy fixes to the pension problems that plague many unions today.

As 2016, there were 168 different union pension funds in “critical status,” according to the Department of Labor.

While no one wants to see retirees suffer as the result of others’ poor choices, resolving the pension dilemma should not be borne on the backs of taxpayers either.

When President Obama signed the bipartisan Multi-Employer Pension Reform Act in 2014, it was thought that, finally, a partial solution could be found.

As part of the new law, critically-funded pensions could, for the first time ever, cut already retired pensioners’ pensions in an effort to save the entire fund.

However, when the Central States Pension Fund’s trustees attempted to do that, it was blocked by President Obama’s Treasury Department, which only kicked the can further down the road and closer to the fiscal cliff.

A political hot potato…

With unions calling for a pension bailout, they have a slew of lawmakers (mainly democrats) heeding their call.

With Republicans controlling Congress and Donald Trump in the White House, however, the chances of seeing a bailout bill passed is highly unlikely.

This makes the 2018 mid-term elections a huge deal for unions.

If they cannot win back enough seats to get legislation passed, or if they cannot win back the White House in 2020, their already-numbered days will be that much shorter.

13 comments

  • As a retired Teamster I say 1 pension for all the people who are getting two or three pensions from committees they sit on should pick the highest pension and return the others back to the fund. But this is just a bandage. Why are people who are in charge of the pension getting raises when the pension is losing money. If you can’t do the job and come up with a solution You’re fired.

  • As a retired Teamster I say 1 pension for all the people who are getting two or three pensions from committees they sit on should pick the highest pension and return the others back to the fund. But this is just a bandage. Why are people who are in charge of the pension getting raises when the pension is losing money. If you can’t do the job and come up with a solution You’re fired. Every time I try to submit this comment I get rejected. Freedom of speech

  • I’m a retired teamster and proud of it for many years republican presidential was always degrating teamsters if an employee got fired 9 times out 10 that person got there job back people like Donald trump all he know is you fired.

  • I have paid my taxes and supported our troops with every pay check I have ever earned. I also gladly paid into a pension fund that I believed would be there for me in retirement. Thanks to government intervention in the way our pension fund was handled, we now face this crisis. It has been overseen by the government since the 1980’s. They are a very big reason for the funds shortcomings. Is it wrong then, to expect consideration at a time like this? It is no different than saving money in the bank. If you were to retrieve those funds, they are guaranteed by guess who…..? The government!

    • Mr. Stein, while it is true, we all pay taxes, some of us pay more than others. Here in New Jersey, we are taxed literally to death (and beyond). So while i appreciate that money that you put into the fund yourself should be there when you retire, it shouldn’t be up to the average joe taxpayer to foot that bill, because of malfeasance or incompetence of those in charge of the funds. In NJ, the Public Pension Fund has been raided by the Governor(s) time and time and again, they cannot fix it. They’re response was to increase the gas tax in order to correct the shortfall. The difference is that the funds were originally placed there by the public entities they represent (NJT, Port Authority, et al). The Teamsters, by all rights, are a private entity and none of the funds collected for the Pension Fund came from tax payer dollars. They came from your own payroll deductions, which are different from taxes. That money, much like the 401K, should be there for you when you retire. If it isn’t, then you need to look at the Union leadership to correct this, not the rest of the country, who have nothing to do with this plight. And Government wouldn’t have come in to “raid” your pension funds. That is just the Union’s way of covering up what they did with your money while it was being held in reserve for your retirement.

      • The Hoffa leadership and the rest of the cronies all need to go, it’s a pure shame that hard working men and women aren’t going to have anything when they want to retire.

      • Mr. Scott, Banks are a “private entity”. Joe taxpayer does foot the bill if they fail. Joe taxpayer also funds social programs like Social security, Medicare, Medicaid, food stamps, etc. It also is not the Unions way of covering up poor investments. Thr government intervened in 1982 because they didn’t like the Teamsters “investments” in, what they determined were unscrupulous investments. At that time the Teamster pension funds were solvent. After Uncle Sam’s intervention they turned the Central States fund over to firms like J.P. Morgan-Chase and Goldman Sachs. Almost immediately profits were absorbed by “fees and clerical expenses”. When there were no profits in “bad” wall street periods we lost huge .When the markets went south in 2008 we suffered huge losses. All this after government intervention. Put yourself in our shoes, and try to understand our frustration .We did everything we were supposed to do and someone who did not contribute absconded with the money.

  • No union pension bailouts without an independent government audit first.
    Bet the union bosses work be OK with that. Lol.

  • Pension payments should be based on the money available; not on the amount promised by the Union 30 years ago. I do not have a pension and my retirement income is totally dependent on the amount in my 401k (to which I contributed 100%) when I retire; not what I hoped it would be in 1987.

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