After kicking the can down the road for decades, the problem of underfunded pension plans is hitting retirees hard and a government bailout may be the only solution.
Across the country, there are hundreds of underfunded multi-employer (union) pension plans and scores of them may go insolvent within the next several years, leaving tens of thousands of retirees empty handed.
For Teamsters in upstate New York, although the problem has been building since President Jimmy Carter signed the Motor Carrier Act into law in 1980, October is the first time that 16,000 Teamster retirees are having their current pensions cut by 29 percent and they are hoping the government will come to the rescue.
Although the problem has little to do with United Parcel Service (UPS) and more to do with Teamster-represented trucking companies that have gone out of business since 1980, according to the Albany Times Union, “the union and its membership are hoping that one of its major employers, United Parcel Service, can help ease those cuts with help from a series of federal loans to shore up the pension fund over the next 15 years.”
The loan is one of two possibilities being raised, although it’s unclear how much headway either one will make.
In a variation of the plan, pension activists say two Democratic lawmakers, Sen. Sherrod Brown of Ohio and Congressman Richard Neal of Massachusetts, are preparing a bill that would create a new bureau with the U.S. Treasury Department to deal with the numerous underfunded pensions that are facing long-term solvency problems.
Their plan would involve selling bonds to help shore up the pension funds. But since both sponsors are members of the minority party in the House and Senate, however, there are serious doubts that that the bill can move forward.
While the Teamsters New York pension plan has already enacted cuts, a larger problem looms with the Teamsters’ Central States Pension Plan–a plan that covers nearly 400,000 current and future retirees.
That plan, once known as the “mob’s piggy bank,” is expected to go insolvent within the next 10 years and, unless lawmakers come up with a plan to provide relief with taxpayer money, many Teamster retirees will likely face financial hardships.