Two Teamsters’ union pension plans were featured in the news last week. Although they are separate pension plans, they are both examples of just how dismal the state union multi-employer pensions plans are across the U.S.
Over the years, we’ve written a lot about failing union pensions plans.
Two recent articles, though, highlight the precarious state that many union pension plans are in—which is causing some pension plans to cut their retirees’ benefits.
Here is the first one via the Boston Globe:
N.E. Teamsters facing $5.1b pension shortfall, putting retirees at risk
A study by pension consulting firm Cheiron Inc., according to the Boston Globe, was released last week that stated one of the Teamsters’ New England pension funds is $5.1 billion underfunded.
A pension plan covering more than 72,000 truck drivers and warehouse workers represented by the New England Teamsters union is the nation’s second-most-underfunded multi-employer pension plan and is on track to run out of money within two decades, according to a study.[snip]
Nationwide, the study said, 121 multi-employer plans covering 1.3 million workers are underfunded by a total of $48.9 billion and have told regulators they could slip into insolvency within 20 years.
It said the Burlington-based New England Teamsters and Trucking Industry Pension Plan has an unfunded liability of $5.1 billion, second only to the $22.9 billion liability of the Teamsters’ Central States Fund, which also covers some workers in Massachusetts.[Emphasis added.]
The other union pension fund that gave its retirees bad news is the Western Pennsylvania Teamsters and Employers Pension Fund.
Teamsters pension fund cuts would hit UPS, Giant Eagle retirees
According to the Pittsburgh Post-Gazette:
Facing insolvency in 2029, a struggling 50-year-old pension fund has proposed cutting benefits by 30 percent to more than 21,000 people in the Pittsburgh region who are receiving benefits.
In notices to beneficiaries, the Western Pennsylvania Teamsters and Employers Pension Fund board of trustees announced it filed for federal approval to cut benefits effective Aug. 1, 2019. The U.S. Treasury Department has until May 7 to make a decision.
“The benefit reduction is the only remaining option to keep the plan from running out of money,” the notice reads to participants, which includes employees and retirees of shipping company UPS and O’Hara-based grocer Giant Eagle. [Emphasis added.]
According to the Department of Labor, in 2017, there were 165 multi-employer union pension plans that were listed in either critical or endangered status.
The causes of the union pension problems go back decades and are, according to the Boston Globe, “most acute among multi-employer plans because of deregulation and consolidation in their industries, nonunion competition, and stock market losses that have depleted the plans’ assets.”
Unions and their backers in Congress are, at present, hoping to enact the Butch Lewis Act, which is a “bailout” of sorts.
According to Congressional Budget Office estimates, the Butch Lewis Act’s “proposed federal loan program for struggling multi-employer pension plans could cost $34 billion over a decade.”