The government is preparing to cut benefits over the next few years for hundreds of thousands of retirees covered by underfunded multi-employer private pension plans.
The Obama administration announced on Wednesday that well-known mediator Kenneth Feinberg review applications from pension plans under a law passed last year. The law would cut benefits as a last ditch means to stave off insolvency of troubled plans such as the huge Teamsters Central State Fund.
While there are dozens upon dozens of union multi-employer pension funds that are in “critical” status (listed here) with tens of billions in unfunded liabilties, one of the largest—the Teamsters Central States Pension Fund (which covers more than 400,000 Teamsters)—has been losing about $2 billion every year and is “headed for financial failure,” according to a letter written in April by its Executive Director and General Counsel Thomas Nyhan.
Although the Star Tribune states that the “Teamsters and AARP opposed the law,” the Teamsters for a Democratic Union claims a leaked e-mail reveals that Teamsters’ president James P. Hoffa actually supported the changes to the law.
For years, due to work moving away from unionized companies, unions like the Teamsters have known there was trouble on the horizon for their pension plans.
In 2008, for example, Hoffa, the Teamsters president, explained in a letter to Teamster members employed by YRC Worldwide:
“The government’s adoption of deregulation in the trucking industry has had a long-term negative impact on unionized carriers, with market share shifting to nonunion carriers. [Emphasis added.]”
Now, with expected cuts coming, people “80 years old and over are protected from any upcoming cuts, while those over 75 are partially protected,” states the Star Tribune.
However, despite “more than 10 million people are covered by 1,400 or so multi-employer plans”…”about 1 million of those are covered by plans expected to run out of money in coming years.”
Under the new law, these union retirees (or their survivors) would be eligible for their benefits to be cut, despite already being in retirement.
Related:
- The Teamsters’ Sinking Ship: Central States Pension Fund Is “Headed For Financial Failure…”
- Multiemployer Pension Reform Act of 2014 FAQs
Image credit: Jason deCaires Taylor
Those millionaires have no idea how it will effect us. Just pick on the old people
the retirees are already on a tight income. The coast of living keeps going up , and there are no pension increases. Not even a small percentage .
The nature of capitalism is that the cost of everything goes up over time but workers are just commodities. What is the real reason that the pensions aren’t funded properly?
From the horse’s mouth, Tim:
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.
Teamsters Central States Pension Plan Letter
Go ahead, give all your hard earned dues money to the Democrats and keep electing them, SUCKERS. A whole lot of good it has done you in the last 7 years and you dummies will just do it again in 2016 while your reps at the union hall live in luxury on YOUR dime and never miss a paycheck. Try asking who is investing your pension money and where, along with how much of a kickback they get on those “investments” Case in point the Sheetmetal Workers Union in the 1980s. 800 million down the drain in “mismanaged investments” and the international president’s brother was in charge of the pension fund. Imagine that.
I would like to know what Central States did with the OVER 4 BILLION dollars it got from UPS
“From the horse’s mouth, Tim:
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.” Why are there people collecting pensions who’s company quit paying into the fund. Let’s do the math. Over 4 BILLION @ a minimal 7% return plus employers contributions and the return on investments. Baby Boomers pretty sure we are past that generation, it was before me and I haven’t retire yet. Is there something UPS knew all those years ago but these people playing games with our money didn’t? I think not !