“GROW” Act: A Threat to Workers’ Pensions

A new threat to retirees and workers’ pensions was introduced in Congress last month: the misnamed “Give Retirement Options to Workers” Act. It does not give options to workers, but it could shift risk and uncertainty to some workers, and undermine stable pensions.

STOP-THE-RUSH-BANNER_thumb.jpgWhile the proposed bill (H.R. 4997) would have almost zero direct impact on Teamster pensions, we believe an injury to one is an injury to all. The only way to defend and expand pensions is with a united fightback of all unions and retiree organizations.

What is the “GROW” Act?

The proposed bill would allow well-funded multiemployer plans – those in the healthy “green zone” – to adopt a “hybrid” pension plan, which cuts out employer withdrawal liability, eliminates the safety net of the Pension Benefit Guaranty Corporation, and allows fund trustees to cut pensions whenever they deem it needed!

Who is Behind this Fake “Reform”?

Many employers of course favor the bill, because it would relieve them of responsibility for providing guaranteed pension benefits, and put all risk onto affected workers and retirees. But some union leaders also support it -- most of the Building Trades Unions of the AFL-CIO. The National Coordinating Committee for Multiemployer Pensions (NCCMP) is pushing the bill. This is the same group which authored and pushed the disastrous Multiemployer Pension Reform Act.

It is shameful that some unions are joining employers to sell-out pensions, when we need a united labor front to protect and expand pensions.

What Does it Mean for Teamsters?

In the direct sense, it means little for Teamsters. Very few Teamster pension plans are in the “green zone” and thus the proposed bill would not affect them. It would offer zero help to troubled plans, such as the Central States Pension Fund.

But the largest Teamster fund, the Western Conference of Teamsters Pension Trust, is in the green zone. The Western Fund’s assets are up to $42 billion; it is 92% funded and heading upward toward 100% funding in the next few years.

On the positive side, this means the present accrual rate of 1.2% may be raised in the near future. The accrual rate determines how much you earn on your pension for one year of work. For example, if your contract has a contribution rate of $5 per hour, or about $10,400 per year, you would add about $125 to your monthly pension for that year (or a bit less if your contract provides for PEER early retirement). So raising the accrual rate means a bigger pension boost every year; for example, if the accrual rate is raised to 1.8%, that $125 annual pension boost would go up to $187 (1.8% x $10,400)

The “GROW” Act and the Western Pension Fund

If the “GROW” Act becomes law, it would give the employers a tool to use in contract negotiations. They could propose that workers be transferred into the new, risky, hybrid plan. If all locals and officers in the West stand firm in local negotiations, it would mean no change. But the threat would be that some may break ranks.

That is one more reason to oppose this fake pension reform bill.

The Western Fund is holding meetings in all Western joint council areas in the next few weeks to inform officers, retiree groups and members of threats to pensions, and urge political action.

Unfortunately, Southern California Joint Council 42 has issued some mis-information, causing confusion among members. The bulletin, signed by JC 42 President Randy Cammack, states that the bill “will rob benefits from heathy multi-employer plans (such as the WCT pension) to fund other inferior plans.” There is nothing of that sort in this bill, and it is illegal to transfer funds from one plan to another. We agree with JC 42 on the need to mobilize against this bill, but spreading bad info and panic among members is not the way to do it.

It’s a bad piece of legislation that puts workers' pensions at risk.

Contact your Congressional Reps and Senators to Oppose H.R. 4997

Support the Pension Protection Movement 

Teamster Retiree Movement and Pension Right Center Oppose the “GROW” Act

GROW Act a Threat

Text of the Grow Act (H.R. 4997)

 

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