March 31, 2011: The Central States, Southeast, and Southwest Areas Pension Fund, which administers pensions for some members of the International Brotherhood of Teamsters, March 22 announced major changes to the pension plan for IBT members employed at financially struggling trucking company YRC Worldwide Inc.
The changes were detailed in a memo addressed to “all local unions with YRCW participants” and signed by Thomas C. Nyhan, executive director of the pension fund. According to the memo, workers who retired or will retire on or after Sept. 24, 2010, no longer will be eligible to receive pension benefits after 25 or 30 years of service if they are younger than 65 (referred to as “25 and out” or “30 and out” provisions).
In addition, pension benefits will be reduced if workers retire prior to age 65. In addition to the loss of “all adjustable benefits, including 'and-out' benefits,” workers who retire will be “entitled to their '2 percent/1 percent' accrued benefit subject to an actuarial reduction from the normal retirement age (age 65) benefit for each year the Participant is below age 65 at the time of his retirement.”
Workers who retire before July 1, 2011, and are under 65 years of age will receive a 6 percent per year reduction in retirement benefits. Those who retire after that date and are under age 65 will be subject to benefit reductions determined by actuarial adjustment.
Teamsters members who retired prior to Sept. 24, 2010, are not affected by the changes, and will retain their current pension benefits.
YRCW Stopped Contributing in 2009.
Due to the company's poor financial situation, driven by the economic downturn, YRCW stopped contributing to worker pension plans in July 2009 after the company and the union reached agreement on contract modifications (134 DLR A-2, 7/16/09). Last fall, the union and the employer agreed to a restructuring plan that specified the company would resume pension contributions in June 2011, but at a lower rate (190 DLR A-8, 10/1/10).
The latest memo said this reduction in YRCW's contribution would amount to a decrease from $280 per week in June 2009 to $76 per week. Combined with other factors, YRCW's reduced contributions necessitated the most recently announced changes, the Central States Fund's memo said. The fund “expects to receive nearly $1.3 billion less in pension contributions over the life of the collective bargaining agreement which expires in March 2015,” the memo said.
Ken Paff, national organizer for Teamsters for a Democratic Union, a group that bills itself as a reform group representing the union's rank-and-file workers, characterized the cuts to the pension plan as “draconian,” and said March 29 that 64 percent of IBT-represented workers at YRC are in the Central States plan. As a result of these changes, he said, many workers will go from receiving about between $2,500 and $3,000 per month in pension benefits during retirement, to receiving less than half that, and some could even receive no pension benefits at all.
Paff said YRCW employees had for years been putting about $8 of each hour's wages into the pension fund, so the changes are particularly distressing. The workers' “whole lives are rearranged,” he said, likening the changes to Bernard Madoff's Ponzi scheme that decimated countless peoples' savings.
TDU Blames Release of UPS Workers From Fund.
Aside from the YRCW's temporarily suspending its contributions to the pension plan, Paff said the Teamsters' releasing some 44,000 workers at United Parcel Service Inc. from the pension plan several years ago played a large role in the fund's poor financial situation. Because those workers were of “a younger demographic,” Paff said, the union's letting them out of the pension fund was akin to a health insurance company no longer covering healthy people, and having to pay more to cover older members, who get sick more often.
“The loss of 44,000 UPS full-time Teamsters from the Central States Fund was the sell-out that put the fund on the brink, and makes it harder for the fund to cut any slack to YRC Teamsters who have worked long and hard and earned a good pension,” TDU said in a March 25 post on its website.
Although Paff alleged that Teamsters President James Hoffa was responsible for the decision to release the UPS workers from the pension plan, IBT spokesman Galen Munroe said March 29 that change was “negotiated by committee.” Paff's group, which frequently criticizes Hoffa, is supporting a challenger, Sandy Pope, in the upcoming Teamsters presidential election.
Iain Gold, director of strategic research and campaigns for IBT, said March 29 TDU's allegations that the UPS workers leaving the pension fund had anything to do with the fund's dire financial straits was “absurd on so many levels.” Specifically, he said, at the time those workers left the pension fund, UPS agreed to pay a withdrawal liability to the fund, which added up to more than $6 billion over several years.
“The idea that Central States is worse off” because of the withdrawal of UPS workers from the plan “just doesn't make sense,” Gold said. He accused TDU and Paff of making “a political argument for ulterior motives.”
By Michael Rose