Central States Cuts Locked in Place for Year

December 1, 2005: The Union Trustees of the Central States Pension Fund have announced an agreement with employers and the IRS that will lock the 2003 pension cuts in place for years to come. Even worse, this deal will usher in more healthcare reductions—and lower wage increases when contracts are renegotiated.

At a November 8 meeting of union officials International Vice President and Trustee Chairman Fred Gegare told stunned officials that union trustees have put their stamp of approval on new attacks on our pensions and benefits. Specifically, the trustees agreed:- to maintain a long term freeze in the cuts to the Central States pension accrual rate- to not restore 25- and 30-and-out, which have been eliminated for younger Teamsters, and
- to divert health and welfare money for 2007 to the pension fund, which will mean more cuts in medical benefits for Teamsters and retirees.

In addition, the Fund will require that all future contracts will have to include an increase in pension contributions of 7 percent in each year of the contract. Negotiating these huge hikes in pension contributions will divert money from wage increases and medical benefits—but Teamster members will see no pension improvements in return because our trustees have agreed not to increase the pension multiplier or restore 25-and 30-and-out benefits!

No members were allowed to attend the officials’ only meeting where these terms were announced. Three weeks have passed and members still have not received any information. This is our fund and our benefits at stake. But once again, the union trustees are keeping members in the dark.

Roots of the Crisis


The latest crisis at Central States is rooted in the Hoffa administration’s failure to bargain enough employer contributions into the fund in the last UPS, freight and carhaul negotiations. Fund documents that we obtained by going to court prove that Hoffa knew that cuts were on the horizon.

But instead of leveling with the members and fighting for higher contributions, Hoffa hid the facts and promised, in writing, that all our pension and medical benefits would be protected for the life of those contracts.

Without the needed contributions, the fund’s credit balance continued to deteriorate. In 2003, the credit balance was approaching the point where the IRS would require employers to increase their contributions to the plan. That’s when the employers sought sharp cuts in pension accruals and the virtual elimination of retiree health coverage.

Both our union and the employers had an interest in taking steps to improve the Fund’s credit balance. But the employers had a special interest, because they faced the threat of IRS-imposed penalties and increased contributions. That threat gave our union trustees bargaining power.

Our union trustees could have used that leverage to insist on a union-sponsored study and bargain for the best possible outcome for Teamster members. Instead our union trustees just went along with the employers’ demands for cuts without any fight—effectively surrendering control of our fund to the employers.

Now the Hoffa administration has gone a step further and turned decision-making power over our benefits to the IRS. In exchange for an IRS extension of the period allowing for amortizing the Fund’s unfunded liabilities, the Trustees agreed to lock in the pension cuts and usher in more healthcare cuts.

The employers and IRS got what they wanted and Teamster members got the shaft. Our Union Trustees are supposed to represent our interests. Under the Hoffa administration, they have failed miserably. It’s time for them to go—and to be replaced with trustees who will fight for Teamster members.

No Accountability Is the Problem

The Hoffa administration keeps dragging out the same, tired excuses, over and over. The stock market declined in 2000-2001, retirees live longer now, and there are more retirees than active members. Is any of this big news? These are well-known facts. The reason we have Trustees is to manage these challenges—not to use them to justify cuts in our benefits.

TDU commissioned a comparison with other Teamster Funds, which showed that funds with the same demographic have weathered the “perfect storm” much better. It’s time to fire the Trustees who are destroying our Central States benefits.

Amid the lies and cover-ups, you never hear one word about a positive plan to build up our Fund. Do they plan to bring some 50,000 UPS Part-Timers into the Central States Fund in the next contract? They are in the Teamster Funds in the West, in New England and in Upstate New York. Why not Central States?

Is there a plan to organize UPS-Overnite and bring many thousands more into the Fund? The Hoffa administration doesn’t have a plan to build up our fund—just plans to cut our benefits. That’s exactly what UPS and other employers want—cuts that will undermine our good union benefits and drive a wedge between members and our union.

Teamster members and leaders fought for years to win good pension and medical benefits. Sometimes we took light wage increases to make it happen. We fought to win early retirement benefits so we could get out of these hard jobs with our health intact. We fought together to win them, now Fred Gegare and the Hoffa Administration destroy them and tell us we should be glad we don’t work at Enron.

Those characters need to be replaced. If our trustees won’t step down, then we need to put them into retirement by electing new leadership in the 2006 International Union election.


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