November 19, 2008: The Central States Pension Fund suffered a loss of $2.6 billion in assets during the third quarter of 2008, according to fund documents obtained by TDU.
The CSPF lost a total of $5.6 billion in assets during the first nine months of 2008. Despite the record losses, the Fund did not report any plans for further cuts in their quarterly report.
But under new fund rules, more than one out of every three Teamsters who work under local contracts in the Central States will, for now at least, face benefit cuts. That is because their employers are not currently complying with the fund rule that require increased employer contributions.
Notes from the Reports
The Fund’s assets dropped from $26.8 billion to $21.2 billion during the first nine months of 2008, according to the fund’s Financial and Analytical Information Report. And the stock market tumbled even further in October.
These record loses are largely due to the stock market meltdown; CSPF had 66 percent of its assets in stocks, as of Sept. 30. Most of the assets are managed by Goldman Sachs or Northern Trust.
The CSPF has 94,000 active members, which is relatively steady since the loss of 44,000 UPS Teamsters last December. There are 212,000 retirees, which is also a stable number.
The fund pays $2.68 billion per year in benefits, up just two percent since a year ago.
Too Many Teamsters on “Default Schedule”
A troubling fact buried on page 5 of the Report is that 17,000 Teamsters are working under 550 local contracts where the employer is not in compliance with CPSF’s rule which requires employer contributions to increase eight percent each year.
This means these Teamsters are now under the “Default Schedule,” which provides much lower benefits to retirees. The figure was 18,000 three months ago, so little progress has been made so far in bringing these contracts into compliance with Central States' rules.
The fund projects an average investment return of eight percent over the long haul. With the present assets of $21.2 billion, that return rate, combined with employer contributions, will barely cover the $2.68 billion per year cost of benefits. So there is little margin for further losses.
Teamster members cannot afford to have more employers pull out of the fund, like Waste Management in Milwaukee last month.
Future Cuts?
Many Teamsters are understandably worried about their pensions, as well as their personal savings or 401(k) accounts. We can’t predict the future, but apparently no new cuts are currently planned by the Central States Fund.
The Quarterly Report of the Independent Special Counsel, which accompanies the financial report, indicates that the CSPF approved its Rehabilitation Plan in March, and does not indicate that any changes in benefits are planned.
They will probably ride out the recession and see where they stand at the other end.
Our union appoints half of the trustees of the CSPF, who are supposed to be the members’ representatives. They need to do a much better job of keeping members informed.
Our union also needs a pro-active agenda for strengthening the CSPF for the long haul—including organizing new and growing employers into the Fund. We missed a critical opportunity last year when the Hoffa leadership let UPS Freight keep 15,000 new Teamsters in a company plan.
With a new President and Congress, our union will be going all out to win passage of the Employee Free Choice Act, which would make it easier for workers to form a union.
Passing this legislation can help strengthen our Fund and secure our retirement—if it is part of a one-two punch that includes a plan to bring more members into Teamster pension plans.
Download the Quarterly Report of the Independent Special Counsel.
Download the Quarterly Financial and Analytical Information Report.
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