May 15, 2015: The 2014 financial report on the Central States Pension Fund shows that the fund’s money manager – Northern Trust -- performed rather poorly last year, causing the fund to get a sub-par return of 6.86% on investments. The fund’s assets declined to $17.9 billion.
Despite losses in 2014, the fund still has net growth over the past six years, since the end of 2008 when the fund had $17.3 billion in assets. It was during the 2008 financial meltdown, caused in large part by Goldman Sachs, that the fund lost $9.5 billion. Goldman Sachs was managing most of the Central States assets at that time.
The Hidden Truth
The 2014 Special Counsel Report details at length many of the fund’s problems and its policies, but in 24 pages it fails to mention one word about the biggest disaster inflicted on the fund: the Hoffa-Hall deal to let UPS pull out of the fund.
These simple facts illustrate the magnitude of that disaster: The financial and analytical report on page 3 projects employer contributions of $635 million for 2015. But if UPS were still contributing to the fund, it would contribute an additional $800 million, more than doubling the income! (This assumes that UPS would be contributing at the same rate as ABF, $342 per week. $342 x 52 x 45,000 = $800.3 million.)
This single disaster, costing the fund $800 million per year over shadows any other problem the fund has experienced.
Unfortunately, the Hoffa-Hall administration is continuing to undermine the fund. The report details on page 20 the attempt by the Kroger Co and the IBT let Kroger pull-out of the Fund without even paying the withdrawal liability, and the fund’s refusal to accept this sell-out deal.
The 2014 financial report was yesterday turned over to the attorney for TDU members who previously sued the fund to make information available to members.