February 1, 2011: Can a new plan with a blank slate help organize new members into our pensions?
The New England Teamster Pension Fund has launched a new plan, in a move aimed at enrolling new employers into the fund.
This “Alternative Schedule” would have no unfunded liability, no withdrawal liability, and no rule requiring that contributions increase annually. It amounts to a clean sheet, to facilitate growth in the pension fund.
The new plan is open only to companies not presently participating. This could be newly-organized companies, or Teamster employers who don’t yet have a Teamster pension.
For each $1 per hour of employer contribution, a Teamster would accrue $40 a year toward a monthly pension. For example, a contribution rate of $2.50 per hour would lead to an accrual of $100 per year.
Pensions are payable at age 65, with a percentage reduction for early retirement.
Why a New Plan?
The New England Pension Fund is in the red zone, or critical status, and 59 percent funded. It is very difficult to bargain new employers into the fund, because after a period of time they would assume a share of that unfunded liability and carry it on their balance sheet.
So the separate new plan is designed to facilitate organizing new employers into the fund.
Will it work? That depends on Teamster organizing of new companies and bargaining to get them into this new plan.