New England Pension Fund in the Red Zone

May 1, 2008: The New England Teamsters and Trucking Industry Pension Fund has put members on notice that the fund will be in critical status (the “Red Zone”) when its funding classification is officially certified later this year.

The fund also announced strict new rules that will make it tougher for local unions in contract negotiations.

The new rules are part of the fund’s Rehabilitation Plan—a plan required by the Pension Protection Act for improving its funding within a 10-year period.

The New England Fund has until Dec. 29 to officially certify its status under the Pension Protection Act—and a year after that to formally adopt a Rehabilitation Plan. But in a March 27 notice to members, the fund announced it is taking action now.

No Cuts—For Now

The good news is no pension cuts are being implemented—at least for now. Instead of reducing benefits, the fund is focusing on increasing revenue by requiring all new contracts that are negotiated to include a 10 percent increase in hourly pension contributions each year.

The 10 percent rule applies to all contracts negotiated after March 4. If a local union is unable to bargain a 10 percent annual increase in pension contributions, then Teamsters covered under the contract will suffer pension cuts.

The 10 percent Maintenance of Benefits (MOB) requirement is the highest in the Teamsters. It doubles the five percent MOB that the New England Fund implemented in 2005. The Central States Fund requires an eight percent increase in pension contributions each year.

The new requirement is so steep that the recently completed UPS and Freight contracts don’t meet the 10 percent standard—despite record pension contribution increases of 65 cents a year.

The New England Fund took this into account and allows any new contracts that include increases of 65¢ an hour over and above a current pension rate of $5.26 an hour to meet the new requirements.

Challenges in Bargaining

The new rules will create serious challenges for Teamsters in contract talks.

Healthcare costs are on the rise, and fuel prices are skyrocketing. At the bargaining table, we will face the triple challenge of negotiating record pension contributions, higher health and welfare contributions and wage increases to keep up with the rising cost of living.

All this, in the context of a recession.

Teamsters in New England need to get ready for tough bargaining and be prepared to get involved in contract campaigns if we’re going to protect our pensions and healthcare and win the wage increases we need to keep up with the cost of living.


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