July 15, 2002: Many Teamsters rely on their pension benefits to provide for a secure retirement. But recent events like the crisis in the Central Pennsylvania Teamsters Pension Fund and health benefit rollbacks in the Central States and New England funds (see related stories) have Teamsters asking a lot of questions about the security of those benefits.
This article answers some frequently-asked questions about our Teamster benefits. Please note that these answers are only general guidelines, and each pension plan is different. If you have a specific question about your plan, webmaster [at] tdu.org (contact TDU).
What are the different kinds of Teamster pensions?
Teamsters are generally covered by two types of pension plans: defined benefit and defined contribution.
With a defined benefit plan, your retirement benefit is a guaranteed amount, linked to your age and/or the number of years for which your employer has made contributions to the pension fund on your behalf (known as years of contributory credit). For example, Central States fund participants get $2,500 per month with 25 years of contributory credit at age 57. In the West, benefits are based on a PEER system, where you become eligible once your age and years of contributory credit add up to a certain number, currently 80. Many plans now also offer retirement benefits linked solely to years of contributory credit, like the 25-and-out benefit in the Central States.
With a defined contribution plan, your employer contributions are held in an account and invested by the fund on your behalf until you retire. Your benefit is based on how much money has accumulated in your account. Depending on how your money has been invested and what the economy is like when you retire, your benefit level can vary quite substantially.
Employers generally prefer defined contribution plans, as they pass the risk for your retirement on to you. If the stock market dips a few months before you retire, or if the plan administrators mismanage the fund (as in the case of the Central Pennsylvania fund) your employer has no responsibility for making up for the shortfall.
How can our pension plan trustees be held accountable?
This depends on whether your plan is a single company plan or a multi-employer plan which is jointly managed by an equal number of union and company trustees.
If you are covered by a company plan, your plan is controlled by the company, which makes it easier for the company to use your money for their own interests, and harder for you to do anything about it. That’s why UPS tries to get Teamsters into their company plan.
Multi-employer plans are jointly controlled by the companies and the union, which allows for more member accountability.. Union trustees of most smaller Teamster pension plans are usually officers of the local union. But in larger plans union trustees are appointed officials who themselves hold multiple lucrative pensions and are shielded from accountability. For example, in the West, trustees are selected by the heads of the Joint Councils in the plan. In the Central States, trustees are selected by an official from each state in the plan.
It is possible to make your trustees sit up and listen though, as our brothers and sisters in Central Pennsylvania are showing.
Health coverage in Central States just tripled in cost.
What can we do about it?
Central States, along with many other Teamster pension plans, has been warning retirees about the rising cost of health coverage for some time now. But the trustees proposals for dealing with the problem just stick members with the tab, resulting in a net cut in benefits.
There is a way to address rising health costs while protecting members benefits that our union trustees refuse to talk about. The solution is to negotiate sufficient employer contribution rates for our pension and health and welfare funds in upcoming contract talks. This requires a more coordinated bargaining strategy. With our union currently bargaining on economic issues with UPS, which will set the pattern for freight and carhaul next year, now’s the time to push for decent employer contribution rates to restore retiree health coverage.
I want to keep working after I retire, but I’m worried that I might lose my pension benefits. How can I avoid that?
It used to be that Teamsters looked forward to retirement as a well-deserved rest after a career of hard work. But today, Teamsters are retiring younger and staying active. Many take early retirement and start a second career.
Unfortunately, our Teamster pension plans refuse to change with the times. They impose overly restrictive re-employment rules that severely limit retirees choices of second careers. Central States has gone so far as to say that “The Pension Fund ... was designed to provide a retirement income, not supplemental income.”
While re-employment rules make sense to the extent that they keep retirees from putting their Teamster-related skills to work for the nonunion competition, the current rules are so restrictive that they end up denying retirees the right to earn a living. The rules are even more outrageous when compared to those for the lucrative officials-only pension plans that cover many union trustees. These plans have virtually no re-employment rule, and even allow officials to retire and work for management.
To protect yourself if you’re working after retirement, seek advice before filling out any forms for your fund related to re-employment. Every case is different, and you could be denied benefits unfairly simply because of how you word your job description, even if your job is legal under the funds regulations.
How can I protect my pension benefits?
Education and documentation are the key. Share this article with your co-workers, and educate yourself about how your plan works. Request all plan documents and financial information youre entitled to (see the Convoy article on “Your Right to Union Documents and Financial Information” to find out which documents, or go to the Department of Labor’s pension website at http://www.dol.gov/pwba/pubs/youknow/know2.htm#disclose).
Keep a paper trail so you can prove what benefits youre entitled to. Keep all your pay stubs and a copy of every contract you work under. Keep lists of the Teamster companies you work for, along with the names of your supervisors. Request your personal summary of plan benefits from your pension fund (they should send this to you every year), and make sure the funds records correspond with yours.
Teamsters in some areas have organized Pension Improvement Committees to safeguard their benefits and advocate for improvements. webmaster [at] tdu.org (Contact TDU) to find out how.