December 7, 2009: A new pension bill is working its way through Congress which could provide some needed relief to Teamster pension funds, but there are possibilities of changes that could cut some Teamster pensions.
The time for Teamsters to get informed is now, because this bill could soon be on a fast-track to become law. It is HR 3936 in the House, sponsored by Earl Pomeroy (D-ND) and Pat Tiberi (R-OH). Hearings on similar bills will soon be held in the U.S. Senate, and there could be various bills under consideration.
What is HR 3936?
The Pomeroy bill, HR 3936, has four parts that pertain to multi-employer plans, such as our Teamster pension plans.
It is strongly backed by the IBT, as well as by industry and major pension plans. Backers of the bill include Con-Way, ABF, Kroger, and YRCW.
Much of the bill provides some relief to pension plans hit by the stock market. The first two sections allow more time for pension plans to recover from their recent losses and extend the rehabilitation or funding improvement period for plans in the red or yellow zones, and provide other relief from the strict requirements of the Pension Protection Act of 2006.
These sections of the bill are widely supported and should become law. A third section makes it easier for pension plans to form alliances or possibly to merge operations.
The fourth section of the Pomeroy bill is the one we need to keep an eye on. It would allow troubled pension plans, in danger of insolvency, to “partition” their liabilities attributable to bankrupt or closed employers to the Pension Benefit Guarantee Corporation (PBGC).
Many thousands of retirees could get all or part of the pension from a new fund created within the PBGC, to cover so-called “orphan” participants, who worked for companies that have gone out of business and no longer contribute to our pension plan.
Who are the so-called “orphans” who would get some or all of their pension benefits from the PBGC?
They are good Teamsters who worked for Consolidated Freightways, Preston Trucking and hundreds of other companies that went out of business due to deregulation, mismanagement or corporate union-busting.
Teamsters presently working for YRCW, Allied Automotive Group and others, despite our best efforts to save those carriers, could possibly be labeled “orphans” in the future.
The goal of the bill is to save pension plans in danger of becoming insolvent in the future by shifting some liabilities to the PBGC. This is a good goal—but only if members don’t suffer big pension cuts in the process.
It would only affect Teamsters in very troubled plans, perhaps none at this time, but Teamsters and retirees in the Central States Fund could possibly come under this provision at some point.
Protect our Pensions
The PBGC was set up to insure workers’ pensions, but unlike the FDIC it guarantees only a fraction of what you’ve earned, especially in multi-employer plans.
The Pomeroy bill properly provides that affected Teamster “orphans” covered by the PBGC would receive the full benefits due to them. But bills often get changed or watered down as they go through Congress. That is the danger that we have to safeguard against.
The bill is already coming under attack by anti-labor Washington insiders. The Washington Times recently ran an Op-Ed denouncing the bill as a “bailout for struggling union pensions,” and a “sop to unions” that would “shovel” taxpayer money into failing funds.”
The anti-labor crowd conveniently forgets that the PBGC has never paid a dime to a retiree from our Teamster multi-employer plans because historically our funds have been more stable than single-employer plans.
Pressure will run high to water-down the bill’s protections. If that happens, and a troubled pension fund comes under the provision, then some Teamsters who worked for companies that have gone out of business could see their pensions slashed to a maximum of $13,000 (the Pomeroy bill would raise this maximum to $20,000). That is what we must prevent from happening.
The Pomeroy bill may very well be split into two pieces, to allow the financial relief portions to gain quick passage, and then hold aside the language providing for partitioning of troubled plans for consideration in 2010.
Stay Informed. Be Prepared to Act
It is vital that Teamsters stay informed. We support a positive bill—one that helps keep pension funds from failing by having the PBGC help finance the pensions of some retirees. But the PBGC needs to provide workers with real, not token, protection.
Safeguarding workers’ hard-earned pensions is in the interest of all Americans—and a matter of basic fairness. For decades, Teamsters have accepted lower wage gains in exchange for higher employer contributions to earn a good retirement.
We must be ready to contact every Congressman and Senator and organize visits to Washington to stop any legislation that would cut the pensions of Teamsters who earned them.
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