November 4, 2004: Sue Mauren is in the Club. Minnesota Local 320 filed their Form 990 tax return late, so we were unable to include Sister Mauren in our $100,000 Club report. Mauren, the secretary treasurer of Minnesota Local 320, received $112,273 in salaries and $126,714 total in 2003. She gets salaries from Local 320, Joint Council 32, and the International Union. Mauren’s brother-in-law, Jeff Farmer, is the International’s Organizing Director.
Additional Scam in the Club: The International Union pays a special benefit—not included in the listed salaries of officials—which is virtually unheard of, even among corporate execs.
The Union pays the employee portion (as well as the employer portion) of FICA tax, meaning that each official’s salary is really about 7.65% higher than reported. This bonus paid to members of the $100,000 costs members an extra half-million dollars per year. Wouldn’t it be better to use it for organizing to build Teamster power?
November 4, 2004: Teamsters and local officers at UPS often want to know if the issue they have grieved has been decided before—and if so, what the decision was. Just as common is the answer “We don’t know.”
Sometimes we are told we should give up on a grievance because the same issue has already been lost in another case.
Now the international union has provided local unions with a compact disk containing arbitration and court decisions.
The digest of cases goes back to 1968, when just a few locals or regions had arbitration in their contracts. Most of the cases in the digest are more recent, stemming from arbitration provisions won in the national contract in the 1990s.
The digest also cites court cases (including NLRB and EEOC) going back to the 1980s.
The next time your local is unsure whether cases have been won or lost, remind them that they can look it up in the IBT digest
January 28, 2005: There has been a great deal of discussion lately about pension relief from many sources. The IBT releases regular statements regarding the need for relief, and in the July/August issue of Teamster Magazine the IBT called for Teamsters to “join [John] Kerry in his fight for legislation that provides meaningful relief for multi-employer pension plans.”
Our committee couldn’t agree more that our pension funds need help but isn’t reform more important than relief?
Interestingly, Timothy P. Lynch, president and CEO of the Motor Freight Carriers Association (MFCA), agrees with the IBT that relief is needed but he also claims reform is necessary. The Central Pennsylvania Teamsters Reform Committee agrees! However, his idea of reform is skewed almost entirely on behalf of the companies he represents, naturally!
We Might Be Able to Agree
In testimony before Congress Mr. Lynch made a number of points we might be able to agree on. For example:
“The employers...are concerned about the current framework for multi-employer plans and strongly believe that if not properly addressed, the problems will only get worse, thus jeopardizing the ability of contributing employers to finance the pension plans and ultimately putting at risk the pension benefits of their employees and retirees.”
Note that the employees and retirees come last in regards to his concerns.
The main point of his testimony was that the companies have no control over how the funds are maintained. He reiterated this point near the end of his statement:
“Employers cannot be expected to bear ultimate responsibility for the financial viability of plans, but at the same time be precluded from any ability to hold the plan and its trustees accountable.”
Mr. Lynch’s statement conveniently forgets this position is set by ERISA, the law covering pension benefits and that we working Teamsters pay for our retirement and medical benefits with our labor, skill, and dedicated service. Our benefits are negotiated and earned; they are not a gratuity or a gift.
Lynch is quick to point out the costs of our benefits and that they are part of the National Master Freight Agreement but one gets the impression from reading his testimony that their contributions are something they do willingly instead of something they are contractually obligated to do. Lynch complains, “because of the legal restrictions placed upon trustees in furtherance of their fiduciary responsibilities, there is very limited control by our companies over the actions and decisions of trustees.”
Turn Over Control?
So are we to assume the solution is to turn over all control to the companies instead of trustees who are legally obligated to act in the best interests of the participants?
You really need to read the entire testimony to see Mr. Lynch’s motives. I wonder if the only reasons Mr. Lynch testified were to:
- Eliminate the excise tax (avoid company liability),
- Gain control of the pension funds (avoid additional liability),
- Reduce the total number of Teamster pension funds from around 22 to one or two: “If two pension plans can cover 85% of the country, there is no reason why we need 20 to cover the remaining 15%,”
- And last but certainly not least—get rid of the pesky fiduciary responsibility.
Committee Has Suggestions, Too
Our committee also has some suggestions to reform pensions but I wonder if we will ever get the opportunity to share them with Congress:
1. Every citizen/participant has the right to expect the utmost loyalty and diligence from individuals and companies who safeguard and administer the benefits plans that we Americans depend upon for our retirement security and health (more fiduciary responsibility).
2. When pension laws are violated intentionally or recklessly, then those who are responsible for the violation can be held liable for punitive damages in order to punish and prevent such violations, just as with other important rights under federal law (consequences for breaching fiduciary responsibility).
3. Enact extremely harsh penalties for pension improprieties, with effective enforcement tools built into ERISA (validity to existing laws).
4. Make available to all participants all information concerning their pension fund, barring access to nothing. (tools the participants can use to educate themselves).
5. A complete, annual, in-depth audit by an independent firm must be made of each pension fund. All aspects of every fund must be examined and made available to participants (honesty).
6. All pension fund changes must have complete plan changes and complete documents written and filed with the IRS and the Department of Labor before implementation. All plan participants must be notified of the proposed changes 60 days prior to any plan change (accountability).
7. Any money paid to a fund on behalf of, or by, a participant must become an accrued benefit for that participant upon the fund’s acceptance of that money.
8. A company’s withdrawal liability must be paid before a company can be sold or merged.
Many more items could be added to this list. Isn’t it time our union put its political clout behind winning these kinds of protections?
Overhaul PBGC Rates
Finally, any meaningful reform should include overhauling the Pension Benefit Guaranty Corporation’s (PBGC’s) insurance rates for multi-employer pension plans. Single-employer funds pay $19 per worker per year for coverage but multi-employer funds pay only $2.60 per worker. Is $16.40 per year the sole reason my potential PBGC insurance reimbursement (if the plan fails) is only one-third that of my single employer brothers?
The double standard goes further. If a single employer plan fails (and almost all failures are single-employer plans) the maximum benefit from the PBGC is $3,580. If a multi-employer plan fails the maximum is only $1,072 per month.
The squeaky wheel gets the grease. Mr. Lynch squeaked pretty loudly testifying before Congress, and the employers will likely step up their campaign in the future. The Bush Department of Labor has so far ignored the needs of pension plan participants.
How much noise do we have to make before we too can be heard?
November 4, 2004: NetJets Aviation Pilots of Local 284 are awaiting a new election for our Master Executive Council (MEC) after the local botched the first mailing of ballots. The Strong Union slate, which campaigned around the issues of good contracts and establishing an independent Teamster local, was widely expected to defeat the incumbents. The candidates of the slate include myself, Bill Olsen, Greg Rountree, Tim Nelson and Jim Brady. The previous MEC’s term expired on October 31st, leaving a void in leadership just as a strong push is needed to conclude contract bargaining.
Local officials had previously delayed a vote on a tentative agreement in order to allow the MEC to hold 20 “road shows” to promote it. The tentative agreement provides wages so low that many pilots will continue to qualify for food stamps and free lunch programs. Strong Union denounced the weak agreement and it was ultimately voted down by 82% of the nearly 2,000 pilots.
NetJets is the leader in the newly emerging “fractionals” industry, in which wealthy individuals or corporations purchase a portion of an aircraft, similar to a time-share. Strong Union organized in July of this year to unseat the current leadership, which has been viewed as caving in too easily to company demands. Strong Union is supported by an extensive network of over 100 volunteers, including a rank and file advisory committee.
Local 284 has been dismissive of the pilots and uninterested in tackling the complexities of the fractional business and the needs of the members. We want the IBT to charter an independent local for the pilots, and have already established a member-based infrastructure capable of taking on the job of running our union.
Our new non-profit organization, Association of Shared Aircraft Pilots (ASAP), will move into office space in Columbus on Nov. 15. All that is necessary now is a Teamster charter. But as the Airline Division continues to drag its feet, some members are becoming disillusioned with the Teamsters. It is necessary for the IBT to call immediate MEC elections and to hold a membership vote to let the pilots establish their own local. Meanwhile, bargaining has ceased.
Local 284, NetJets Aviation
February 28, 2003: “I’m planning to retire in three years. This will cost me $400 a month for the rest of my life.” That’s what a Colorado freight Teamster said when he heard about the drastic cutback coming down from the trustees of the Western Conference of Teamsters Pension Fund.
Future Benefit Accruals Cut
In mid-January the fund imposed big cuts on future benefit accrual. They slashed the “multiplier” from 2.92 percent a year (or 2.2 percent for those with less than 20 years) down to 1.2 percent a year.
What does this mean for working Teamsters? The accrual cut taking effect July 1 will cut the benefits that each Teamster will accrue per year of continued work approximately in half. (See related article.)
The cuts do not affect pension amounts already earned, as that is illegal under federal law. The cuts affect pension accruals that Teamsters will earn in the years to come.
‘Why Would They Do This?’
That’s what we hear from members as they learn of the big cut.
The pension fund’s union trustees are not accountable to working and retired Teamsters. Many of them, including Chuck Mack, Jim Santangelo, Al Hobart, Ralph Taurone and Rome Aloise, enjoy extra officers-only pension plans which are not being cut.
“This was a deal made over lunch,” one West Coast officer told us. “Our union trustees didn’t bargain with the employers, they just went along with the employer trustees.”
The employer trustees insist on having the fund “fully funded,” which means that if every employer went broke tomorrow, the fund would have enough in the kitty ($23 billion) to pay all pension obligations, projected into the future.
The pensions of Teamsters planning to retire in the next several years are being sacrificed to have a better looking bottom-line for Safeway, UPS, Roadway and all the other employers.
Instead of simply reducing the multiplier to what has always been its base level of 2.65 percent (over 20 years) and 2 percent (under 20 years), they slashed it way down to 1.2 percent to maintain full funding.
Bottom Line Gets Lower
The 2/2.65 percent level is the historic bottom line multiplier for pensions in the West, and many Teamsters have been promised it would never go lower than this level. Now they are lowering pension accruals to half of this historic bottom line.
The excuse is the loss the fund has taken from stock investments in the past three years. Indeed, like all funds, they have had stock losses. But with some $23 billion in assets, and full funding, the fund could easily smooth out those short-term losses over a long period, rather than attacking Teamsters who have been told in writing by the fund not only that the multiplier is secure, but that also they would get a bonus level of pension accruals through 2005.
What Can We Do?
Make your voice heard. A movement is already starting to brew and is sure to grow in the West on this issue. The cuts can be rescinded, or modified, by the same people who made them – the fund trustees.
Members can make a difference, if we make our voice heard now, in an organized way. The first step is to get the word out. Coordinated action to reverse this decision will follow. webmaster [at] tdu.org (Contact TDU) to get involved now.
February 27,2003: In the Western Conference Pension Plan, each year you work, and your employer makes contributions to the plan, your pension benefit grows. The amount it grows is easy to calculate, once you know these facts:
- What does your employer contribute, per hour, as specified in your contract;
- How many credited hours did you have for the year (many contracts do not include overtime hours, and have a 2,080 limit);
- Are you covered by “PEER 80” or 82 or 84 early retirement?
- How many years have you been in the pension plan (more or less than 20)?
- What is the multiplier that the pension fund is applying for that year? This last point is where the big pension cut comes in.
Example: Your contract provides for $3.90 per hour employer pension contributions. You are covered by PEER 80. You were credited with 2,000 hours for the year. You’ve worked under the plan for 22 years.
2,000 hours times $3.90 equals $7,800 paid into the fund on your behalf. But you must buy your PEER 80 by reducing this amount by 16.5 percent. That leaves $6,695. Now, you simply multiply that by the multiplier to get your pension benefit raise for the year. If the multiplier is 2.65 percent, the historic base level, you would get $173 added to your monthly pension benefit for a year’s work. But, with the big cut down to 1.2 percent, you will get only $78 added to your monthly pension. That’s a huge cut in your pension benefits.
November 5, 2002: The Central States Pension Fund, in a bulletin to all local unions dated November 2002, has finally made a comment on the sudden removal of Ronald Kubalanza as director. He was replaced on Oct. 16 by Thomas Nyhan, the fund’s general counsel. Unfortunately, the statement gives no reason for Kubalanza’s removal, so it raises more questions than answers.
The bulletin goes on to state that reports that initially appeared in Traffic World of three union trustees stepping down are exaggerated. The fund reports that Ray Cash is stepping down as one of the five union trustees, and that Phil Young has temporarily vacated his seat. They report Young will come back as a trustee, assuming Cash’s position, effective March 31, 2003. Fred Gegare has been appointed to fill the vacant trustee position.
Members deserve answers regarding why the long-time director of the fund was suddenly removed. Lacking honest answers, rumors will continue to spread.
International Union to Issue Report
On Nov. 12 the International Union announced they would retain two firms to perform an independent assessment of the actuarial condition of the Central States Fund. The announcement is clearly timed to try to derail the growing movement of Teamsters demanding pension improvements and relief from unjust re-employment rules.
In fact, the general counsel of the International, Patrick Szymanski, told the St. Louis Dispatch on Nov. 18, “We’re concerned about how hard the union should push for increased pensions, given increased contributions (from employers).” Szymanski, whose firm is paid millions of dollars per year by our union, seems to know the result of their “study” in advance: no pension increases for members. He didn’t publicly comment on the re-employment rule or the increases in payments for retiree health care.
The Central States Fund — like almost all pension plans — has lost assets with the decline of the stock market in recent years.
The officers-only pension plan that covers all International officials and top staff, including Hoffa, Phil Young, (and yes, their attorneys) has no re-employment restrictions whatsoever. It is very much more generous than the Central States Fund, and its benefits go up every time salaries go up, which is every year. It also provides free health benefits for life.
The International Union says the study should be completed early in 2003. We urge them to release the entire study – which members are paying for – not just press releases.
Class Action Lawsuit to Challenge Reemployment Rule
Local Unions Speak Out On Pensions
July 15, 2002: The pressure is on! The Central Pennsylvania Teamster Pension Reform Committee is a force that will not be denied. Through lawsuits, mass meetings, media exposure, petitions, contact with influential public officials and regulatory agencies, tough questioning at union meetings and membership education, the committee has created a situation where the Teamsters, from Hoffa on down, have to deal with their critical pension problem.
For Teamsters in the Central Pennsylvania pension plan, any pension credits they have accrued prior to 1987 are in a defined benefits (DB) plan. Since 1987, the benefits are in a defined contribution (RIP) plan. When the switch was made all participants were assured by the fund trustees that the old DB plan was fully funded. The trustees were dead wrong. The old DB plan is anywhere between $103 and $160 million underfunded, with no additional revenues coming into it.
To make matters worse the trustees have botched up investments in good times and in bad. They are completely discredited in the eyes of the rank and file.
How to make up the money they need for the DB fund? The trustees have an idea — a bad one. Rather than going after the companies, they want to take from 20 to 35 percent, depending on age and years of service, of the pension contributions paid on behalf of fund participants under the age of 51 and divert that RIP money into the old DB plan to make up the deficit. Since the legality of such a move (taking one person’s guaranteed pension money and giving it to someone else) is highly dubious, this money is being held in an escrow account for the time being.
Facing a rank and file revolt, the Hoffa administration is pressing the Upstate New York pension fund to take the fund over. A formal proposal from the Upstate New York plan is expected within weeks. The Reform Committee, which has recently held mass meetings in Milton, Scranton and Harrisburg and has another scheduled for Reading, vows to carefully scrutinize the Upstate New York proposal.