UPS Teamsters in the Southwest thought they saved their health benefits by voting no. But they got stuck with an inferior health plan—and pension cuts too.Read more
More than a million current and retired truck drivers, construction workers and other union employees could see their pension benefits cut now that Congress has passed a controversial new measure.
By allowing the plans to cut benefits now, lawmakers say it will help keep around 150 pension funds from running out of money.
But retirees aren't exactly seeing it that way. Many gave up years of pay increases and contributed thousands of dollars from their salaries each year toward their promised pensions. As a result, many have little savings outside of their pension benefits and Social Security checks and are not sure how they'll make ends meet if the cuts go through.
"It's devastating," said 63-year-old Dave Scheidt, who retired five years ago after more than 30 years loading and unloading trucks. "We never dreamed that our pension wouldn't be there."
In the worst case scenario, Scheidt could see his current annual benefits of around $37,000 a year reduced to as little as $15,000. He receives his checks from the Central States Southeast and Southwest Areas Pension Fund, one of the multiemployer plans that is now qualified to cut benefits under the law.
Central States lobbied heavily for the new pension-cutting measure, which has led many of its retirees to speculate that it will be one of the first plans to reduce benefits.
However, any cuts would ultimately require government approval and will only be allowed at those plans like Central States that are projected to become insolvent in the next 10 to 20 years.
Benefits also cannot be cut for those with disability pensions or those who are 80 years and older, while cuts must be less severe for those between 75 and 80.
Central States did not respond to a request for comment. But on its website, it says that "given the complexity of the process, it is likely that it would take up to a year before modifications, if any, take effect" and that retirees would receive "advance written notice of any proposal to modify benefits."
The fund, which paid out $2.1 billion more than it received in contributions in 2012 alone, is projected to be insolvent in the next 10 to 15 years. So officials have argued that retirees will ultimately see major cuts either way.
That's because if a multiemployer plan goes insolvent, a retiree is guaranteed less than $13,000 a year from the Pension Benefit Guaranty Corp. In contrast, a retiree in a single employer plan that goes bust is insured for up to $60,000.
In the meantime, the fund's retirees and others are in another waiting game, wondering when -- and by how much -- their checks could be cut.
Scheidt, who has mobilized with other retired Teamsters to oppose the cuts, said he's heard from retirees across the country about the new law. Some, he says, have broken down in tears.
"Many will lose homes and cars and trucks because of this," he said. "These guys are scared to death."
Retired trucking industry worker Kirby Cabrera, 62, is trying to stay positive. "I don't want to preach doom and gloom," he said. But with 20 years of mortgage payments, he too is worried that he could face foreclosure if his current roughly $36,000 annual pension is cut too deep.
He already faces thousands of dollars in medical bills each year as he battles injuries from his years of working on the truck loading docks. Two years ago, he had one knee replaced. In a few weeks, he's going in to have the other one replaced.
Plus, he's worried that current Central State rules limiting employment options for pensioners could hurt his ability to go back to work and make up for any lost income.
For now though, Cabrera said he is trying to stay hopeful that any cuts won't be as deep as he is fearing,
"If they're 30% or 40%, it's going to destroy me..." he said. "I wish I had a crystal ball, and I knew what I was going to do."
Passing legislation on a tight deadline--especially a bogus deadline--is invariably a formula for serious mischief. That's what's happening with a proposal to deal with a supposed crisis in worker pensions by allowing trustees to slash the pensions of already-retired workers to shreds.
Members of the House Education and the Workforce Committee are trying to slip the measure into an omnibus spending bill to be passed before Dec. 11, when Congress leaves Washington for its vacation recess. Pension advocates are up in arms, not least because the measure's actual language hasn't been made public. (It's still in negotiation, committee staffers say.) What is known is that it would change four decades of labor law in a way that mostly affects the oldest and most vulnerable workers.
"There's no bill, no legislative language," David Certner, legislative counsel to AARP, told me Friday. "To attach this big a change to a year-end spending bill is outrageous."
What's at issue is the condition of so-called multiemployer pension plans. These are defined benefit pensions in industries comprising lots of relatively small employers. The plans often are sponsored by unions, who share trustee duties with employer representatives.
Thanks to changes in the workplace, the 2008 crash, and the long recession, many--but by no means most--of these plans are underfunded and in danger of going bust sometime in the next decade or two. In those cases, the pensions will become the responsiblity of the federal Pension Benefit Guarantee Corp.
That's a concern for two reasons: First, the PBGC, which also takes over single-employer plans that run out of money, is already in serious financial trouble. Second, although the PBGC guarantees single-employer pension benefits up to about $59,318 a year (as a straight-life annuity for someone retiring this year at 65), the ceiling is much lower for multiemployer plans--for a worker with 30 years of pension credits, the maximum PBGC guarantee is $12,870. (The guarantees are adjusted each year for inflation.) That would be a huge cut for many workers with long years on the job.
To keep many of these plans solvent, the committee is considering a proposal to allow plan trustees to cut retirees' pensions now, many years in advance of any looming insolvency. The benefit cut could be no lower than 110% of the PBGC guarantee, or about $14,150 for that 30-year worker this year.
This would mean gutting the fundamental principle underlying the federal ERISA law governing private sector pensions. "The law says that once a retiree has earned a benefit, it must continue to be paid, until the day the fund is depleted," says Karen Friedman, policy director of the Washington-based Pension Rights Center.
That may sound like financial brinksmanship, but it's really a guarantee that all pension beneficiaries will be treated equally--pension trustees can't slash the benefits of the already-retired in order to preserve those for members still working.
The remedy is being crafted by Committee Chairman John Kline, R-Minn., and its ranking member, California's Rep. George Miller, D-Martinez, who is retiring. My request for comments was funneled up to committee staff, who say that "members are still discussing the details about a possible legislative solution to the multiemployer pension crisis and remain hopeful Congress will act before the end of the year."
Although some big unions favor the change, it's opposed by the boilermakers and international Assn. of Machinists, among others. "Changing ERISA to allow cuts in promised benefits is a ticket to poverty and dependence on government asisstance," IAM International President R. Thomas Buffenbarger wrote members of Congress last month.
The new proposal is an outgrowth of a study conducted last year by the National Coordinating Committee for Multiemployer Plans, which brought together union leaders, employers, and pension experts to find a way out of the crisis. The study considered numerous remedies, including merging struggling plans to improve administrative efficiencies; raising the standard retirement age from 65 to 67, as Social Security has done; and increasing premiums paid by employers to the PBGC to shore up its funding.
But the most draconian idea was to allow "early corrective actions" such as the benefit cuts.
Congressional sources say the proposals on the table would incorporate protections for the oldest and most vulnerable retirees, as well as a requirement that plan members vote to approve the benefit cuts. But Friedman says that's not very comforting: any such vote would pit existing workers, who can still accumulate pension credits on the job, against retirees, who can't return to the workforce. "That creates a real conflict of interests," she says.
What's most irksome about the Congressional maneuvering is the ginned-up atmosphere of urgency around it. For even seriously impaired pension plans, the day of reckoning may be 10 or 20 years off; a lot can happen in that time frame to improve their condition or for other solutions to bubble to the surface.
"Yes, there's a problem," Friedman says, "but it doesn't have to be solved this very second, with three days left in the session."
the measure's fate is uncertain; as word of a pending Kline-Miller deal started leaking out this week, the opposition has grown more vocal. "I'm more confident today than I was four days ago," AARP's Certner told me.
But the cloud hasn't passed. While it's true that some fix is imperative, whatever takes shape should be aired in public and weighed carefully. Pushing it through in haste, as all of Capitol Hill is rushing to get out of Washington and go home for the holidays, only raises the prospect that the most powerless members of the workforce will get screwed.
(WOIO) - A new bill that could be passed before Congress leaves for winter break has a lot of retirees upset.
Donna and Daniel McAuliffe are heading into a nightmare next week, as Congress could pass a bill that opponents say will slash some retiree's pensions by 65 percent. This scares the Brunswick couple.
"It's going to hurt and it's going to hurt a lot of families," said Donna.
Supporters of the bill that will remove a longstanding anti-cutback on pension law believe if the bill fails, some pensions could be exhausted by 2021.
Daniel, who worked for Yellow Trucking for 32 years, says he earned his pension through a lifetime of hard work.
His biggest fear now?
"My house, everything I own. If this goes through, I am done," said Daniel.
The Northeast Ohio Committee to Protect Pensions was born in March and wants politicians to consider merging plans or a pension bailout. The group believes some in Congress want to sneak this bill through in only a matter of days.
"Especially trying to tack this important bill onto something that is meaningless, to push it through Congress in four days, that you have something you could have taken care of all year," said Mike Walden, with NOCPP.
Donna is wondering if anyone on Capitol Hill is listening.
"I would hope they care. This is America. Nobody thinks this kinda thing is going to happen to us," said Donna.
If passed, the bill could affect 10 million retired Americans.
June 12, 2009: The first-quarter 2009 Financial and Analytical Report on the Central States Pension Fund is finally out; it details the fund’s problems due to the stock market collapse. The report is available to members only through Teamsters for a Democratic Union.
The Central States Fund had $15.7 billion as of March 31, 2009, down from $17.3 billion at the start of 2009. The fund lost about 6.8% on its investment portfolio during the quarter, as the stock market continued to tumble.
The fund has undoubtedly benefited from the stock market run-up in April and May, and probably has assets topping $18 billion at this point, because the CSPF has 68% of its assets in US and foreign stocks.
While the number of retirees is holding steady at 212,000, the number of active participants is now down to 82,000. That is due to Hoffa’s disastrous plan of allowing UPS out of the fund, which has deprived the fund of a huge source of employer contributions. The number has slipped a little since the end of 2008 due to lay-offs.
The bulk of employers have agreed to contracts that meet the CSPF rule of 8% increases in contributions per year. The fund reports that only 23 small employers, with 290 Teamster employees, have had the default benefit schedule imposed on them because of continued non-compliance with the rule.
The report makes a small reference to the serious problem that YRC is seeking to defer its pension contributions.
The financials on the Central States Health and Welfare Fund continue to be strong.
Click here for the Central States Financial and Analytical Report.
Click here for the Report of the Special Counsel.
Click here to give us your views on what our union should be doing to protect good Teamster pensions.
Hit by a 30 percent pension cut, many New York Local 804 Teamsters feel it’s time to fight back.
Local 804 President and fund trustee Howie Redmond voted against the cuts, but never informed members that UPS management was seeking cuts.
“Local 804’s officers certainly knew we had a problem and that management wanted cuts. Why was that hidden from the members?” said Local 804 alternate steward Jim Reynolds. “Now they’re going to blame everyone but themselves. Respect and responsibility come from what is done, not what is said.”
“Local 804 officials have said ‘our pension is sacred’ so what’s happened is sacrilege,” Reynolds said.
The announcement was kept under wraps until Nov. 30, just after the Local 804 election and the International election. Could that be a coincidence?
Local 804 officers say the cuts affect them, too. True, but they don’t mention that they are covered by at least two pension plans plus a 401(k).
“Howie is on the national negotiating committee that right now is supposedly negotiating to protect our pensions. We’re always told how powerful he is,” Reynolds said. “But when our pensions were on the line, he and Hoffa and Hall came up empty-handed.”
“If Local 804 members want to reverse these cuts, we better stand up for ourselves and get involved,” Reynolds said. He suggests that members turn out in force for the union general meeting Sun., Dec. 17.