The Central States Pension Fund (CSPF) is down to $11.75 billion in assets, a loss of $557 million in the first quarter of 2020, according to the Fund’s Financial and Analytical Report obtained by TDU.
These facts make it imperative that our union, locals, members and retirees work to win passage of federal legislation which protects the earned pensions of Teamsters and all workers. This is especially true in this crisis period of a pandemic and a deepening recession.
The report, which covers the period from January 1 to March 31, 2020, notes that the number of active participants is down to 47,574, while the number of retirees drawing pensions has declined slightly to 198,366, a ratio of over four retirees to each active participant.
The Fund did not lose much in the stock market crash in March, due to the fact that only 7% of assets were in stocks. Presently the Fund has no stock holdings, with 99% in bonds. This is a defensive posture as the fund’s assets steadily decline.
The outlook is shown by the income and benefit figures. In the first quarter, the fund paid out $711 million in benefits, and took in just $156 million in employer contributions. Over a year, those figures mean the fund pays about $2.8 billion in benefits and takes in $624 million from employer contributions, a net loss of $2.2 billion. While the $11.75 billion in assets can earn some investment income, the short-fall is likely to be about $2 billion per year.
You can see why the fund will go insolvent in about five years without back-up from the Pension Benefit Guaranty Corporation, which is supposed to protect our pensions, but is completely inadequate and likely to go insolvent itself.
Federal legislation is urgently needed. The stimulus packages passed and on the table run well into trillions of dollars, to provide short term relief to workers and bail-outs to corporations, including profitable ones.
It’s time for the US Senate to pass legislation to protect earned pensions!
No to the GROW Act
The US House passed a stimulus bill in mid-May called the HEROES Act (HR 6800) which includes important pension protection which is urgently needed. Unfortunately, it also includes the so-called GROW Act, which authorizes the voluntary use of hybrid pension plans. The Teamsters Union and most of labor rightly oppose the GROW Act, which could give employers a chance to weaken pensions in bargaining. It would only apply to plans that are well funded, including the Western Conference of Teamsters Fund. The GROW Act, which was tacked onto the bill at the last minute, and should be taken out.
The HEROES Act pension protection measures are similar to those put forward by Senators Chuck Grassley (R-Iowa) and Lamar Alexander (R-Tenn). However, Senate Majority Leader Mitch McConnell has so far blocked any legislation to help protect pensions. More pressure from members and unions is needed to move this legislation.
YRC Continues to Struggle
The first quarter Independent Special Counsel Report on CSPF devotes six pages to the YRCW situation, because it is the largest employer in the Fund and pays in at a very substandard rate. The Fund’s staff conclude that the demanding full pension payments from YRCW would sink the company, and thus continue to accept the lesser employer contributions.