March 31, 2009: The 2008 Financial and Analytical Report on the Central States Pension Fund is finally out, and it’s not pretty. There are no big surprises in it, but it reveals that the Fund will ask the IRS for a waiver because it cannot meet its funding target for this year.
The report, which was expected on February 1 but was not issued until late March, is available to members only through Teamsters for a Democratic Union. Neither the Fund nor the IBT provides this document.
Key points in the report:
The Central States Fund had $17.3 billion at the end of 2008, down from $26.8 billion a year earlier. This was due to the stock market crash; Central States lost 29.8% on its investments. This was a little worse than most pension funds, because the CSPF has 64% of its assets in stocks.
The CPSF will have to make 11% on its investments just to break even in 2009; that is, to maintain its current level of assets. This is because employer contributions are drastically reduced, due to the Hoffa administration plan of allowing UPS to leave the fund a year ago for a UPS company plan.
While the number of retirees is holding steady at 212,000, the number of active participants went down sharply to 88,000. That again is due to the disastrous plan of allowing UPS out of the fund.
The bulk of employers have agreed to contracts that meet the CSPF rule of 8% increases in contributions per year. However, contracts covering 9,700 Teamsters (11% of the total) are not yet in compliance and are paying a 5% surcharge as a result.
The report notes that the Central States Health & Welfare Fund is in much healthier shape. It finished the year in the black.
Click here for the Central States Financial and Analytical Report.
Click here for the Report of the Special Counsel.
While no failure of the Central States Fund is imminent, it is clearly in trouble. So are a number of other pension funds. The International Union has a committee of officers looking at possible answers.
We believe the Teamsters Union—and all unions and labor’s allies—should demand a pension bailout. The economic crisis has led to a bank bailout, an auto industry bailout, and bailouts of other major institutions. It’s time for a helping hand to retirees who earned it.
Workers’ pensions are a mainstay of our economy and a bulwark against impoverishing millions of seniors. The Pension Benefit Guarantee Corporation (PBGC) is supposed to protect pensions, like an insurance plan, but it is woefully underfunded. An infusion of federal funding could be used to shift some burden from union plans, especially for the pensions of retirees whose former employers are now out of business.
The other key to rebuilding and securing the Central States Fund is organizing new members, and bringing them into our pension plans. Again the Hoffa administration has led in the wrong direction, when they organized UPS Freight but failed to bring those Teamsters into our union pension plans.
We need to work to pass the Employee Free Choice Act, which would help level the playing field between unions and corporations. And we need a union leadership committed to organizing workers into our pension funds.