April 18, 2008: “‘Red Zone’—Why it is better than the ‘Yellow Zone’”: That’s the surprising headline that appeared in a newsletter issued by the Central States Fund in March.
Most pension funds want to stay out of the Red Zone. But Thomas Nyhan, the director of the Central States Fund, told union officials last December that he wanted to steer the fund’s documents so that it would end up in the Red Zone. Now he has.
Nyhan says that being in the Red Zone is advantageous in the case of Central States because it will allow the fund to chart a longer period—beyond ten years—to bring its funding level up to a high level.
Central States Teamsters should not be faced with any further pension cuts, however. The fund already has lowered the accrual rate to one percent—the lowest allowable for a plan in the Red Zone.
A one percent accrual means that each year a Teamster increases their monthly pension amount by one percent of the contributions for that year.
The accrual rate in 2008 for a freight Teamster who works all year will be $136.
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