Central States Funds Change Benefits

December 6, 2005: Teamster and employer trustees of the Central States Funds agreed to changes in benefits to keep the overburdened multi-employer pension fund from collapsing, a Teamsters faction reported.

The dissident group Teamsters for a Democratic Union, in a Dec. 1 Web posting, blasted the agreement as a disservice to union members and called for firing the Teamster trustees.

"In exchange for an IRS extension of the period allowing for amortizing the fund's unfunded liabilities, the trustees agreed to lock in the [2003] pension cuts and usher in more health care cuts," TDU charged. "The employers and IRS got what they wanted and Teamster members got the shaft."

The International Brotherhood of Teamsters praised the agreement and criticized TDU.

"These are more scare tactics from a small, dissident faction that is trying to exploit the pension crisis in this country for political gain," IBT said.

"The IRS amortization agreement is a major victory for Central States," the union continued. "It is the only such agreement the IRS has granted, and it will allow Central States to regain its financial footing after the unprecedented stock market losses that have affected every pension fund in the country."

TDU said "stunned" union officials were informed of the changes Nov. 8 by Fred Gegare, chairman of the five union trustees who administer the fund with five employer trustees. The Central States fund covers workers at unionized trucking companies, including UPS, the largest employer of Teamsters.

According to TDU, trustees agreed to keep in place pension cuts made in 2003, divert health and welfare money for 2007 to the pension fund and not restore a "25- 30-and-out" provision that has been eliminated for younger fund participants. In addition, future labor contracts must include an increase in pension contributions of 7 percent in each contract year.

"The IRS agreement requires employers to increase their contributions. It does not cut benefits. This dissident faction needs to get the facts straight," IBT responded.

"The dissident faction's solution to the national pension crisis is to do nothing, putting members' entire pensions in jeopardy by forcing a government takeover that would result in huge benefit cuts by as much as two-thirds," the union said.

In July, Thomas C. Nyhan, executive director of the fund, in a letter to employers, said the Internal Revenue Service at the request of the fund had approved a 10-year extension of the period for amortizing unfunded liabilities, subject to certain conditions.

"The conditions attached to the amortization extension period will require additional contributions to the pension fund in order to maintain existing benefits, but the issue of additional contributions can now be addressed in the context of the collective bargaining process rather than as a result of IRS imposed penalties," Nyhan wrote.

Nyhan could not be reached for comment on the agreement.
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