The Western Conference Pension Fund has announced a big cut in pension accruals, effective July 1. This cut, if it stands, will seriously diminish pensions of those who retire in the coming years. (By law the fund cannot decrease pension credits already earned.)
Teamsters in the West have formed the Western Teamsters Pension Improvement Committee (WESTPIC) and are calling on the trustees to rescind the cut.
The trustees are insisting that they must have “full funding.” Below are answers to some questions on that issue. For more information, webmaster [at] tdu.org (contact TDU).
Why were our pension benefits cut so drastically?
After several years of record growth, the stock market has been in a cyclical downturn.
As the cycle plays itself out the market will rebound. But, in the meantime, the trustees had to choose between keeping the pension fully funded or maintaining our benefits at the historic minimum level set in 1987 (2 percent per year and 2.65 percent for members with over 20 years in the fund).
The employer trustees wanted to maintain full funding and cut our benefits. Our union trustees gave in to the employers. Thus the drastic cuts.
Don’t I want my pension to be fully funded?
“Fully funded” has a reassuring ring to it. But it’s important to understand what full funding is and who it serves.
Full funding means that if every single employer in the fund were to simultaneously go out of business, the fund would still have enough money to pay every Teamster their vested benefits.
But it is absurd to imagine that would ever happen.
That’s why other Teamster pension funds can and do responsibly assure members’ benefits with funding levels of 75, 80 or 90 percent.
Is there a downside to full funding?
Yes. Because employers want full funding, our pension benefits are being slashed!
Trustees take cyclical market swings into account in their plans. But instead of riding out the latest dip in the market, the trustees have cut our pensions, in the name of full funding.
The market will recover, but our pensions won’t. We will never make up the money we will lose while our accrual rate is slahed.
contact [at] nopensioncuts.org (Contact WESTPIC) at PMB #313, 10611 Canyon Rd. East, Puyallup,Wash. 98373 or at www.nopensioncuts.org. Or webmaster [at] tdu.org (contact TDU) for more information or materials.