November 20, 2012: Two of the biggest Teamster Pension Plans have adopted a new pension model. What does it mean for members' pensions?
Both the Central States Fund and the New England Pension Plan have a new pension model that may affect tens of thousands of Teamsters.
Why are employers pushing for the new "Hybrid Plan" model? What will it mean for Teamsters' pensions?
Companies are getting increasingly aggressive about getting out of defined-benefit union pensions. One big reason is employers don't want to have withdrawal liability, that is, debt owed to pay for pensions that Teamsters and retirees have earned.
In 2007, the Hoffa administration let UPS pay off its withdrawal liability, pull out of Central States and set up a new plan for UPS Teamsters only. That move put the Central States Plan on the brink.
Now the Central States and New England Pension funds are offering employers a different model.
Under the Hybrid Plan, companies pay down their liability and stay within the Teamster pension plan at the same time.
As of October 2012, some 17 employers in the Central States Fund have switched over to this arrangement and another 25 in the New England Fund.
The Hybrid Plan model has not been adopted by the Western Conference of Teamsters Pension Trust. That fund already operates at close to full funding so employers have already eliminated withdrawal liability as an issue.
So far only small units have switched in the Central States, but they include some large companies such as Republic Waste. In New England, UPS, DHL, and some other corporations have done so.
In the future, other companies may make this switch. Will ABF push for this change? Stay tuned.
Click here to read more about Hybrid Pension Plans.