March 27, 2008: Teamsters in New Jersey Local 641 were hit with major pension and health and welfare cuts on March 10—just nine days after the Local 641 pension fund announced it was in critical status (the “Red Zone”).
Effective June 1, the pension accrual will be slashed to one percent—the lowest amount allowed for plans in the Red Zone. The minimum retirement age was raised to age 57 with stiff annual reductions for pension benefits for Teamsters retiring below the age of 62.
Under the Pension Protection Act, Local 641 did not have to classify their fund in the Red Zone until June and did not have to adopt a plan or implement any cuts until June of next year.
The fund acted on a much accelerated pace—which may be financially prudent. But coming without any warning, the announcement blindsided members and left some Teamsters scrambling before the June 1 deadline when the changes take effect.
The Local 641 Welfare Fund also introduced major cuts to in health benefits for both working Teamsters and retirees.
Members were informed of the benefit cuts at a March 9 general membership meeting and through a notice from the fund dated March 10.
The cuts in Local 641 reveal how quickly Teamster funds may move in some cases to reduce benefits, now that the Pension Protection Act is in effect—and serve as a warning to Teamsters to get informed now.
A Warning from Local 641
“We were broadsided when pension cuts were made in my local with no warning. I feel like I was slapped in the face. Some drivers on my job are scrambling to retire now before the cuts take effect in June.
“My advice to all Teamsters: Don’t wait for the other shoe to drop. Ask questions now. Don’t let what happened to us in Local 641 happen to you.”
John Roncinske, Yellow, Local 641, Union, N.J.