May 21, 2014: The Director of the Pension Benefit Guaranty Corporation (PBGC) is calling for reforms that would help secure union members pensions. TDU backs this proposal and Teamsters should, too.
The Director of the Pension Benefit Guaranty Corporation (PBGC) is calling for a major increase in insurance premiums paid by employers to provide more security to pension funds that cover Teamsters and other union members.
Teamsters for a Democratic Union (TDU) supports this proposal and urges its adoption.
The PBGC exists to provide earned pensions for workers whose pension funds become insolvent, but it is badly underfunded, and unlike the FDIC which guarantees personal bank accounts, it is not backed by the US treasury.
A big increase in premiums would be a healthy first step in a package of changes to protect the pensions of millions of workers, including Teamsters.
Josh Gotbaum, the PBGC director, points out that the premiums of $12 per year per participant are far too low to sustain the pension program.
“Unlike the FDIC and other Federal insurance programs, Congress has continued to set PBGC premiums and has done so in ways that both underfunds PBGC and is convincing some companies they shouldn't offer pensions at all,” Gotbaum noted in a May 14 statement.
Presently the PBGC only guarantees a maximum of $12,870 per year for a 30-year Teamster in a multi-employer fund who may have earned a pension of $36,000 or more per year. And, it is too underfunded to back up a huge fund such as the Central States Pension Fund.
A PBGC fact sheet shows the problem.
The linked fact sheet for single employer plans notes that the PBGC guarantees pensions up to $59,320 per year for a single employer plan – nearly five times as high as for a multi-employer plan.
Big business, including the Chamber of Commerce, is opposed to any increase in PBGC premiums. They are comfortable with squeezing workers pensions to the minimum or out of existence.
TDU members are actively fighting back against a proposal to allow troubled pension funds to slash existing benefits. We are supporting positive alternatives. Adequate funding for the PBGC is a first step.
Teamster members are organizing committees to make sure Congress understands that working and retired Teamsters are dead set against reductions to their pensions. To learn more and to get involved in organizing to defend the pension in your area, contact TDU at 313-842-2600 or click here for more information.