Editorial: A tale of two equities
The recently passed federal spending plan allows big banks to renew risky trades and some pensioners' benefits to be cut.
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That solid pension benefit? It may be subject to change
Some troubled pension plans now have the authority to drastically reduce the benefits of current and future retirees — something that hasn’t happened since Congress passed legislation protecting retirement benefits 40 years ago.
The power was included in the last-minute, $1.1 trillion budget compromise signed by President Barack Obama on Dec. 16.
Click here to read more at the Pittsburgh Post Gazette.
Union Retirees: Don't Cut My Pension
More than a million current and retired truck drivers, construction workers and other union employees could see their pension benefits cut now that Congress has passed a controversial new measure.
By allowing the plans to cut benefits now, lawmakers say it will help keep around 150 pension funds from running out of money.
But retirees aren't exactly seeing it that way. Many gave up years of pay increases and contributed thousands of dollars from their salaries each year toward their promised pensions. As a result, many have little savings outside of their pension benefits and Social Security checks and are not sure how they'll make ends meet if the cuts go through.
"It's devastating," said 63-year-old Dave Scheidt, who retired five years ago after more than 30 years loading and unloading trucks. "We never dreamed that our pension wouldn't be there."
In the worst case scenario, Scheidt could see his current annual benefits of around $37,000 a year reduced to as little as $15,000. He receives his checks from the Central States Southeast and Southwest Areas Pension Fund, one of the multiemployer plans that is now qualified to cut benefits under the law.
Central States lobbied heavily for the new pension-cutting measure, which has led many of its retirees to speculate that it will be one of the first plans to reduce benefits.
However, any cuts would ultimately require government approval and will only be allowed at those plans like Central States that are projected to become insolvent in the next 10 to 20 years.
Benefits also cannot be cut for those with disability pensions or those who are 80 years and older, while cuts must be less severe for those between 75 and 80.
Central States did not respond to a request for comment. But on its website, it says that "given the complexity of the process, it is likely that it would take up to a year before modifications, if any, take effect" and that retirees would receive "advance written notice of any proposal to modify benefits."
The fund, which paid out $2.1 billion more than it received in contributions in 2012 alone, is projected to be insolvent in the next 10 to 15 years. So officials have argued that retirees will ultimately see major cuts either way.
That's because if a multiemployer plan goes insolvent, a retiree is guaranteed less than $13,000 a year from the Pension Benefit Guaranty Corp. In contrast, a retiree in a single employer plan that goes bust is insured for up to $60,000.
In the meantime, the fund's retirees and others are in another waiting game, wondering when -- and by how much -- their checks could be cut.
Scheidt, who has mobilized with other retired Teamsters to oppose the cuts, said he's heard from retirees across the country about the new law. Some, he says, have broken down in tears.
"Many will lose homes and cars and trucks because of this," he said. "These guys are scared to death."
Retired trucking industry worker Kirby Cabrera, 62, is trying to stay positive. "I don't want to preach doom and gloom," he said. But with 20 years of mortgage payments, he too is worried that he could face foreclosure if his current roughly $36,000 annual pension is cut too deep.
He already faces thousands of dollars in medical bills each year as he battles injuries from his years of working on the truck loading docks. Two years ago, he had one knee replaced. In a few weeks, he's going in to have the other one replaced.
Plus, he's worried that current Central State rules limiting employment options for pensioners could hurt his ability to go back to work and make up for any lost income.
For now though, Cabrera said he is trying to stay hopeful that any cuts won't be as deep as he is fearing,
"If they're 30% or 40%, it's going to destroy me..." he said. "I wish I had a crystal ball, and I knew what I was going to do."
New law lets some pension plans cut promised benefits
For some retirees, Congress has played the Grinch this holiday season.
Tucked into the federal spending bill were provisions that will allow certain struggling multi-employer pension plans to reduce benefits already being received by retirees.
Click here to read more at The Washington Post.
A devastating blow to retirees
America "survived" the government shutdown, sacrificing the benefits and pensions for millions of retirees. Ed Schultz gives an impassioned response to the new budget. Sen. Bernie Sanders and Rep. Tony Cardenas join the conversation.
Click here to see the video.
Brief Summary of Pension Legislation
Click here to read a brief summary of the Multiemployer Pension Reform passed by Congress expected to become law.
Join the Pension Justice Campaign
December 15, 2014: Congress has passed pension cut legislation. Our Campaign for Pension Justice will make our voices heard from Capitol Hill to the Central States Pension Fund.
We’re not going to stand by and let this happen without a fight.
Yesterday, TDU held a conference call with over 400 Teamsters and retirees—and we are just getting started.
Click here to join our Campaign for Pension Justice.
Our Campaign for Pension Justice will make our voices heard from Capitol Hill to the Central States Pension Fund.
We will continue to partner with allies like the Pension Rights Center, the AARP, and unions to challenge the new law and fight for new pension protections.
We’re also organizing Teamsters and retirees to take on the Central States Pension Fund directly.
We are prepared to hold pension organizing meetings around the country to inform and mobilize Teamsters and retirees.
Click here to join our Campaign for Pension Justice.
Our pension funds have been run down by Wall Street and the Hoffa administration. Retirees shouldn’t pay the price for their failures.
UPS Profits Off Pension Cuts
December 15, 2014: The lame duck Congress has attached pension cut legislation to the end-of-year spending bill that will pave the way for the worst pension cuts in Teamster history.
Leave it to UPS to find a way to make billions off this disaster.
UPS lobbyists fought for and won a special interest loophole that shifts $2 billion in the company’s pension responsibilities on to the backs of Teamster retirees in the Central States. These retirees will now face even bigger pension cuts as a result.
UPS is the one and only company that benefits from the loophole on pages 81-82. Its purpose is to ensure that the Central States Pension Fund will not reduce the pensions of UPS workers who retired after January 1, 2008.
Not reducing pensions. Isn’t that a good thing? Of course! But UPS retirees in the Central States are already protected from having their pensions reduced.
In the case of any pension cuts by Central States, Article 34, Section 1 of the UPS master agreement, requires the company to make up any lost pension benefits.
UPS’s special interest loophole means the company won’t have to make up for any pension cuts. The loophole doesn’t save UPS retirees a dime, but UPS will save a fortune.
Teamster retirees and their widows will face $2 billion more in pension cuts so UPS can get out of paying the obligations it agreed to in the contact.
What can Brown do for you? Certainly, not this.
Middle-class retirees deserve better from Congress
The devastating pension reform crammed into the omnibus spending bill that will likely soon become law would allow pension trustees to slash the benefits of retired workers and cut future benefits for a shrinking pool of middle-income employees.
These people were and are the backbone of our nation’s economy. They drive trucks, mine coal, haul bricks and bag groceries. Corporations have been weaseling out of guarantees for future retirees for years, but promises to current retirees generally have been sacrosanct.
Most of these employees contributed what was expected of them over their working lifetimes and retired — or hope to — with a well-earned nest egg.
The plans that will be affected are know as multiemployer pension plans. They typically involve union workers who are allowed to accrue benefits while changing employers, with each employer contributing to the plan.
About 1,400 such plans currently cover about 10 million workers, and most of the plans are solvent. Between 150 and 200 of them, covering roughly 1.5 million workers, are not. They could run out of funds within the next 20 years, according to the Pension Rights Center.
It’s those pension plans that the legislation aims to benefit. The Pension Benefit Guaranty Corp., an agency set up 40 years ago to guarantee those pensions, says it may run out of money to pay them in 2018, and is certain to be broke by 2025.
Hence the emergency. While it is important to help prevent these plans from becoming insolvent, pension advocates say the deal Congress worked out in haste and then attached to the $1.1 trillion budget bill funding all of government is the wrong way to do it.
That politicians are willing to eviscerate labor law safeguards that have been in place since 1974 under the Employee Retirement Income Security Act, known by its acronym, ERISA, is a sign of what little value they place on the futures of the hard-working men and women of Main Street.
Because the plans generally benefit union members, they are not popular with congressional Republicans. Union political influence has been waning for years and some of the plans — such as the Central States Teamsters fund — have a history that includes legendary levels of corruption. Even though that was generations ago, it’s enough to give cover to grandstanding lawmakers who want to look like they have a legitimate reason to vote against older, middle-class workers.
Selling out these workers is the wrong message to send to future retirees. The baby boomers now retiring may be the last generation of Americans to leave work assured of adequate income in old age. It’s not just the 1 percent who deserve security.
Congress approves plan to allow pension cuts
More than a million retired and current truck drivers, construction workers and other union workers could see their pension benefits cut now that Congress passed a proposal aimed at shoring up some of the nation's biggest pensions.
Tacked on as an amendment to the government's $1.1 trillion spending bill, the proposal was approved by the Senate late Saturday night.
While those sponsoring the pension proposal say it is "the only available option" to save failing multiemployer pension plans, other groups -- like the AARP and the Pension Rights Center -- are crying foul.
Multiemployer pension plans cover more than 10 million workers and retirees in the trucking, manufacturing and other industries. But many of these plans have struggled in the last decade as they grapple with an aging workforce and major investment losses from the recession. Plus, many larger employers have pulled out of the plans.
That has put a major strain on the Pension Benefit Guaranty Corporation, the government agency that insures pension plans, which last month said its reserves are dangerously low.
The Congressional proposal would allow plans that are projected to run out of money in the next 10 to 20 years to cut the benefits they pay to both current and future retirees. Benefits would not be cut for disabled pensioners or those 80 years and older, while cuts would be lessened for those between 75 and 80.
The PBGC projects that more than 10% of the roughly 1,400 multiemployer pension plans, which cover more than 1 million workers and retirees, currently meet this criteria.
Under current law, cutting the benefits of those who are already retired is off-limits. Instead, troubled multiemployer plans can take other actions, like reducing the benefits employees earn going forward and raising employee and employer contributions to the plan.
If the Congressional plan passes, cuts would require participant and government approval first, although the largest troubled plans could slash benefits even if retirees vote against it.
Retired truck driver Glenn Nicodemus, 64, receives his pension checks from the Central States Southeast and Southwest Areas Pension Fund, which is struggling to cover more than 300,000 retirees, widows and others.
Under the Congressional proposal, Nicodemus could see his annual benefits plummet from around $40,000 a year to as little as $15,000.
"I am disappointed in the fact that such an important matter is being done is such an underhanded way with little or no discussion of the consequences to millions who will be effected," he said.
Groups like the AARP, the Pension Rights Center and some worker unions say that retirees like Nicodemus are counting on their pension benefits, which they paid for through decades of contributions, and that other measures should be taken to save plans like Central States.
But supporters of the legislation counter that allowing for benefit cuts -- along with other changes included in the legislation, like allowing troubled plans to merge with healthier plans and doubling the insurance premiums employers pay the PBGC -- will help preserve the plans for both retirees and current workers.
One Cleveland plan, for example, has said it would only need to cut current benefits by 10% in order to prevent insolvency, said Randy DeFrehn, executive director of a coalition of employers and labor unions that crafted the proposal the legislation is based on.
Without any cuts now, he said that plan expects to run out of money by 2028, at which point all participants would see their benefits cut by 50% or more.
That's because if a multiemployer plan goes insolvent, a retiree is guaranteed less than $13,000 a year. In contrast, a retiree in a single employer plan that goes bust is insured for up to $60,000.
To make matters worse, the PBGC's multiemployer insurance program is itself projected to run out of money in the next decade unless changes are made -- meaning that workers and retirees in failing plans could be left with no benefits at all.