UPDATED December 16, 2014: Get answers on the pension cut deal and what it means for you.
The ink is still drying on the pension cut deal that was attached in the dead of night to Congress's spending bill. Some questions can be answered now. We will update with new information as it becomes available.
Does this bill mandate pension cuts?
No. This bill permits “deeply troubled” pension plans, those which could become insolvent over the next 15-20 years, to cut already-earned pensions of retirees and active workers. These cuts will be up to the trustees of the pension fund; the trustees are 50% union officials, and 50% management reps. No cuts will go into effect immediately.
The Central States Fund states that "it is likely that it would take up to a year, before modifications [pension cuts] if any, take effect."
Could this affect other Teamsters, or just those in the Central States Pension Fund?
Most Teamster funds will be unaffected. The Western Conference Fund is in the “green zone.” Other large Teamster funds, such as New England, Local 705, Local 710, Local 804, Local 177, Joint Council 83, and most others will be unaffected, even if they are in the “red zone.” For example, Local 804 just won significant pension benefit increases in their recent contract.
Certain deeply troubled small Teamster funds may be affected. New York Local 707’s pension fund is nearly insolvent, as freight jobs dried up, and their biggest employer YRC got concessions to drastically cut their contributions to all pension funds. So we expect the Local 707 Fund to consider pension cuts.
While the cuts may only hit some Teamsters now, this attack on workers’ pensions could affect all Teamsters eventually – and we are all in this fight for pension justice.
How will it affect Teamsters in the Central States Fund?
The Director of the Fund, Thomas Nyhan, was a principal lobbying force for this bill, and has stated that CSPF will impose cuts on retirees and active Teamsters. The Trustees of the fund, who are 50% management and 50% Teamster officials politically aligned with Hoffa, support the bill and support cutting pensions. They will make the decisions – we will demand accountability.
Have Central States officials indicated how much they will cut?
In the past, Al Nelson, the Benefit Services Director of Central States, stated that a cut of about 30% would be what is needed.
But now the legislation has changed that. It requires that workers (so-called “orphans”) who retired from companies that went bankrupt (such as CF, Allied Systems, Preston, or Hostess, for example) be cut first and hardest.
This horrendous language is contained on page 81 of the pension legislation.
At this point, no one knows what the cuts will be, because we do not know how this legislation will be interpreted or applied. The next move will be by the Central States trustees.
The legislation also has protective language for some retirees: those over 80, those receiving only a disability pension, and to a partial degree, those who are 75-80.
How will this affect UPS retirees in the Central States Fund?
UPS bought enough influence in Congress to save an estimated $2 billion through a special interest loophole that shifts the company's cost burdens on to Teamster retirees who will face additional pension cuts as a result.
On pages 81-82 of the pension legislation there is a loophole dedicated to exactly one corporation, UPS. This loophole means that CSPF will probably not be able to cut the pensions of UPS workers who retired after January 1, 2008, because they are “Priority 3” in order of cuts (the best priority).
UPS retirees do not benefit one cent from this loophole because their pensions are already protected by the contract. Article 34, Section 1 of the current UPS master agreement, requires UPS to make up the full pension to UPSers if CSPF imposes cuts.
UPS's special interest loophole means the company won't have to make up for any pension cuts. As a result, all non-UPS retirees will face $2 billion more in pension cuts. Retirees are footing the bill so that UPS doesn't have to pay the obligations it agreed to in the contract.
It is not known if the "UPS Exemption" also covers UPS Teamsters who retired from Central States before January 1, 2008. These Teamster retirees deserve to know their status and if they may face pension cuts.
Will Teamsters and retirees get a vote prior to any cuts?
A ‘fact sheet’ issued by the bills sponsors claims that workers and retirees will get a vote before cuts could be made. But this is no fair vote.
First, those in Central States can have their vote overruled, because it is a large fund and its failure could seriously impact the Pension Benefit Guaranty Corporation (PBGC).
To add insult to injury: a majority of all participants – not just voters – would be required for a No result.
Who gets to vote?
It is our understanding that all participants would get to vote: retirees and working Teamsters. Even if the vote can be overruled – as explained above – it can be a very important tool for us to organize and unite Teamsters and retirees, and we plan to use it.
If Central States makes these cuts, will the fund be secure?
Certainly slashing the benefits would improve the bottom line. But in the long run a pension plan needs contributing employers, and here is where the Hoffa administration has failed badly. They severely undermined the Fund by letting UPS pull out 45,000 participants, and they have not organized new companies into the fund. Central States set up a special “hybrid” kind of plan to allow new companies to join the fund with zero withdrawal liability. It was designed for organizing. But it has not been used for new companies. That has to change.
Will Hoffa and Central States officials have to take cuts?
Thomas Nyhan, the fund director, is paid $662,060, so he probably isn’t worried about any pension cut. Neither is Hoffa: he is in the lucrative Family Protection Plan, which covers only International officials and staff, and pays far more than a working Teamster could dream of collecting.
Central States has restrictive reemployment rules. Can we get those lifted?
If pensions as slashed, many Central States and other retirees will need to return to work, and we will demand that Central States revise its reemployment rules for anyone subject to pension cuts.
Can we file a suit and overturn this?
This law was passed by the US Congress. It is highly unlikely it would be found to violate the US Constitution, which does not guarantee anyone a pension. But, as reported on the national conference call by the attorneys, we will pursue all legal avenues to curtail damage done to retirees. Our effort will be on-going.
What’s next for fighting back?
We are moving forward with Campaign for Pension Justice which we invite you to join. We will continue to partner with allies to fight this law and to demand accountability from any Teamster plan that seeks to slash pensions.
What can we do to get rid of the Hoffa leadership?
We are starting now to build for a new leadership in 2016. We are fed up with Hoffa’s lies, excuses and cover-ups. If you agree, join us to help make it happen.
The Pension Rights Center’s backgrounder on the pension-cut bill.
December 13, 2014: Congress has officially passed the spending bill that includes pension cut legislation that was attached as an amendment to the budget bill.
The legislation guts federal pension protections and will pave the way for pension cuts in the Central States Pension Fund.
Teamsters have questions and deserve answers. TDU lays out what the bill means for Teamsters in our Frequently Asked Questions.
The biggest question of all may be: how did Hoffa let this happen in the first place?
While Hoffa was MIA or worse, TDU fought a grassroots campaign to protect Teamster pensions.
We partnered with the Pension Rights Center and AARP and launched a coalition for pension protections, not cuts.
We sounded the alarm when a Congressional sneak attack attached the pension cut deal to the end-of-year spending bill. Growing number of unions spoke out in opposition. We even forced the Hoffa administration to make a show of opposition.
The Hoffa administration was worse than MIA. His allies at the Central States Pension Fund were leading proponents of the pension cut deal. Central States Executive Director
Thomas Nyhan was a leading proponent of the pension cut deal. He was paid $662,060 by our pension fund last year. How big of a cut will he take?
Hoffa waited until the day before the legislation passed, Hoffa issued a last-minute letter opposing the pension rip-off. The IBT emailed members calling on them to make phone calls. This wasn't even a matter of too-little-too-late. It was a cover-up.
Hoffa stayed quiet to signal politicians that he backed the pension cut bill; then when the bill's passage was secured, he put on a show of opposition to the membership to cover himself politically.
Teamsters expect Congress to play politics. But they deserve more from their own union leadership.
The Hoffa administration has spent the last year imposing contract concessions, healthcare cuts and pension cuts. It's time for change.
If you agree, get involved in the movement for change in our union.
Send us a message and tell us what TDU should do next to fight for our union.
Join with Teamsters working to defend pensions, and change the leadership of the Teamster Union. Together, we can rebuild the Teamsters!
December 12, 2014: Thomas Nyhan testified in Congress and lobbied hard – with our pension money and staff – to get the pension-cut bill passed. Now, he got his wish: a 163-page bill sneaked through Congress, tacked onto the budget.
We propose some small measure of equality of sacrifice, which is a basic principle of the labor movement.
The executives of the Central States Pension and Welfare Funds should take a 30% cut, to show their sincerity when they talk about the need for sacrifice.
Let’s start with Thomas Nyhan, who was paid $662,060 in 2013 and Al Nelson who was paid $305,811. There are plenty of other fund executives in their bracket: in our review of the 5500 forms for Central States Pension and H&W Funds, we found 13 pulling down over $200,000, and seven over $300,000.
What do you think?
December 11, 2014: We need your help NOW! The House is poised to vote on the omnibus spending bill, which includes provisions that would allow pension plan trustees to cut the hard-earned pension benefits of current retirees – as a purported solution to shoring up certain financially-troubled multiemployer plans.
Click here to contact your members of congress and tell them to strip the pension cut ammendment from the omnibus bill.
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At last the actual language has been released of the backroom, last-minute congressional deal allowing benefits of millions of retired workers to be shredded.
It's even worse than its critics anticipated.
We've tracked this inexcusably hasty, secretive maneuvering during the last week, reporting that it allows extreme, potentially premature cuts in benefits for retirees who are members of multi-employer pension plans. Such plans typically are sponsored jointly by unions and employers in given industries, like trucking. See our posts here and here for more background.
Click here to read more at the Los Angeles Times.
Dave Erickson of Isanti, Minn., believed his pension benefits were guaranteed when he contributed a fixed portion of his pay into the Teamsters Central States Pension Fund.
On Wednesday, Erickson learned that those benefits might be cut under a provision that Minnesota Rep. John Kline aims to tack onto the new federal budget bill.
Click here to read more at the Star Tribune.
A bipartisan group of congressional leaders reached a deal Tuesday evening that would for the first time allow the benefits of current retirees to be severely cut, part of an effort to save some of the nation’s most distressed pension plans.
The measure, attached to a massive $1.01 trillion spending bill, would alter 40 years of federal law and could affect millions of workers, many of them part of a shrinking corps of middle-income employees in businesses such as trucking, construction and supermarkets.
Click here to read more at The Washington Post.
A provision that would suspend parts of an hours of service rule has been included in a $1 trillion bill congressional lawmakers plan to advance to President Obama’s desk this month to keep federal agencies funded through fiscal 2015.
The provision, offered by Sen. Susan Collins (R-Maine), would suspend for a year a requirement that drivers take off two consecutive periods of 1 a.m. to 5 a.m. during a 34-hour restart. It also would require the Federal Motor Carrier Safety Administration to provide Congress with an extensive study detailing the rule’s safety benefits.
The bill language says that within 90 days of the enactment of the act, "the Secretary shall initiate a naturalistic study of the operational, safety, health and fatigue impacts of the restart provisions." It would suspend the current restart provisions through Sept. 30, 2015, "and the restart rule in effect on June 30, 2013, shall immediately be in effect."
American Trucking Associations’ leadership had urged its membership to press federal representatives to back the HOS suspension language in the omnibus.
"We're pleased that the Collins language is included in the fiscal 2015 omnibus spending bill. We now urge the House and Senate to pass the overall bill and that the president sign it into law," said Sean McNally, ATA vice president of public affairs.
The bill also would provide $500 million for U.S. Department of Transportation infrastructure grants that have become popular with states and municipalities.
Congressional leaders are now in a race against the clock, as they look to advance the massive multi-bill legislation through the chambers. A short-term funding law expires Dec. 11. Without an omnibus package or another short-term funding measure reaching the president’s desk by that date, a government shutdown is likely.
“As we close in on our Dec. 11 deadline, we now ask that the House and Senate take up and pass this bill as soon as possible, and that the president sign it when it reaches his desk. The American people deserve the certainty of a continuously functioning and responsible government, and the knowledge that both parties in Congress have heard their demands and have worked cooperatively on their behalf,” said the chairmen of the House and Senate Appropriations panels, Rep. Hal Rogers (R-Ky.) and Sen. Barbara Mikulski (D-Md.).
Opposition to Collins’ proposal has come from the Obama administration, a small number of groups, and Democratic Sens. Cory Booker of New Jersey and Richard Blumenthal of Connecticut.
The two Democrats had asked Senate Majority Leader Harry Reid (D-Nev.) to remove the HOS suspension in the omnibus.
In addition to the $500 million in TIGER grants, the bill also provides:
- $40.3 billion for the federal-aid highways program (MAP-21), which is equal to the level enacted for fiscal year 2014.
- $1.39 billion for Amtrak
- $830 million for the National Highway Traffic Safety Administration (NHTSA), to allow NHTSA to make important investments in its safety defects analysis and investigation programs and improve the agency’s ability to aggressively screen defect trends.
- $104 million for the National Transportation Safety Board (NTSB).
View the full bill here. HOS section begins at page 1443.
UPDATED December 13, 2014: There's still time to fight Congress's last-minute pension cut deal by calling and emailing your Senators today. Do it now. The vote could come Monday on the budget bill.
Click here to read AARP's letter of opposition.
Click here to read a Statement from the Pension Rights Center.
Click here to read a Statement by Senator Tom Harkin.
The proposed pension cuts amendment has now moved on to the Senate. They need to vote on it. We still have a chance to shoot down the earmark.
Our allies in Washington encourage the following:
Contact your Senators ASAP.
We need them to say NO to the earmark on pensions. The legislation was developed behind closed doors. The 163 pages have barely been seen and have not been debated. There has been no discussion of the earmarked legislation. This is not a consensus proposal and is opposed by AARP, the Pension Rights Center, The International Association of Machinists, The Teamsters, The Steelworkers, and other organizations.
Adding this earmark to the Funding Bill is a last minute maneuver to allow pension cuts that have been protected by ERISA for forty years. There is no reason to rush this through in this manner.