Dear Member of Congress:

On behalf of the 1.2 million active and retired members of the United Steelworkers Union (USW), I urge you to oppose last minute legislation added to year-end spending legislation which will dramatically reform the multi-employer pension system and cut benefits to existing retirees. The lack of transparency and the inability to provide significant input into legislation which impacts close to 250,000 USW members and retirees in multi-employer pension plans is the wrong approach to former workers who deferred decades of wages into this retirement option.

The multi-employer pension system does need assistance to create long term stabilization and we applaud the efforts to craft a solution. However, the issue is a long term one. Many plans which are facing financial burdens have 10 years or more to find methods to fund the liabilities owed to participants. The proposal which from our understanding, dramatically reduces benefits to retirees in pay status is an extraordinary change to long standing ERISA “anti-cutback” rules and deserves intense scrutiny before being considered as a viable solution. Every effort should be made to find solutions that do not force retirees in pay status to bear the brunt of massive cuts when many employers who withdrew from these pension plans paid pennies on the dollar to get out.

Retirement Security for Americans is an issue that is intensifying in importance for our nation. The average working household has virtually no 2 retirement savings. When all households are included— not just households with retirement accounts —the median retirement account balance is $3,000 for all working-age households and $12,000 for near-retirement households. The failure of individual savings accounts to adequately prepare working Americans for retirement highlights the importance of well-run defined benefit plans, including multi-employer pension plans.

Belonging to a union, and participating in a defined benefit pension plan like a multi-employer pension is the best way to reverse the growing retirement security crisis. That is why USW opposes this last-minute, backroom deal that did not have adequate stakeholder engagement, will potentially force massive benefit cuts to retirees, and could undermine the full faith and promise of the entire pension system.

Sincerely,

Passing legislation on a tight deadline--especially a bogus deadline--is invariably a formula for serious mischief. That's what's happening with a proposal to deal with a supposed crisis in worker pensions by allowing trustees to slash the pensions of already-retired workers to shreds.

Members of the House Education and the Workforce Committee are trying to slip the measure into an omnibus spending bill to be passed before Dec. 11, when Congress leaves Washington for its vacation recess. Pension advocates are up in arms, not least because the measure's actual language hasn't been made public. (It's still in negotiation, committee staffers say.) What is known is that it would change four decades of labor law in a way that mostly affects the oldest and most vulnerable workers.

"There's no bill, no legislative language," David Certner, legislative counsel to AARP, told me Friday. "To attach this big a change to a year-end spending bill is outrageous."

What's at issue is the condition of so-called multiemployer pension plans. These are defined benefit pensions in industries comprising lots of relatively small employers. The plans often are sponsored by unions, who share trustee duties with employer representatives.

Thanks to changes in the workplace, the 2008 crash, and the long recession, many--but by no means most--of these plans are underfunded and in danger of going bust sometime in the next decade or two. In those cases, the pensions will become the responsiblity of the federal Pension Benefit Guarantee Corp.

That's a concern for two reasons: First, the PBGC, which also takes over single-employer plans that run out of money, is already in serious financial trouble. Second, although the PBGC guarantees single-employer pension benefits up to about $59,318 a year (as a straight-life annuity for someone retiring this year at 65), the ceiling is much lower for multiemployer plans--for a worker with 30 years of pension credits, the maximum PBGC guarantee is $12,870. (The guarantees are adjusted each year for inflation.)  That would be a huge cut for many workers with long years on the job.

To keep many of these plans solvent, the committee is considering a proposal to allow plan trustees to cut retirees' pensions now, many years in advance of any looming insolvency. The benefit cut could be no lower than 110% of the PBGC guarantee, or about $14,150 for that 30-year worker this year.

This would mean gutting the fundamental principle underlying the federal ERISA law governing private sector pensions. "The law says that once a retiree has earned a benefit, it must continue to be paid, until the day the fund is depleted," says Karen Friedman, policy director of the Washington-based Pension Rights Center.

That may sound like financial brinksmanship, but it's really a guarantee that all pension beneficiaries will be treated equally--pension trustees can't slash the benefits of the already-retired in order to preserve those for members still working. 

The remedy is being crafted by Committee Chairman John Kline, R-Minn., and its ranking member, California's Rep. George Miller, D-Martinez, who is retiring. My request for comments was funneled up to committee staff, who say that "members are still discussing the details about a possible legislative solution to the multiemployer pension crisis and remain hopeful Congress will act before the end of the year." 

Although some big unions favor the change, it's opposed by the boilermakers and international Assn. of Machinists, among others. "Changing ERISA to allow cuts in promised benefits is a ticket to poverty and dependence on government asisstance," IAM International President R. Thomas Buffenbarger wrote members of Congress last month.

The new proposal is an outgrowth of a study conducted last year by the National Coordinating Committee for Multiemployer Plans, which brought together union leaders, employers, and pension experts to find a way out of the crisis. The study considered numerous remedies, including merging struggling plans to improve administrative efficiencies; raising the standard retirement age from 65 to 67, as Social Security has done; and increasing premiums paid by employers to the PBGC to shore up its funding.

But the most draconian idea was to allow "early corrective actions" such as the benefit cuts.

Congressional sources say the proposals on the table would incorporate protections for the oldest and most vulnerable retirees, as well as a requirement that plan members vote to approve the benefit cuts. But Friedman says that's not very comforting: any such vote would pit existing workers, who can still accumulate pension credits on the job, against retirees, who can't return to the workforce. "That creates a real conflict of interests," she says.

What's most irksome about the Congressional maneuvering is the ginned-up atmosphere of urgency around it. For even seriously impaired pension plans, the day of reckoning may be 10 or 20 years off; a lot can happen in that time frame to improve their condition or for other solutions to bubble to the surface. 

"Yes, there's a problem," Friedman says, "but it doesn't have to be solved this very second, with three days left in the session." 

the measure's fate is uncertain; as word of a pending Kline-Miller deal started leaking out this week, the opposition has grown more vocal. "I'm more confident today than I was four days ago," AARP's Certner told me. 

But the cloud hasn't passed. While it's true that some fix is imperative, whatever takes shape should be aired in public and weighed carefully. Pushing it through in haste, as all of Capitol Hill is rushing to get out of Washington and go home for the holidays, only raises the prospect that the most powerless members of the workforce will get screwed.

(WOIO) - A new bill that could be passed before Congress leaves for winter break has a lot of retirees upset.

Donna and Daniel McAuliffe are heading into a nightmare next week, as Congress could pass a bill that opponents say will slash some retiree's pensions by 65 percent. This scares the Brunswick couple.

"It's going to hurt and it's going to hurt a lot of families," said Donna.

Supporters of the bill that will remove a longstanding anti-cutback on pension law believe if the bill fails, some pensions could be exhausted by 2021.

Daniel, who worked for Yellow Trucking for 32 years, says he earned his pension through a lifetime of hard work. 

His biggest fear now?

"My house, everything I own. If this goes through, I am done," said Daniel.

The Northeast Ohio Committee to Protect Pensions was born in March and wants politicians to consider merging plans or a pension bailout. The group believes some in Congress want to sneak this bill through in only a matter of days.

"Especially trying to tack this important bill onto something that is meaningless, to push it through Congress in four days, that you have something you could have taken care of all year," said Mike Walden, with NOCPP.

Donna is wondering if anyone on Capitol Hill is listening.

"I would hope they care. This is America. Nobody thinks this kinda thing is going to happen to us," said Donna.

If passed, the bill could affect 10 million retired Americans.

When people are old, should governments guarantee they have incomes?

In the 19th century — 125 years ago — Germany became the first country to answer yes to that question, adopting an old-age pension system at the behest of Chancellor Otto von Bismarck.

Click here to read more The New York TImes.

December 4, 2014: It is urgent that Teamster President Hoffa make a strong statement to all Senators and Congresspersons to defend Teamster pensions under attack.  

This letter from the IAM President must not stand alone. We need the political weight of the IBT at this time.

December 4, 2014: Congress is nearing a vote on arguably the biggest change to private pension law in decades.

The proposed reforms would grant sweeping new authority to the trustees of some “deeply troubled” multi-employer pension plans to slash benefits promised to current retirees—something that’s illegal under existing law.

See what you can do to help head off this sneak attack.

Click here to read more at In These Times.

Congress could soon allow the benefits of current retirees to be cut as part of an agreement to address the fiscal distress confronting some of the nation’s 1,400 multi-employer pension plans.

Several unions and pension advocates opposing the move, which would be unprecedented, say that permitting financially strapped plans to cut retiree benefits would violate the central promise of traditional pensions: that they would provide a defined benefit for life.

Click here to read more at The Washington Post.

Congress is nearing a vote on arguably the biggest change to private pension law in decades.

The proposed reforms would grant sweeping new authority to the trustees of some “deeply troubled” multi-employer pension plans to slash benefits promised to current retirees—something that’s illegal under existing law. A cornerstone of some collective bargaining agreements, multi-employer plans cover more than 10 million workers, mostly in construction but also in the transportation, manufacturing, retail and service sectors.  

Click here to read more at In These Times.

December 3, 2014: Behind closed doors, a handful of Congressional representatives are planning to pass a major change to federal pension law, by making a last-minute amendment to the omnibus budget bill which Congress must pass by December 11 to avoid a shutdown. You need to take action now to stop this sneak attack.

Does that seem like the right way to consider the future of pensions for hundreds of thousands of Teamsters and millions of Americans?

We say No.  

And we are not alone. The AARP, the Pension Rights Center and some unions such as the International Association of Machinists are working hard to head-off this deal, so that hearings will be held on a proposed bill to consider amendments, improvements, and alternatives to it.

We need Teamster president James Hoffa to use the political weight of the Teamsters Union to help stop this sneak attack. You can email your request that Hoffa to call upon all congressional reps and senators to say No to junking the anti-cutback rule of ERISA by a sneaky deal. Put the millions of Teamster dollars given to politicians to good use, right now.

One year ago, Hoffa sent a letter to Congress on this issue. But a year-old letter is not what’s needed. Now is the time to press the case, with all the clout the Teamsters Union can muster. Call on Hoffa to take action.

This proposal has nothing to do with the federal budget. It has everything to do with the future of workers’ hard-earned pensions. 

Alex Adams, a retired Teamster out of Cleveland Local 407 speaks for thousands of other Teamsters facing these cuts:

“I’ve been retired for ten years after working for over 36 years moving freight across the country. In 1980, due to government deregulation, many companies went out of business in the freight industry. I worked for ten companies at one time (on call) to make sure I stayed active to receive contributions into the pension.  I earned my pension the hard way as I have a clear memory of giving up many possible wage increases so that money could go towards benefits.”

Because the deal is being done secretly, we don’t have all the terms of the proposed pension change. But it will allow “deeply troubled” pension plans—including the Central States Pension Fund—to slash existing pensions and those already vested. Central States officials have said the cuts will be about 30%.

We recognize that Central States and some other funds are in trouble, but Teamsters and retirees deserve an open discussion of the terms of the law, and possible protective amendments to it, before Congress rushes it through.

Contact your Congressperson and Senators. Tell them making a sneaky deal is no way to respect their constituents. Retirees and hard working Teamsters deserve better.

For more information:

Why the AARP opposes this bill

Why TDU opposes this bill

Why the Pension Rights Center opposes this bill