More than a million people risk losing their federally insured pensions in just a few years despite recent stock market gains and a strengthening economy, a new government study said on Monday.
The people at risk have earned pensions in multiemployer plans, in which many companies band together with a union to provide benefits under collective bargaining. Such pensions were long considered exceptionally safe, but the Pension Benefit Guaranty Corporation reported in its study that some plans are now in their death throes and cannot recover.
Click here to read more at The New York Times.
“For retirement, the answer is 4-0-1-k,” proclaimed Tyler Mathisen, then editor of Money magazine in 1996. “I feel sure that someday, like a financial Little-Engine-That-Could, it will pull me over the million-dollar mountain all by itself.”
For this sentiment, and others like it, Mathisen was soon rewarded with an on-air position at financial news network CNBC, where he remains to this day. As for the rest of us? We were had.
Click here to read more at The Yucatan Times.
June 20, 2014: The overdue year-end 2013 report on the Central States Pension Fund shows that it grew by $1 billion to $18.7 billion on the rising stock market. However the report stresses the fund trustees’ goal of changing federal law to allow them to cut the pensions of current retirees, and active Teamsters with earned vested pensions.
The Teamster officials who are trustees are at odds with the official position of the International Union, which is to oppose a bill to abolish the “anti-cutback” protections in federal law. The report states that the fund could be unable to make pension payments by 2026, as the justification for their stand.
CSPF Benefits Services Director Al Nelson recently called for 30% across the board cuts in present and future benefits.
Teamsters for a Democratic Union (TDU), along with the Pension Rights Center, the AARP, and several unions are calling for alternative positive action to support pensions, rather than drastic cuts. You can sign the petition to add your support, and you can find out more about this growing movement.
The 2013 report (submitted by the Independent Special Counsel (ISC)) notes that the fund grew by $1 billion in 2013 thanks to outsized stock market returns. The CSPF has 50% of its asset in three different unmanaged index funds, and those did especially well in 2013.
You can also read a copy of the 2013 Financial and Analytical Report on the Central States Pension and H&W Funds.
A disturbing note in the report concerns Allied Systems Holdings’ carhaul operation. Allied went bankrupt in a hedge-fund dispute. Jack Cooper then bought it, and most Allied Teamsters were able to follow their work (and maintain their pension benefits) to Jack Cooper. But the ISC report notes that Jack Cooper will not be assuming the $900 million withdrawal liability owed by Allied to the fund.
The Central States Health and Welfare Fund continues to operate in the black with its reserves topping $2 billion. The fund has 83,102 participants at the end of the year, but that number has now doubled with the addition of so many UPS and UPS Freight Teamsters.
June 16, 2014: Teamsters, along with many other groups, are fighting back against a proposal Congress is considering to allow troubled pension funds – like the Central States Fund – to slash existing benefits. You can help by signing a petition to the U.S. House of Representatives Education and the Workforce Committee. Help preserve the federal anti-cutback law to protect our pensions.
Click here to sign the petition.
Call TDU: 313-842-2600 to get petitions to circulate in your area.
Pension Action Committees have formed in Northeast Ohio and the Twin Cities. If you want to form a committee in your area, click here.
To learn more about this threat and what you can do, click here.
June 13, 2014: Al Nelson, the Benefits Services Director of the Central States Pension Fund, told Minneapolis Teamsters that he favors a 30 percent across-the-board benefit cut for every current retiree and every active Teamster in the fund.
June 13, 2014: The Director of the Pension Benefit Guaranty Corporation (PBGC) has called for reforms that would help secure union members pensions.
Complexity is to be expected when discussing an issue like pensions. So for the moment let’s make things simple: 150 to 200 multiemployer plans are severely underfunded and may run out of money in 15 to 20 years if no action is taken. There are approximately 1.5 million workers and retirees in these plans. To solve this problem, members of Congress are considering a proposal that would allow the trustees of these plans to immediately cut benefits across the board for all participants, including those who have been retired for many years.
Let’s borrow an example from a Wall Street Journal article to illustrate how this proposal would work: Greg Smith worked for 31 years under the Central States Teamsters Plan, which is underfunded. He currently receives a monthly pension of $3,019. If this proposal were implemented, Mr. Smith’s benefit would be cut by more than half, down to $1,200 per month.
Click here to read more at the Pension Rights Center.
May 30, 2014: How much could you possibly lose from your pension if the anti-cutback provisions are repealed from federal law? The Pension Rights Center has posted a retiree cutback calculator to show you the answer.
The calculator shows how drastic the cuts could possibly be to retirees in “deeply troubled” pension plans, including the Central States Plan. The calculator provides the answer.
Use the calculator below to determine how much your pension could legally be cut if the "Solutions not Bailouts" proposal were to become law. Any changes to the proposed law would result in changes to the calculator’s projections.
The threat comes from proposed legislation backed by an organization of employers, pension funds, and even some unions. The trustees of the Central States Pension Fund are shamefully supporting this radical change in ERISA, the federal law which protects our pensions.
The Pension Rights Center, based in Washington, D.C., has played an important role over the years in defending Teamster pensions. The PRC, along with Teamsters for a Democratic Union (TDU), the AARP and several unions, is opposing the proposed law.
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.