April 10, 2009: Reckless Wall Street schemes have devastated Teamster pension plans. Can our union help lead the fight for retirement security for working families?

The Teamsters Union has formed a high-level committee to look for ways to protect union pension funds that have been devastated by the financial crisis. And not a moment too soon.

It’s no secret that many Teamster pension plans are in trouble. The Central States Pension Fund lost $9.5 billion in assets last year. The problem goes well beyond our union. Pension plans covering millions of American families are in danger.

Now the International Union is looking to legislation and policy changes that can increase workers’ retirement security.

Fix the Law

Three years ago, Congress passed the misnamed Pension Protection Act. This law may have been well-intentioned, but it has made a bad situation worse.

The PPA puts pressure on our pension funds to cut members’ benefits to meet strict funding timetables prescribed by the law.

In the wake of the stock market meltdown, our pension funds need time to recover and build up their assets—not unrealistic timetables that may lead to deep benefit cuts.

Even more importantly, we need programs to protect workers’ pensions. The Pension Benefit Guarantee Corporation (PBGC) was set up to insure workers’ pensions, but unlike the FDIC it guarantees only a fraction of what you’re owed.

The PBGC needs to provide workers with real, not token, protection—and it needs to help keep pension funds from failing by helping to finance the pensions of retirees whose companies have gone out of business.

To win public support for these retirement security programs—which will cost federal money—our union needs to mobilize members and retirees. And we need to join forces with other unions, pension funds, AARP and other allies.

Protecting workers’ pensions is not as controversial as spending tax dollars on bonuses for Wall Street executives. Retirement security is a fight that can be won.

United Teamster Action

Let’s be honest. The Hoffa administration’s record on pensions has been an uninterrupted streak of broken promises and pension cuts.

But if they are serious about building a coalition for workers’ retirement security, Teamster members and retirees should join the fight.

What do you think? Click here to send your comments to Teamsters for a Democratic Union.

April 10, 2009: The 2008 Financial and Analytical Report on the Central States Pension Fund was finally issued in late March, and it’s not pretty.

There are no big surprises, but it reveals that the Fund will ask the IRS for a waiver because it cannot meet its funding target for this year.

The report, which was expected on February 1 but was not issued until late March, is available to members only through Teamsters for a Democratic Union.

Neither the Fund nor the IBT will provide this document to members; we had to go to federal court to compel the Fund to provide these documents each quarter.

Key points in the report include:

The Central States Fund had $17.3 billion at the end of 2008, down from $26.8 billion a year earlier. This was largely due to the stock market crash; Central States lost 29.8 percent on its investments. This was a little worse than most pension funds, because the CSPF has 64 percent of its assets in stocks.

The CPSF will have to make 11 percent on its investments just to break even in 2009; that is, to maintain its current level of assets. This is because employer contributions are drastically reduced, due to the Hoffa administration’s plan of allowing UPS to leave the fund a year ago for a UPS company plan.

While the number of retirees is holding steady at 212,000, the number of active participants went down sharply to 88,000. That again is due to the disastrous plan of allowing UPS out of the fund.

The bulk of employers have agreed to contracts that meet the CSPF rule of eight percent increases in contributions per year. However, contracts covering 9,700 Teamsters (11 percent of the total), are not yet in compliance and are paying a five percent surcharge as a result.

The report notes that the Central States Health & Welfare Fund is in much healthier shape. It finished the year in the black.

The Central States Financial and Analytical Report is available here.

A Plan for the Future of our Pension Funds

While no failure of the Central States Fund is imminent, it is clearly in trouble. So are a number of other pension funds. That’s why it is so important for our union to launch a campaign, along with other unions and allies, to win real federal protection for workers’ pensions.

The International Union has a committee of officers looking at this issue. We hope they move from talk to action.

Workers’ pensions are a mainstay of our economy and a bulwark against impoverishing millions of seniors. The Pension Benefit Guarantee Corporation (PBGC) is supposed to protect pensions, like an insurance plan, but it is woefully underfunded. An infusion of federal funding could be used to shift some burden from union plans, especially for the pensions of retirees whose former employers are now out of business.

The other key to rebuilding and securing the Central States Fund is organizing new members, and bringing them into our pension plans. Again the Hoffa administration has led our union in the wrong direction, when they organized UPS Freight but failed to bring those Teamsters into our union pension plans.

We need to work to pass the Employee Free Choice Act, which would help level the playing field between unions and corporations. And we need a union leadership committed to organizing workers into our pension funds.

Get More Members into Our Fund

“The $6 billion that UPS paid to exit the Central States seemed like a real windfall but now it’s all gone in the stock market downturn. It’s a shame Hoffa Jr. gave UPS Freight a pass on Teamster pensions. Both of those decisions are coming back to haunt thousands of Teamster members and retirees.

“We need to get more Teamsters into the fund. I’m sure it took Hoffa Sr. some hard bargaining to get all those companies to sign on years ago. That’s the kind of negotiating power we need from our leaders today if we’re going to have any chance of turning things around.”

Tim Pagel, YRC, Local 988, Houston

What do you think? Click here to send your comments to Teamsters for a Democratic Union.

April 10, 2009: As the one Teamster carrier that has done some hiring, UPS Freight has attracted some experienced Teamster drivers.

Unfortunately, they are learning the bitter truth about a deal made by the Hoffa administration: you get no pension credits in any Teamster pension fund by working there. You start anew in a company fund.

Can this be corrected in the next contract? Not with the present IBT leadership.

April 10, 2009: YRCW has contacted some Teamster pension funds asking to defer for several months the company’s payment of pension contributions for Teamsters. This is according to IBT Freight Director Tyson Johnson, who says any deal like that must be negotiated with him.

The only good news here is that Teamster can rest assured it will not affect your pension credits. Thanks to court cases our members won years ago, all Teamster pension funds must give you credit for your time worked, even if the fund fails to collect employer payments required under the contract.

May 1, 2009: If you are a UPS Teamster in the West or the East, then the problems in the Central States Pension Fund won’t affect you, right? Wrong.

UPS’s pullout has financially devastated the Central States Pension Fund. And the company plan that replaced it is a ticking time bomb of retirement insecurity for nearly 50,000 UPS Teamsters in the Central and Southern Regions.

This may not affect your pension directly, if you’re a UPS Teamster in the East or West. But it will affect your contract and your future. The new problems in the Central States gives the company leverage that management will use to try to win nationwide concessions in the next contract. Just like they did in the last one.

Ticking Time Bomb

One ticking time bomb is the expiring pension guarantee for UPS Teamsters in the Central and Southern Regions (the areas formerly covered by the Central States Fund). Right now, UPS guarantees members’ pensions if the Central States Pension Fund is unable to pay them.

But when the contract expires in 2013, UPS management will no longer have to guarantee these pensions. With the Central States Pension Fund in bad shape, our union will have to negotiate an extension of this protection so that UPS Teamsters won’t lose their pensions if the Central States Fund fails.

Management will surely demand concessions in 2013, and not just in the Central States, in return for renewing the pension guarantee.

Here’s a second ticking time bomb. The UPS company plan that Central and Southern Teamsters are now in pays the lowest pension benefits in the country. The tens of thousands of UPS Teamsters in this fund need, and deserve, to bring their benefits in line with pensions in the East and West. That will be a costly improvement. UPS is sure to demand concessions in return.

In the last contract, UPS used the problems in the Central States Pension Fund to extract concessions from every UPS Teamster. Management has a plan to do the same in 2013.

The Hoffa administration didn’t have a plan to stop concessions and protect our pensions when UPS was making record profits. Why should we believe they will do better next time?

The good news is that there is an International Union election in 2011. UPS Teamsters will be able to vote out the Hoffa administration and replace them with new leadership and a new direction before we get to the bargaining table.

April 10, 2009: The Local 804 Health Fund has lost another $1.9 million in assets, according to documents obtained by 804 Members United.

The Local 804 Health Fund has lost nearly $20 million over a five-year period. Its assets have dropped from $32.2 million in 2003 to just $12.5 million on May 31, 2008—the most recent figures available from the Fund.

The good news is that the Fund’s losses have started to level off. The Fund lost less than $2 million in the 2007 plan year, compared to losses of $4.5 and $6.8 million the previous two years.

In the fall of 2007, Local 804 officials voted with UPS to hike members’ co-pays. It remains to be seen whether those cuts and the contributions negotiated in the current contract will be enough to restore the Local 804 Health Fund to fiscal health.

Some Executive Board members have started blaming the cost of retirees for the Fund’s problems.

What Local 804 officials don’t tell the members is their own role in creating the financial problems at the Fund. The money negotiated in the 2002 “Best Contract Ever” was not enough to pay for members’ health benefits. For years, officials spent down the Fund’s reserves to make up for the shortfall.

With the Fund losing millions of dollars a year, Local 804 officials poured gasoline on the fire by voting with UPS to divert contributions from the Health Fund to the Pension Fund. After the diversion, the Fund’s assets nosedived—dropping a whopping $11.3 million in two years.

The Local 804 Executive Board never told members a word—about the losses or the diversion of funds.

“At both the Pension and Health Funds, the Executive Board kept the membership in the dark until the problems were out of control,” said shop steward Tim Sylvester. “Now they point fingers and pass the buck. That’s damage control, not leadership. And a lot of members have had enough.”

April 10, 2009: On April 9, a federal judge ordered UPS to reverse increases in retirees' healthcare payments in Chicago.

In January, UPS raised the cost of healthcare for Local 705 retirees to $315 a month for a married couple. Many companies and health plans have hiked retiree healthcare costs, often with no objection from the union. But Chicago Local 705 took action.

With Local 705’s support, retirees went to federal court. Yesterday, they won an injunction that prevents UPS raising the health care premium above $50 per month.

Retiree Iggy Green, who was a plaintiff in the case, told us that “It’s great to win for retirees, because many of them couldn’t afford this increase. They’re calling me, all excited that we won. Thank God we have a local that works for the members and retirees that would fight this battle.”

In briefs filed in the case, UPS management argued they could charge Local 705 retirees more than retirees under the national contract, because the national union had given them concessions in bargaining, including giving up the Central States Pension Plan. Local 705 has a separate contract from the national contract.

UPS will now have to refund the retirees for the overpayments during the past three months, and lower the cost to $50 per month going forward.

We do not know if UPS will appeal the decision, which was issued by federal district judge Matthew F. Kennelly.

Click here for a copy of the decision.

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March 31, 2009: The 2008 Financial and Analytical Report on the Central States Pension Fund is finally out, and it’s not pretty. There are no big surprises in it, but it reveals that the Fund will ask the IRS for a waiver because it cannot meet its funding target for this year.

The report, which was expected on February 1 but was not issued until late March, is available to members only through Teamsters for a Democratic Union. Neither the Fund nor the IBT provides this document.

Key points in the report:

The Central States Fund had $17.3 billion at the end of 2008, down from $26.8 billion a year earlier. This was due to the stock market crash; Central States lost 29.8% on its investments. This was a little worse than most pension funds, because the CSPF has 64% of its assets in stocks.

The CPSF will have to make 11% on its investments just to break even in 2009; that is, to maintain its current level of assets. This is because employer contributions are drastically reduced, due to the Hoffa administration plan of allowing UPS to leave the fund a year ago for a UPS company plan.

While the number of retirees is holding steady at 212,000, the number of active participants went down sharply to 88,000. That again is due to the disastrous plan of allowing UPS out of the fund.

The bulk of employers have agreed to contracts that meet the CSPF rule of 8% increases in contributions per year. However, contracts covering 9,700 Teamsters (11% of the total) are not yet in compliance and are paying a 5% surcharge as a result.

The report notes that the Central States Health & Welfare Fund is in much healthier shape. It finished the year in the black.

Click here for the Central States Financial and Analytical Report.

Click here for the Report of the Special Counsel.

The Future

While no failure of the Central States Fund is imminent, it is clearly in trouble. So are a number of other pension funds. The International Union has a committee of officers looking at possible answers.

We believe the Teamsters Union—and all unions and labor’s allies—should demand a pension bailout. The economic crisis has led to a bank bailout, an auto industry bailout, and bailouts of other major institutions. It’s time for a helping hand to retirees who earned it.

Workers’ pensions are a mainstay of our economy and a bulwark against impoverishing millions of seniors. The Pension Benefit Guarantee Corporation (PBGC) is supposed to protect pensions, like an insurance plan, but it is woefully underfunded. An infusion of federal funding could be used to shift some burden from union plans, especially for the pensions of retirees whose former employers are now out of business.

The other key to rebuilding and securing the Central States Fund is organizing new members, and bringing them into our pension plans. Again the Hoffa administration has led in the wrong direction, when they organized UPS Freight but failed to bring those Teamsters into our union pension plans.

We need to work to pass the Employee Free Choice Act, which would help level the playing field between unions and corporations. And we need a union leadership committed to organizing workers into our pension funds.

The Central States Health and Welfare Fund has increased the cost for Teamsters who retire under age 60, and decreased it for those who retire after age 60. Once again, Central States is aiming to increase the average age of retirement.

Monthly premiums for 2009 for those who retire at age 57 are $360, or $720 for a couple. For those who retire at 62 or more, the retiree monthly payment is $100 ($200 per couple).

These changes do not affect UPS Teamsters who have Central States Health and Welfare; they pay $200 per month ($400 per couple) if they retire over age 55.

February 27, 2009: The Baltimore Local 355 pension is no longer frozen, thanks to hundreds of working Teamsters who took action and demanded improvement.

But Local 355 officials have raised benefits only a fraction of the former amount—and added a penalty for Teamsters who retire early.

On Feb. 18, the Local 355 pension fund trustees announced they are re-instating a modest pension accrual, effective March 1, 2009 through the end of the year.

Last year, Local 355 pension trustees cut the accrual rate to zero and froze the Baltimore pension. That means Baltimore Teamsters earned zero toward their retirement for their past year of work.

Over the past year, hundreds of Baltimore Teamsters signed petitions, passed out flyers and spoke up at union meetings demanding an end to the freeze. Their voices have been heard.

Freeze Over, Deep Cuts Remain

For UPS Teamsters, the new accrual rate is $61.56, for a three-quarter year period. Compare that to the accrual rate before the cut, $191 a year—that’s a 57 percent cut.

The new accrual rate is even lower for Teamsters at U.S. Foods and other companies with lower contribution rates in the fund.

Worse, the trustees have added a new penalty for early retirement.

Currently, UPS Teamsters can retire at age 50. Under the new plan, UPS Teamsters who retire early will take a cut of half a percent for every month prior to age 55. This penalty only applies to pension accrued after March 1, 2009.

That means a Teamster retiring at age 50 under the new plan will lose a 30 percent penalty on all pension accrued after March 1 of this year. Just for this year’s accrual alone, that’s a $221 cut every year, for life.

“My biggest fear is that, over time, this new system will effectively eliminate early retirement,” said Kenny Walker, a Local 355 package car driver. “Many older drivers have enough pension accrued to retire with a decent pension at age 50. But what about younger members?

“Our local needs a plan to raise the accrual and drop the penalty so that younger members can retire with a decent pension at a reasonable age, too. If they have a plan to do that, they haven’t mentioned it.”

Taylor Admits Mistakes

At the union meeting in January, Local 355 principal officer Denis Taylor admitted that he made a mistake, when the local pension fund cut members accrual rate to zero last year.

Taylor said that the cuts had failed to fix the problem with the pension. And he complained that many employers were angry at him for cutting their employees’ pension.

Members Mobilized For Improvement

When the cuts were first announced, members mobilized.

Hundreds of members signed a petition demanding a Pension Bill of Rights and the right to earn money toward their pension for their work.

Members organized a rank-and-file group, 355 Members United, to coordinate their fight. They launched a website and spread out over the local to push for an end to the pension freeze.

“The members of Local 355 worked hard to beat this cut, and they deserve the credit for this change,” said Ron Reinhardt, a steward at UPS. “We’ve won a battle, but the war isn’t over. We’re going to keep building 355 Members United and fight for a decent pension.”

Chipping Away at Early Retirement

“My biggest fear is that, over time, this new system will effectively eliminate early retirement.

“Our local needs a plan to raise the accrual and drop the penalty so that younger members can retire with a decent pension at a reasonable age.”
Kenny Walker, UPS
Local 355, Baltimore

Members Get the Credit

“The members of Local 355 worked hard to beat this cut, and they deserve the credit for this change.

“We’ve won a battle, but the war isn’t over. We’re going to keep building 355 Members United and fight for a decent pension.”
Ron Reinhardt, UPS
Local 355, Baltimore

What do you think? Click here to send a comment or question to Teamsters for a Democratic Union.