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.

February 13, 2009: Last month UPS dramatically raised the cost of retiree healthcare. Now UPS will have to explain their actions before a judge.

Yesterday, a judge in the U.S. District Court for Northern Illinois set a hearing for March 9. UPS will have to explain to a judge how their midcontract hike in retiree healthcare contributions didn't violate the contract or the law.

In January, UPS management suddenly raised the monthly health and welfare contribution for Local 705 UPS retirees from $50 to $157.58 for a single retiree and $315.17 for a retiree and spouse.

The Local 705 contract with UPS states that “if required, additional contributions would not be implemented until after the expiration of the current collective bargaining agreement.” The agreement runs until 2013.

Local 705 and retirees took action. Members filed a class action lawsuit and bombarded UPS management with letters of complaint. Now they will get their day in court.

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

Stay in the loop about pension and benefits. Click here to sign up for email updates from TDU.org.

January 30, 2009: Chicago Local 705 UPS retirees are mad as hell, and they’re doing something about it.

They’re mad because UPS management suddenly raised their monthly health and welfare contribution from $50 to $157.58 for a single retiree and $315.17 for a retiree and spouse.

Today Local 705 and two retirees filed a class action suit in federal court against UPS, and reportedly they are considering other actions as well. (A copy of the complaint is available, and may be accessed below.) UPS retirees received a letter this week from Local 705 secretary treasurer Steve Pocztowski, who states in it that UPS “claims to be a people-oriented company but has decided to do the unthinkable, raise your monthly insurance premiums.”

Retirees say this big premium hike was unexpected, because the Local 705 contract with UPS states that “if required, additional contributions would not be implemented until after the expiration of the current collective bargaining agreement.” The agreement runs until 2013. That’s a good contract clause, especially in this era of long Teamster contracts.

Iggy Green, a retiree and plaintiff in the lawsuit stated, “It’s shameful. UPS didn’t raise the issue during contract negotiations and then sent a letter raising the rates. That’s just not right. They need to live by the contract. I’m working with Local 705 to make sure this gets fixed.”

Teamster retirees in many areas of the country have seen their retirement benefits limited and their health premiums raised. Maybe UPS management felt the Local 705 Teamsters would take it lying down, or would abandoned their retired brothers and sisters. If so, they were wrong.

Every Teamster struggle to protect pensions and affordable health care is important for all Teamsters. We should all stand with the Chicago UPS retirees in their fight.

Click here for a copy of Local 705’s letter to retirees

Click here for a copy of the complaint in the lawsuit Green v UPS Health and Welfare.

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

January 6, 2009: In December, Congress passed a new law to help multi-employer pension plans ride out the financial crisis.

Most Teamster pension plans were hit hard by the meltdown on Wall Street. Teamster leaders and members demanded relief.

The Worker, Retiree, and Employer Recovery Act of 2008 loosens some of the strictest requirements of the Pension Protection Act and may prevent new cuts. But it gives no relief for Teamster members who are already dealing with cuts.

What’s changed, and what’s stayed the same? Teamsters for a Democratic Union consulted with pension experts to answer these questions.

What does the new law passed last month do?

The goal of the new law is to provide temporary relief to pension funds that are struggling to meet the funding requirements of the Pension Protection Act (PPA).

When the PPA went into affect on Jan. 1, 2008, many pension experts warned that its requirements were too strict—and that was before the meltdown on Wall Street.

The new law amends the PPA to loosen two restrictions:

• Funds can “freeze” their funding status from the previous year.
• Funds can extend their funding improvement plan by three years.

Under the PPA, pension funds must certify their funding level in three categories.

A fund is in the Green Zone if it is funded above 80 percent.

A fund in the Yellow Zone, or endangered status, is less than 80 percent funded.

The Red Zone, or critical status, means that the fund is seriously under-funded and also has a short-term credit balance deficiency (a technical calculation that indicates a more short-term problem than the funding level). Being under 65 percent funded will not automatically place a fund in the Red Zone.

The new changes means that a fund that was in the Green Zone last year can stay in the Green Zone even if its funding level has dropped below 80 percent.

What does a fund have to do if it’s in the Yellow or the Red Zone?

If a plan is in the Yellow or Red Zone, the plan trustees must approve a funding improvement plan to get the funding level up to 80 percent.

An improvement plan can include increasing employer contributions and decreasing future pension accruals.

Under the PPA, funds had ten to 15 years to get above 80 percent. The new law gives these funds three extra years to get to 80 percent.

Will the new law mean an end to some of the cuts that were made?

No. The purpose of this change is to give funds an extra year to make up their losses from 2008—not to end pension cuts that are already in place.

In 2008, some funds, like the Local 355 pension fund, cut benefits in order to stay in the Green Zone. These funds can stay in the Green Zone for an additional year—and the trustees of these funds can vote to eliminate the pension cuts at any time.

When will I know if my fund is making any changes this year?

Funds have until 120 days after the start of their plan year to announce their funding status. Most plans start their plan year on Jan. 1.

We expect most funds to keep their funding status from last year.

How can I find out more about how my fund is doing?

Each year, your pension fund must release a Form 5500 document that shows its assets, liabilities, and funding level. You have the right to request this document from your pension fund.

TDU members lobbied for and won access to new information from our funds under the PPA, including actuarial reports, financial reports from investment managers and fiduciaries, and certain other information.

The PPA gives members access to this information to encourage members and retirees to watch dog our funds. TDU members have already obtained this information for many Teamster funds. Contact TDU to help gain access to the information from your fund.

Are more changes needed?

The freeze in funding status in the new law only applies for one year. Funds will need additional protection if the recovery is as slow as many economists predict.

Congress spent $700 billion to bail out Wall Street. None of that money went to help protect the pension funds that provide benefits for millions of workers and their families. Teamster members still need change to restore the cuts made after 9/11.

Change is most likely to come when Teamsters members are organized and speak out. You can help by joining TDU and getting involved in our work to protect our pensions. Call or email TDU to find out how you can help.

Do you have a question about how the new pension law will affect your fund? Click here to send your question to TDU and an organizer will contact you.

Stay in the loop about pension and benefits issues. Click here to sign up for updates from Teamsters for a Democratic Union.

December 11, 2008: The Central States Pension Fund has lost $9.8 billion in assets during 2008, according to a report from CSPF Director Thomas Nyhan.

As of Nov. 30, 2008, the fund’s assets were $17 billion. That is $4 billion down from the Sept. 30, 2008 figure, which we published in November.

Nyhan notes that the fund has lost 32 percent on its investment portfolio during 2008. Most pension funds, along with 401(k)s and other accounts that hold stocks and bonds, have lost similar percentages.

In the Winter edition of the fund’s Teamwork newsletter, Nyhan indicates that participants should “keep a long term perspective” and that history teaches us that the “financial markets will recover and investment values will return.”

Central States is much more dependent on investment returns than on a steady stream of employer contributions. That’s because last December, the IBT leadership allowed UPS to exit the Central States Plan, and UPS Freight was organized but not brought into Teamster pension plans.

Congress has spending billions to bail out Wall Street—but they have not taken steps to protect our pensions. Now is time for the Teamsters and the whole labor movement to launch a campaign to protect the pensions that millions of American workers are counting on.

Teamsters for a Democratic Union (TDU) will be there to join and advance this movement.

Click here to read the text of Nyhan's memo to CSPF staff on the fund and the state of the economy and prospects for the future.

What do you think our union should do to protect our pensions? Click here to send a comment to Teamsters for a Democratic Union.

TDU has obtained the text of a memo from Thomas Nyhan about the effects of the fall in the financial markets and the status of the Central States pension fund.

Below is the text of that memo.

Thomas Nyhan 12/5/2008 2:05 PM

Over the last several weeks I have received numerous inquiries from Central States' employees as to the status of the Pension Fund and my views concerning the recent stock market meltdown. Here are my views.

It's been a little more than a month since the federal government approved its $700 billion economic stabilization package and began unveiling several programs intended to restore liquidity and confidence in our financial system. In recent weeks, this package has been supplemented by coordinated programs and policy actions around the globe. Despite expectations that these global initiatives ultimately will work, equity markets around the world have remained under severe pressure.

Think for a moment what we have witnessed just since September of this year alone: the government takeover of Freddie Mac and Fannie Mae; the collapse of several investment banking giants including Bear Stearns, Merrill Lynch, and Lehman Brothers; the collapse of AIG with the Federal Reserve bailing them out with an infusion approaching $185 billion; the collapse of banking giants Washington Mutual (acquired by JP Morgan) and Wachovia (acquired by Wells Fargo); the near collapse of Morgan Stanley, Goldman Sachs and Citigroup; the Dow ending its worst week on record (10/10/2008) followed by its worst day in 75 years on 10/13/2008. Add to the mix the fact that housing prices have dropped 10% YTD nationally and foreclosures are at record highs. The confluence of events pushed consumer confidence to its steepest decline on record in October putting the brakes on spending for everything from automobiles to holiday gifts. Now we are heading into a global recession with an US unemployment rate now at 6.7% and climbing. The recession is already taking a toll on our contributing employers and reducing the number of our Funds’ active participants as a result of layoffs and bankruptcies. Yellow Worldwide, currently our largest contributing employer representing almost 40% of the participants in the Pension Fund, has asked the IBT to grant across the board wage concessions without which it may not survive the recession. And the fate of our participating employers in the car haul industry may very well depend on whether Congress agrees to bail out the auto industry which itself is on the verge of collapse.

Fortunately, credit markets are beginning to slowly unfreeze. Unfortunately, the thawing process is taking much longer than many originally had anticipated as the effects of massive deleveraging (i.e. the forced selling of equities by hedge funds and investment banks to meet the cash demands related to customer withdrawals and margin calls from their lenders) and a global recession are severely depressing the markets. Since mid-September the equity markets have dropped unlike anytime since the Great Depression. Virtually every asset class other than U.S. Treasury bonds and notes has devalued dramatically. For example as of November 30, the year-to-date return for larger cap stocks was -37.7%, for small cap stocks was -38.2%, for international -48.2%, for emerging markets -57.7%, for real estate -49.0% and for core fixed income 1.45%.

The Pension Fund ended the month of November with a net asset balance of $17.0 billion, a decrease of $9.8 billion since the beginning of the year. This represents a year-to-date investment return of -32.0%. Of course we are not alone. All pension plans- corporate, public and multiemployer plans, 401(k) plans, and university endowments have witnessed similar historic declines in the value of their investments in a relatively brief span of time. CALPERS, the largest pension plan in the United States, experienced a 20% drop in assets in the last four weeks alone.

We are hopeful that the markets will rebound strongly as they have following all past market meltdowns. But while we can hope for the best we can not plan on it. We are currently working with a large consortium of pension plans, corporations and unions in an effort to secure legislative relief from the short term stress occasioned by the dramatic loss of assets and the annual funding requirements imposed by the Pension Protection Act. We are also working with the IRS in order to preserve our amortization extension which is endangered absent a near-term rebound in the market or regulatory relief. I am cautiously optimistic that both legislative and regulatory relief will be granted. What the markets hold for the immediate future is unclear.

Given new market realities and the resulting deterioration in our net asset base, we are beginning to closely examine all elements of our cost structure. For the time being, I have imposed a Fund-wide hiring freeze, and effective immediately all overtime must be approved in advance by Executive. Other items under consideration include the suspension of the recognition of employment anniversaries, a material reduction in the budget for the year-end holiday events, prospective modification of the educational reimbursement program and a review of the exempt employees’ year-end bonus program.

In making adjustments to our cost structure, our highest priority will be to ensure that Fund-wide resources continue being deployed to meet our participants’ current needs and to advance our long-term strategic priorities. Even as we make adjustments, we must maintain the highest quality work standards and continue fulfilling, with excellence, the important commitments we have made to our participants. We will have to make some tough decisions and trade-offs to strike a proper balance. We expect to share our plans with you as soon as they are finalized.

Thomas C. Nyhan
Executive Director
Central States Funds

December 4, 2008: John Moore is fighting to keep his company afloat. People no longer want to buy the gas-guzzlers sitting on his auto lot in Los Gatos, Calif., an upscale town that's home to several Silicon Valley pioneers. His sole supplier, General Motors (GM), is begging the government for aid. With sales down 35% over the past 12 months, the 59-year-old Moore, who as a teenager worked at the family-owned dealership, wonders if there will be a business to pass on to his son, Bret. Already, the recession has claimed 115 dealerships in the state, roughly 1 in 10.

November 19, 2008: The Central States Pension Fund suffered a loss of $2.6 billion in assets during the third quarter of 2008, according to fund documents obtained by TDU.

The CSPF lost a total of $5.6 billion in assets during the first nine months of 2008. Despite the record losses, the Fund did not report any plans for further cuts in their quarterly report.

But under new fund rules, more than one out of every three Teamsters who work under local contracts in the Central States will, for now at least, face benefit cuts. That is because their employers are not currently complying with the fund rule that require increased employer contributions.

Notes from the Reports

The Fund’s assets dropped from $26.8 billion to $21.2 billion during the first nine months of 2008, according to the fund’s Financial and Analytical Information Report. And the stock market tumbled even further in October.

These record loses are largely due to the stock market meltdown; CSPF had 66 percent of its assets in stocks, as of Sept. 30. Most of the assets are managed by Goldman Sachs or Northern Trust.

The CSPF has 94,000 active members, which is relatively steady since the loss of 44,000 UPS Teamsters last December. There are 212,000 retirees, which is also a stable number.

The fund pays $2.68 billion per year in benefits, up just two percent since a year ago.

Too Many Teamsters on “Default Schedule”

A troubling fact buried on page 5 of the Report is that 17,000 Teamsters are working under 550 local contracts where the employer is not in compliance with CPSF’s rule which requires employer contributions to increase eight percent each year.

This means these Teamsters are now under the “Default Schedule,” which provides much lower benefits to retirees. The figure was 18,000 three months ago, so little progress has been made so far in bringing these contracts into compliance with Central States' rules.

The fund projects an average investment return of eight percent over the long haul. With the present assets of $21.2 billion, that return rate, combined with employer contributions, will barely cover the $2.68 billion per year cost of benefits. So there is little margin for further losses.

Teamster members cannot afford to have more employers pull out of the fund, like Waste Management in Milwaukee last month.

Future Cuts?

Many Teamsters are understandably worried about their pensions, as well as their personal savings or 401(k) accounts. We can’t predict the future, but apparently no new cuts are currently planned by the Central States Fund.

The Quarterly Report of the Independent Special Counsel, which accompanies the financial report, indicates that the CSPF approved its Rehabilitation Plan in March, and does not indicate that any changes in benefits are planned.

They will probably ride out the recession and see where they stand at the other end.

Our union appoints half of the trustees of the CSPF, who are supposed to be the members’ representatives. They need to do a much better job of keeping members informed.

Our union also needs a pro-active agenda for strengthening the CSPF for the long haul—including organizing new and growing employers into the Fund. We missed a critical opportunity last year when the Hoffa leadership let UPS Freight keep 15,000 new Teamsters in a company plan.

With a new President and Congress, our union will be going all out to win passage of the Employee Free Choice Act, which would make it easier for workers to form a union.

Passing this legislation can help strengthen our Fund and secure our retirement—if it is part of a one-two punch that includes a plan to bring more members into Teamster pension plans.

Download the Quarterly Report of the Independent Special Counsel.

Download the Quarterly Financial and Analytical Information Report.

Stay in the loop. Click here to get pension updates from Teamsters for a Democratic Union.

November 14, 2008: The Western Conference of Teamsters Pension Fund has cut the pension accrual rate, effective Jan. 1, 2009, to 1.2 percent of employer contributions.

For 2008 the accrual rate was two percent for Teamsters with less than 20 years in the fund, and 2.65 percent for 20-plus years. So this is approximately a 50 percent cut in what each Teamster will add to their pension next year.

The Western Fund is well funded and is in the “Green Zone” under the Pension Protection Act (PPA) standards. This big cut was imposed because of the recent nose dive in the stock market.

TDU will obtain and make available documents that the fund must disclose because of requirements in the PPA, as soon as they are available.

November 14, 2008: The crisis on Wall Street has millions of Americans—and many Teamsters—worried about their retirement.

Multi-employer pension plans, like our Teamster funds, are still the safest bet for a secure retirement—in good times and bad.

For years, corporate America has been telling members they would be better off if they had all of their retirement in a personal 401(k) plan—instead of the pension plans that hundreds of thousands of Teamster families rely on.

Some pundits even proposed replacing Social Security with personal savings accounts.

Those arguments looked pretty tempting when markets were up.

Now they look really scary.

In the first ten months of 2008, the average 401(k) account has lost 18 to 23 percent of its value, according to the Wall Street Journal. That paper said 401(k)s may be “a failed experiment.”

Not on Your Own

Why are workers in a multi-employer plan better off than in a 401(k) or a company pension? Because they’re not on their own, and their pension is based on a “defined benefit,” not just the whims of the stock market.

Our Teamster pension plans have some important protections:

1. You have a defined benefit: you know what you get when you retire. And after you retire, that amount cannot be reduced.

2. The fund pools contributions from different Teamster employers. So you have more protection if your company goes out of business or declares bankruptcy.

3. You can keep building your pension even if you change your job by getting a job with another covered Teamster employer. Even if you don’t stay in the same pension fund, many Teamster funds have reciprocity agreements that let you count your years in both funds.

Changes Needed in Pension Leadership

Our pension plans are the best road to a secure retirement. But it’s no secret that some members are losing faith in our Teamster plans.

It’s no wonder that members lose faith in our plans when Teamster officials hide problems, keep them in the dark, and let the employers call the shots.

The answer is greater accountability, and Teamster leaders who don’t blindly follow the lead of the employers or Wall Street investment firms.

In New York, members of Local 804 won the right to have regular reports on their pension at every union meeting, after they were blindsided with pension cuts.

In Baltimore Local 355, members are pushing for a Pension Bill of Rights guaranteeing members the right to know what’s going on with their pension—and the right to have a say when changes are needed.

We need Teamster pension trustees who understand that their job is not to keep the costs down for employers, but to fight to protect Teamster benefits.

Pension Divide at UPS

At the beginning of the year, UPS pulled 44,000 Teamsters out of the Central States Pension Fund.

The new UPS-only pension plan did restore early retirement for UPS Teamsters in Central States—but there was a hidden cost.

By 2013, the accrual rate for the new plan will be lower than almost every other UPS Teamster pension plan. Unlike other Teamster plans, in the new UPS plan, the company doesn’t have to make fixed contributions for each employee. UPS management will get to pocket the savings from lower benefits.

Worse yet, the pull-out divided our members and weakened the Central States Fund. It traded away the large and growing contribution from UPS to the fund for a one time payment of $6 billion.

New Corporate Attacks

Now other companies want the same deal UPS got.

That’s why Waste Management sent in their strike-breaking “Green Team” to Milwaukee this fall.

Their goal was to get Local 200 waste Teamsters out of the Central States Pension Fund and into a 401(k) plan. Local 200 Teamsters stood strong on the picket line for a month.

The International threatened to expand picket lines to other WM cities, but they never did, and the company forced members into an inferior 401(k) plan.

The International Union did not use Teamster Power on a national scale against a giant corporation to protect Teamster pensions.

Turn It Around

This is not an easy time to defend our pension plans. But we cannot back down and give up what Teamsters fought to win in earlier tough times.

Turning our pensions around will take the work of thousands of Teamsters working together.

TDU members are helping to build that movement. And you can help.

Get the facts on your plan. TDU and the Pension Rights Center won language in the Pension Protection Act that gives you new rights to get plan documents and actuary reports from your pension plan.

Contact TDU to see if members have already obtained the documents for your plan, or to get a sample letter you can send to your fund.

Keep other members informed. It’s harder for management to play games with our retirement when members are watching. You can help keep members informed by distributing Convoy or by holding a pension information meeting in your area.

Planning for the Future

“Pulling out UPS from Central States is now looking like a really bad idea.

“Give up $600 million a year of sure money for a $6 billion buy-out? If my math is right, the Hoffa administration traded away our retirement security for only ten years worth of what used to be a sure thing.

“Our union leaders are supposed to look ahead to problems down the road. Now it’s up to members like us to keep an eye on how our fund is doing—and look out for our long-term retirement security.”

David Manolis, UPS Local 391, North Carolina

A Pension Bill of Rights

“In Baltimore, we were blindsided when our officials announced that our accrual was being cut to zero.

“For years our officials told us that they were taking care of our fund. Now we know we can’t count on their word.

“That’s why we’re pushing for a Pension Bill of Rights. Members have the right to know how our fund is doing—and to have a say when changes are needed.”

Gary Payne, UPS Local 355, Baltimore