Pension Legislation Loss

August 9, 2006. Late in the evening of August 3, the U.S. Senate voted to approve a piece of pension legislation which contains much of the “Red Zone” cut-back language that rank and file Teamsters have fought hard to get removed from the bill. President Bush is expected to sign it.

Thanks to rank and file action, a portion of the red zone was cut that would have let funds cut benefits of members who had already retired. Certain other restrictions were also included, thanks to an extensive rank and file effort over the past year.

The IBT’s PR machine was ready with a press release denouncing the bill and congress. "Congress has failed the American worker," trumpeted James P. Hoffa.

Congress should be blamed for opening the door to possible cuts in earned benefits in certain troubled pension plans, but the role (or lack thereof) played by the Hoffa administration makes them co-responsible for this defeat.

Rank and file Teamsters, officers and Leedham Slate candidates traveled to Washington D.C. three times, on their own dime, to meet with congress about the red zone. They organized a petition drive that sent thousands of letters and petition signatures to members of the conference committee. They got media coverage in the New York Times, Wall Street Journal, ABC News and numerous media outlets. They passed motions at union meetings. And they got the Senate to remove the red zone entirely when the Senate voted on it in November of last year.

Let’s look at how Hoffa compared to the grassroots effort:

• Hoffa supported the bill, and the red zone measure, starting during hearings in the House, through the House vote in June 2005 and after that. In fact congressional staffers reported in May 2006 that in their last contact with the IBT’s lobbyists, they were avidly supporting the red zone cuts.

• After rank and file delegates traveled to Washington, and the Leedham Campaign took up the red zone issue, Hoffa announced in late 2005 that he was reversing himself. Still, the IBT took no action.

• In 2005 and 2006 Hoffa did not mobilize the vast resources of the IBT to send Teamster delegations to DC to lobby against the bill, or to circulate petitions against the cutback provisions or to get media coverage on the issue. The Teamster legislative department delivered zero results.

“Then at the very end, when all was said and done,” Local 391 retiree Frank Bryant pointed out, “Hoffa did some robo-calling to stewards and members. I’ve seen what is involved when a union really lobbies over an issue, and this is no where near what has to be done. It’s just another PR stunt, while member rights are on the line.”

UPS won critical new leverage in their campaign to take over our pension funds when the House and Senate passed the misnamed Pension Protection Act. The Act includes UPS’s baby, the “Red Zone” amendment, which legalizes cutting pension benefits that employees have already earned.

The New York Times called UPS “another of the bill’s winners”. The Times reported that, “U.P.S. had been eager to increase its control over such troubled plans as the Teamsters’ Central States Pension Fund. The pension measures could have that effect in the next few months, when U.P.S. will begin contract negotiations with the Teamsters.”

July 17, 2006: The big health care cuts that the Hoffa administration just slapped on Michigan freight Teamsters will spread to freight, UPS and carhaul Teamsters throughout the Central and Southern Regions.

The Central States trustees are staying quiet about the cuts until after the election for International officers. Then the “surprise attack” will come down.

For the third year in a row, the contractual August 60 cents per hour increase in employer contributions in the freight, UPS and carhaul contracts has been diverted from health and welfare benefits to the Central States Pension Fund, at the request of the employers.

Central States Health and Welfare has balanced the books for the past two years by taking health coverage from retirees. But now they will have to come after working Teamsters.

Many UPS Teamsters have company-provided health and welfare, but the company sets the benefit level by matching Central States benefits, so the cuts will hit them as well.

July 17, 2006: In May, a delegation of Teamster local officers and members, some of them pictured above, converged on Washington to meet with Congressional reps about dangers for Teamsters in pending pension legislation. In particular they were on Capitol Hill to deliver a message: the Red Zone Amendment, which would allow pension funds to cut benefits already earned, must go.

“The Bible says ‘confront the devil and he will flee from you,’” North Carolina retiree Frank Bryant said of the delegation’s meetings with senators and staffers. “Well, we are confronting the Red Zone and will keep doing so until it is swept out of this legislation.”

Congress has been working for over a year to adopt pension reform legislation. There are a number of negative provisions in the bill. The Red Zone Amendment would let pension funds cut earned, early retirement benefits if funding levels fall below a certain level.

The International Union at first supported the Red Zone Amendment, but shifted gears after a grassroots campaign was launched, and the recent IBT Convention passed a resolution against it. But the International hasn’t done anything to stop it, so members and locals have taken on the hard battle themselves, combating UPS management on the issue. Petitions with thousands of signatures have been delivered to key senators and representatives by pension activists like Bryant, Local 1035 Principal Officer Chris Roos, and many others across the country. Currently, the pension bill is still before a Conference Committee of senators and Congressional reps.

“The average worker is paying more and more of the cost of doing business and the corporations are getting more of the cream,” Frank Bryant said. “To add insult to injury, they try to take away the benefits we have earned. This is a fight for all workers.”

The Michigan Fund reported that the Hoffa freight leadership diverted money from health coverage over “emphatic objections” of the health plan. For the third year in a row, all contractual health and welfare increases in employer contributions under the NMFA were diverted from health to the Central States Pension Fund.

Medical Cuts

Cuts include basic medical going from 100 percent coverage in network to 80 percent; annual out-of-pocket maximum jumps to $750 per individual and $1,500 per family in network, while out of network will be $1,500 and $3,000. Co-pays are increased; outpatient cancer rider is eliminated; weekly accident and sickness benefits and death benefits reduced; and numerous other cuts will increase expenses to affected Teamsters. The Fund has set up a two-tier arrangement, with freight going down to a new “TIF 2” level, while others will remain at “TIF 1.”

Hoffa asserts that he has the right to change the NMFA without a vote of the affected members, and has done that to divert contractual money from health to pension for three straight years. The Central States Health and Welfare Fund has dealt with this diversion by serious cuts, essentially killing retiree health care. A 56-year-old Teamster retiring with 30-and-out on Central States Health and Welfare now must pay $1,220 per month for medical coverage for the Teamster and spouse.

The diversion by the Hoffa administration hurts 2,000 Michigan cartage Teamsters and also may eventually hurt the 900 freight Teamsters in the Wisconsin Health Fund. Milwaukee Local 200 has held educational meetings with affected members and retirees and has taken a vote on what members think should be done with the 60 cents per hour increase in employer contributions due on Aug. 1. The Wisconsin Fund could maintain benefits if the 60 cents would at least be split between health and pension. The Central States employers want all of it diverted to the pension fund to reduce the employers’ unfunded liability.

Teamster members are taking action now to protect our pensions from dangerous proposed legislation that makes it easier for multi-employer plans to cut retirement benefits.

Your urgent action is needed to contact the leaders of the Senate’s Health Education Labor and Pensions (HELP) Committee — and your Congressional Reps and Senators — to ask them to stand up for our retirement security.

he Red Zone Amendment to the Pension Protection Act would allow troubled pension plans to cut benefits that members have already accrued—and even cut the benefits of Teamsters who have already retired for less than one year.

The Pension Protection Act contains many positive provisions. It is supported by the IBT leadership, as well as UPS. But the dangerous Red Zone Amendment was added at the last minute to the House version of the bill (HR2830). This bill will now be considered by the U.S. Senate. The Act should be passed, but without this amendment.

TDU urges you to contact the Chairman and Ranking Democrat of the Senate HELP Committee to urge them to pass the bill without the Red Zone Amendment.

You can also contact your Senators by email or phone. All the information you need is just a click away.

The Red Zone Amendment threatens guarantees that have protected millions of workers from pension cuts. The anti-cutback provisions of ERISA make it illegal to cut benefits that employees have already accrued. Only future pension accruals can be cut.

We know that once a past gain is given away, it is hard to restore it. Help keep the anti-cutback provisions in ERISA. Tell Congress to pass the pension act without the Red Zone Amendment.

Click Here: to take action to protect your pension by emailing the leaders of the Senate HELP Committee.

Click Here: to download a sample fax to Senator Enzi

Click Here: to download a sample fax to Senator Kennedy

After you contact the leaders of the Senate’s HELP Committee, click below to find out how to contact the senators from your home state.

Click Here: to find out how to contact the senators from your state

The Western Conference Pension Fund has announced a big cut in pension accruals, effective July 1. This cut, if it stands, will seriously diminish pensions of those who retire in the coming years. (By law the fund cannot decrease pension credits already earned.)

Teamsters in the West have formed the Western Teamsters Pension Improvement Committee (WESTPIC) and are calling on the trustees to rescind the cut.

The trustees are insisting that they must have “full funding.” Below are answers to some questions on that issue. For more information, webmaster [at] tdu.org (contact TDU).

Why were our pension benefits cut so drastically?

After several years of record growth, the stock market has been in a cyclical downturn.

As the cycle plays itself out the market will rebound. But, in the meantime, the trustees had to choose between keeping the pension fully funded or maintaining our benefits at the historic minimum level set in 1987 (2 percent per year and 2.65 percent for members with over 20 years in the fund).

The employer trustees wanted to maintain full funding and cut our benefits. Our union trustees gave in to the employers. Thus the drastic cuts.

Don’t I want my pension to be fully funded?

“Fully funded” has a reassuring ring to it. But it’s important to understand what full funding is and who it serves.

Full funding means that if every single employer in the fund were to simultaneously go out of business, the fund would still have enough money to pay every Teamster their vested benefits.

But it is absurd to imagine that would ever happen.

That’s why other Teamster pension funds can and do responsibly assure members’ benefits with funding levels of 75, 80 or 90 percent.

Is there a downside to full funding?

Yes. Because employers want full funding, our pension benefits are being slashed!

Trustees take cyclical market swings into account in their plans. But instead of riding out the latest dip in the market, the trustees have cut our pensions, in the name of full funding.

The market will recover, but our pensions won’t. We will never make up the money we will lose while our accrual rate is slahed.

Concerned?

contact [at] nopensioncuts.org (Contact WESTPIC) at PMB #313, 10611 Canyon Rd. East, Puyallup,Wash. 98373 or at www.nopensioncuts.org. Or webmaster [at] tdu.org (contact TDU) for more information or materials.

This will mean earlier retirement and larger monthly checks for many Teamsters who have worked as both part-timers and full-timers at UPS.

Agreement Broken

Central States and the UPS Pension Plan have long had a reciprocity agreement that let members combine years worked in both plans when calculating their retirement benefit.

For example, if a member had 10 credited years as a part-timer in the UPS Plan and 20 credited years as a full-timer in Central States, they could retire with a pro-rated 30-and-out benefit.

The 2002 UPS contract provided that members would be given a full year of pension credit in the UPS Pension Plan for any year in which they had worked over 750 hours as a part-time employee, nine-months credit if they worked between 501 and 749 hours, and three-months credit if they worked between 375 and 500 hours in the year. An age-25 requirement for earning pension credit was also eliminated.

The UPS Pension Plan lived up to this part of the agreement, but the employer and union trustees at Central States refused. Central States said they would not credit members for their part-time years unless the UPS Plan went back to calculating benefits the old way. In other words, they wanted UPS to violate the 2002 contract.

UPS Teamsters who wanted to retire got caught in the crossfire between Central States and UPS. When they would write to ask for an estimate of benefits, instead they would get letters from both sides pointing the finger at one another.

Member Pressure Wins

Some of these Teamsters contacted the Central States Pension Improvement Committee (CSPIC) and TDU.

TDU and CSPIC included these members’ concerns in our movement for pension justice. The publicity generated by TDU and CSPIC - and the threat of legal action - increased the pressure on Central States to settle the matter.

Kevin Bowman, who retired from Cincinnati Local 100 in February, took a leading role in the campaign to get Central States to respect the reciprocity agreement.

Bowman started as a part-timer at UPS when he was 17 years old. He kept at Central States to give him straight answers and pursued his appeals as high as he could with the Central States trustees. He also called on the IBT to intervene and help enforce the contract.

Because of his good work and that of other Teamsters in the pension movement, Bowman will be receiving a big hike in his monthly pension check.

Before the change, his monthly pension check was $2,000. With it, he will now get just under $2,500 a month. Central States also gave him a one-time $2,875 check to cover what they owed him for the months since he retired.

“If it had not been for TDU helping a guy like me make a lot of noise this would not have happened,” says Bowman. “It shows that people going to meetings, throwing money in a bucket, and working together can make a difference.”

Many other UPS Teamsters and their families will also benefit from this win.

“My husband and I fought Central States for almost a year to get the benefits they owe him” says Brenda Kelley, wife of Lexington Local 651 member Jim Kelley. “We filed all our appeals with Central States and even consulted an attorney. But it took getting involved with TDU to win this change. Jim is now looking forward to retirement.”

Central States Teamsters need to bring the same kind of unity and pressure to bear on Central States and the IBT to win back the benefits that were taken from us last November.