Uproar Wins Changes to Pension Cuts in New England
The new is not all good. The restrictions on 25-and-out and 30-and-out pensions before age 57 remain in place. New England Teamsters who did not have enough years of credit by July 31, 2005 will not be eligible for 25- or 30-and-out until age 57.
Unlike in the past, the changes did not include grandfathering provisions to protect Teamsters who were close to making their 25 or 30 years and were planning to retire soon. Members are calling for the fund trustees to grandfather existing negotiated promises. Teamsters who were close to qualifying under the old rules should have their contracts honored.
Change #1: No Punishment for Continuing to Work
Under the original changes, Teamsters with 25 years who continued working after July 31 would have their pension frozen until they reach age 57. Then, at 57, the pension would snap back to the full rate. A member who had to retire before 57 because of injury or the closure of their company would get no additional benefit for their extra time worked.
The Trustees have now eliminated this “Snap Back” provision. If, and only if, you had 25 years on July 31 and were eligible for a special service benefit, then you will continue to earn the additional $150 per year and be eligible to retire at any age.
Change #2: Honoring Promises in Existing Contracts
Under the original cuts, Teamsters would have suffered a reduction in their pension accrual if they were covered by contracts that did not include annual increases in their pension contributions of 5 percent. This would have meant pension cuts for many New England Teamsters covered under multi-year contracts that were negotiated before the pension rules were changed.
The Pension Fund Trustees have backed off of this unreasonable rule. Now, the Pension Fund will honor all existing contracts by maintaining the accrual rate. When these contracts expire, the new contracts must include increased pension contributions of 5 percent a year to maintain the accrual rate.
Pension Reform, Accountability Needed
Both of the reforms to the original cuts address problems that were first reported by TDU. It remains to be seen whether membership pressure can convince the Trustees to introduce stronger grandfathering provisions that will protect Teamsters who were planning to retire under the old rules.
Teamster members and officers won these improvements by putting pressure on the Pension Fund Trustees. This is an example of how our union trustees on the pension fund are indirectly accountable if we apply enough heat. What is really needed is direct accountability.
The New England pension cuts show the need for us to elect delegates to the 2006 Teamster Convention who will back reforms to the Teamster Constitution to hold benefit fund trustees directly accountable to Teamster members–and to support candidates for International office who will defend our pensions from attacks by the employers and corporate politicians.
CSPIC Members Lobby Congress About Pension Bill
On Aug. 25 a delegation of Teamster members traveled to Washington, D.C. to meet with congressional aides about pending pension legislation. The delegation included Tommy Burke, Kevin Wright, Frank Bryant (all from Local 391, North Carolina), Randy Brown, President of Local 728, Atlanta and Sandy Pope, President of New York Local 805. They met with aides from Senators Kennedy, Clinton, Enzi and Burr—all of whom are on the Senate committee which introduced the legislation in the Senate.
Pension Cuts Hit New England
July 27, 2005: The Union Trustees on the New England Teamsters Pension Fund have agreed to new pension restrictions—including eliminating 25-and-out and 30-and-out pensions before age 57.
The cuts are coming just as news of the fund’s strong financial performance is hitting members’ homes. The Fund just mailed its summary annual report to members this week, in which it reported that Fund assets grew by more than $121.5 million in the last fiscal year.
Members who do not have 25 years of credit by July 31, 2005, will not be eligible for 25- or 30-and-out until age 57. Members who do have 25 years of credited service, but are under age 57, are protected and can get their earned pension. But if they continue to work they will have their pension frozen until that age. So a Teamster who is 53 and 27 years credit, with a pension accrued of $2,300 per month, could work the next four years with zero pension improvement. Then, at 57, the pension will snap back to the full rate.
Pension accrual rates are also frozen. New contracts will have to increase pension contributions by 5% per year to maintain the present rate of accrual.
But the biggest cuts are in early retirement: the Trustees’ July 13 announcement states that the goal is to keep Teamsters working longer.
While most Teamsters don’t retire before 57 and will be hurt very little, many do retire early. Many are forced to because of company closures (including the Red Star victims) or health factors. These Teamsters are going to take the brunt of the cuts imposed.
Worst hit of all are those who fall short of 25 years. A Teamster with 24 years credit, at age 49, will not become eligible for any Special Service (25- or 30-year) pension for eight years, until age 57.
An announcement is expected to reach New England Teamsters any day with the details of the cuts.
New England Teamsters Hit with Pension Cuts
The changes were announced on July 15, just two weeks after the fund announced that its assets grew for the second straight year. In all, the fund’s assets have grown by more than $429 million in the last two years.
The pension cuts come despite James Hoffa’s promises after he negotiated the “Best Contract Ever” at UPS—as well as after freight and carhaul negotiations—that members’ pension benefits would be secure for the life of these agreements.
New England pension accrual rates are frozen. New contracts will have to increase pension contributions by 5 percent per year to maintain the present rate of accrual.
The biggest cuts are in early retirement. If you do not have enough years of credit by July 31, 2005, you will not be eligible for 25- or 30-and-out until age 57. Members who do have 25 or 30 years of credited service, but are under age 57, are protected from the cuts by federal law and can get their earned pension.
UPS and other employers wanted the fund to make even more drastic cuts to members’ benefits, but union trustees refused.
No Grandfathering Protections
Unlike in the past, the changes did not include grandfathering provisions to protect Teamsters who are close to making their 25 or 30 years and were planning to retire soon. Members were given just two weeks notice of the changes.
TDU has received numerous reports of members’ retirement plans being thrown into chaos by the changes.
“I had planned to retire in November 2005 once I made my 30 ‘good years’ after 36 years as a Teamster,” said Dan Faust, a ready-mix driver from Local 42 in Lynn, Mass.
“Now my retirement has been put off for two more years until I turn 57. What really shocked me is they did not grandfather us in as they’ve done in the past. It’s wrong and cold.”
There’s an additional catch that punishes Teamsters with 25 years who continue working. Beginning July 31, these Teamsters will have their pension frozen until they reach age 57. So a Teamster who is 53 with 27 years credit, with an accrued pension of $2,300 per month, could work the next four years with zero pension improvement. Then, at 57, the pension would snap back to the full rate. But a member who has to retire before 57 because of injury or the closure of their company would work extra time for no additional benefit.
Making Members Work Longer
The fund notice said openly that the goal was to get members to work longer.
“I’ve had some of the union trustees on the fund tell me you really shouldn’t be looking to retire that early,” said Jack Reardon, a UPS feeder driver and vice president of Local 170 in Worcester, Mass. “That’s what I expect to hear from the company. You try driving for 25 or 30 years and then be told you need to spend several more years behind the wheel. It’s not right.
“We used to say, ‘When I hit 30 years, you can retire me but you can’t fire me.’ Well that’s out the door,” Reardon said. “I’ll have to work 36 years to be 57. Members are asking, ‘What did we do to deserve this?’ ”
While most Teamsters don’t retire before age 57 and will be hurt very little, many do retire early. Others are forced to because of company closures (including the Red Star victims) or health factors. These Teamsters are going to take the brunt of the imposed cuts.
Other Teamsters hit by the cuts are members who sacrificed wage increases in recent contract negotiations in order to get pension contributions high enough to maintain eligibility for special service pensions—for which they won’t qualify under the new rules.
That’s just what happened to approximately 900 bakery drivers covered by a recently negotiated regional agreement with Interstate Bakeries Corporation. These members took a two-year freeze in their commission rate in order to stay eligible for 25- and 30-and-out pensions.
That contract promise has been broken. But these Teamster drivers are not getting back their commission increases.
Hoffa Pushes Pension Bill That Could Cut Your Benefits
The misnamed “Pension Protection Act” contains a dangerous provision that 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. Under current laws, these cuts are illegal. Only future pension accruals can be cut.
Not surprisingly, UPS management lobbied heavily for the bill’s passage (HR 2830). But the bill was also supported by the trustees on the Teamsters Central States Pension Plan. And James Hoffa himself hailed the bill as a “great first step.”
All 29 Republicans on the House Committee on Education and the Workforce supported the bill, introduced by Rep. John Boehner (R-Ohio), and all 22 Democrats refused to vote on the measure. The bill will be considered in other committees and by the Senate
Teamsters, take warning: this bill is dangerous. UPS management supports this bill because they want the Teamster Central States Pension Fund, and possibly other Teamsters funds, to be able to cut already-earned benefits.
If passed into law, the bill would reduce pension security for Teamster members—and all working families. That’s why the Pension Rights Center, the organization in Washington that protects and promotes the pension rights of American workers and retirees, opposes changes that allow cuts in earned pension credits.
Your Pension in Danger
The proposed bill would make it easier for a troubled multi-employer pension plan to go into “reorganization” status. Once a plan is in “reorganization” the trustees would be free to drastically cut benefits, even benefits already accrued.
If this happens, a Teamster with 30 credit years in Central States could possibly be told, “Sorry, your 30-and-out credits won’t work. You have work until you are 62 to get it.” Disability pensions could be cut, 25-and-out and 30-and-out benefits could be cut for working Teamsters and for those who are retired less than one year.
Only retirement benefits at “normal retirement age” would be legally protected. This is age 62 or 65 for most pension funds.
Employers, Hoffa Want More Power to Cut Your Pension
Under present law, these cuts are illegal.
UPS management wants that changed. So does the Hoffa administration. In a letter to all local leaders in February, IBT leaders complained that “Trustees are limited by ERISA and can only affect [cut] future accruals.” ERISA is the federal pension law that makes it illegal for pension plans to cut benefits that employees have already accrued.
Hoffa, sold his “Best Contract Ever” at UPS as well as the freight and carhaul agreements on the promise that our benefits would be protected. Now he is using your dues money to lobby Congress so Teamster plans can cut benefits that members have already earned! Hoffa’s own lucrative pension plan is unaffected by this proposal.
Why would the Hoffa administration do this? Because Hoffa and other top Teamster officials are intimidated by UPS management. UPS has told them either the company get pension cuts or they will try to pull out of the Teamster pension plans in the next contract.
Time to Fight Back, Not Give Up
Instead of caving in to the company’s threats three years before the next negotiations, our union leadership should be leading members in a fightback to protect our benefits. We should be lobbying Congress for pension reform that protects Teamster retirement security—not undermines it.
The IBT should be educating members about the threat that a UPS pullout would pose both to all Teamsters’ retirement security. Instead, the IBT has let UPS’s rumors and attacks on our pensions go unanswered.
Finally, the IBT should be mobilizing members to fight for adequate funding of our pension plans in the coming contracts. It may require some sacrifice such as reduced wage gains, but we can negotiate these increases.
In fact, on August 1 another sixty cents per hour will go into the Central States Pension Plan for UPS, freight, carhaul and certain other Teamsters. That increase alone will put nearly $100 million a year in new money into Central States. More of that can be done in the next contract.
What You Can Do
This is time for Teamsters to speak out. Write your Congressional reps and Senators. Urge them to oppose any pension bill that allows for cutbacks in earned benefits. Ask your union officers to do the same.
We also urge Teamster members to contact James Hoffa and tell him to use our dues money to fight to protect our benefits—not to lobby for legislation that will make it legal to cut pension benefits we have already earned.
Click here for a downloadable TDU Pension Cut update to distribute to fellow Teamsters
Central States Teamsters click here for a flyer from the Central States Pension Improvement Committee
Teamster Pension Funds Could Be Strengthened
June 6, 2005:It's no secret that United Parcel Service wants to pull all their employees out of Teamster pension funds. Like any corporation, they'd rather have unilateral control over their employees' pensions and convert them to 401(k) plans.
UPS took a step forward on that plan in May with the acquisition of Overnite. Now they have 10,000 less-than-truckload freight workers who are not in any Teamster plan, and they plan to grow that number as fast as they can.
Already outside our pension funds are at least half of UPS Teamster part timers. We can’t let this balance reach a tipping point: we need to bring Overnite workers into our funds now, and the rest of the part timers in 2008.
That’s why we have to organize UPS-Overnite, into our union and into our Teamster pension funds. Doing that would:
- Bring 10,000 new Teamster participants into our pension funds;
- Greatly improve pensions for Overnite workers and their families;
- Provide strong protection against a UPS pull-out from the funds; and
- Strengthen our funds by improving the ratio of active Teamsters to retirees.
UPS management is not to going to volunteer to pay better pensions to UPS-Overnite workers. Certainly they’re not going to be eager to strengthen our Teamster funds when management’s plan is to bust out of those funds.
UPS management has a three-point plan to undermine Teamster retirement security. Part one is a legislative attack. Part two is a campaign to soften up Teamsters with false promises of wonderful pensions from the company. Part three is taking advantage of the IBT failed leadership on pension issues.
The IBT needs a plan, too. A campaign to organize Overnite and bring those members into the Teamster benefit funds is a good place to start.
If UPS Ran Your Pension, You Would Lose $1,000 a Month!
$2,394 per month after 30 years of full time service: That is what UPS management would pay you for a pension, according to calculations performed by TDU. The calculation was based on UPS Senior Vice President John McDevitt’s testimony last year to Congress.
That’s about $1,000 per month less than Teamster plans provide.
What this means: If the same amount that UPS contributed into the Teamster pension plans since 1974 had gone into a 401(k) plan instead, and earned 7.5% a year, you would have an inferior pension today.
We calculated this figure by using the amount UPS paid into the pension fund each year since 1974 for a full timer who worked every day.
We used McDevitt’s own figure of 7.5% annual rate of return and UPS’ conversion formula from a lump sum to a monthly pension.
The calculations can be provided by TDU to interested members.
Central States Spin
Of course spun information is better than none at all. Thanks to member pressure over the last two years, the fund is finally releasing more information to members. Its important for Teamsters to keep informed and learn more about what’s going on with our pension and health and welfare contributions.
Click Here to See the Letter for Yourself
New England Fund Reverses Some Cuts
The new is not all good. The restrictions on 25-and-out and 30-and-out pensions before age 57 remain in place. New England Teamsters who did not have enough years of credit by July 31, 2005 will not be eligible for 25- or 30-and-out until age 57. Unlike in the past, the changes did not include grandfathering provisions to protect Teamsters who were close to making their 25 or 30 years and were planning to retire soon. Members are calling for the fund trustees to grandfather existing negotiated promises. Teamsters who were close to qualifying under the old rules should have their contracts honored.
Change #1: No Punishment for Continuing to Work
Under the original changes, Teamsters with 25 years who continued working after July 31 would have their pension frozen until they reach age 57. Then, at 57, the pension would snap back to the full rate. A member who had to retire before 57 because of injury or the closure of their company would get no additional benefit for their extra time worked.
The Trustees have now eliminated this “Snap Back” provision. If, and only if, you had 25 years on July 31 and were eligible for a special service benefit, then you will continue to earn the additional $150 per year and be eligible to retire at any age.
Change #2: Honoring Promises in Existing Contracts
Under the original cuts, Teamsters would have suffered a reduction in their pension accrual if they were covered by contracts that did not include annual increases in their pension contributions of 5 percent. This would have meant pension cuts for many New England Teamsters covered under multi-year contracts that were negotiated before the pension rules were changed.
The Pension Fund Trustees have backed off of this unreasonable rule. Now, the Pension Fund will honor all existing contracts by maintaining the accrual rate. When these contracts expire, the new contracts must include increased pension contributions of 5 percent a year to maintain the accrual rate.
Pension Reform, Accountability Needed
Both of the reforms to the original cuts address problems that were first reported by TDU. It remains to be seen whether membership pressure can convince the Trustees to introduce stronger grandfathering provisions that will protect Teamsters who were planning to retire under the old rules.
Teamster members and officers won these improvements by putting pressure on the Pension Fund Trustees. This is an example of how our union trustees on the pension fund are indirectly accountable if we apply enough heat. What is really needed is direct accountability.
The New England pension cuts show the need for us to elect delegates to the 2006 Teamster Convention who will back reforms to the Teamster Constitution to hold benefit fund trustees directly accountable to Teamster members–and to support candidates for International office who will defend our pensions from attacks by the employers and corporate politicians.
Official Testifies that IBT Approved Mid-Contract Concession in New England
February 17, 2005: Boston Local 25 President Ritchie Reardon told Joint Council 10 that the IBT Parcel Division approved a mid-contract giveback to UPS that violates language in the New England supplement. Reardon’s statement was part of his testimony in a hearing on internal union charges over the concession. The testimony marks the first time that anyone has put on the record that the IBT approved the contract concession. Reardon said the approval was not issued in writing.
Sunday to Thursday Without Premium Pay
Local 25 negotiated a side agreement with UPS management, after the company threatened to move some jobs, that allowed the company to establish a Sunday to Thursday workweek with no premium pay for Sundays. The New England supplement recognizes only a Monday to Friday or a Tuesday to Saturday workweek. The UPS contract requires that all mid-contract agreements be approved by the Joint National Negotiating Committee.
The giveback quickly spread to locals 42, 191, 340 and 671.
Other local unions voted the giveback down or refused to hold a vote—even though UPS threatened some locals that they would lose work if they did so.
Members have argued that the change to the regional supplement should have been put to a regional vote—rather than allowing UPS to pit local against local for the best deal.
The impact of this giveback continues to be felt. Recently UPS management at the Worcester hub posted a notice stating that the a.m. sort would be shut down and that the volume would be “moved to other hubs.” Worcester Local 170 was one of the locals that resisted the side agreement.
If the IBT and all New England locals had stayed united it would be impossible for management to pit members against each other in this manner.
Lawsuit Dismissed
A lawsuit filed by members to reverse the concession was dismissed on a technicality Jan. 13. The judge hearing the case ruled that the suit needed to be filed within six months of the change at Local 25, rather than within six months of the date that Local 25 refused to process members’ grievance against the change.
According to Local 25 member David Whitney, the New England Supplement Protection Committee will continue pursuing the issue through charges that are under investigation at the National Labor Relations Board. Also, internal union charges have been filed against officials of all the local unions that made the change without a proper vote of the members
Federal Judge to Central States Trustees: Open More Info to Members!
January 28, 2005: On December 9 Judge James B Moran directed the trustees of the Teamster Central States Pension Fund to turn more documents over to participants in the fund. The decision expands an October 21 victory won by Teamster members in Locals 638, 391 and 20.
Central States has now been ordered to reveal quarterly reports, along with financial and actuarial supplementary attachments, from August of 2000 up till the present, and into the future. The information will help members see just what should have been done, and what can be done now, and who is responsible for the drastic cuts the trustees imposed on members and retirees.
“It’s a great victory. Hopefully when we get these documents we can get an expert evaluation of the situation,” commented Tommy Burke, a UPS driver in Local 391 who is one of the intervenors in court. “I want to thank our attorney, Paul Levy, for his good work.”
The trustees are apparently considering whether to appeal, to try to continue to hide from the Teamster membership.
Teamster Website False
The Teamster website, in a “Central States Update” contains false information on the situation. First, it states the court only ordered that two reports be revealed. The truth is that the court ordered that many reports be turned over, along with additional separate financial attachments. Central States is stalling on many of them. Second, the International claims that Public Citizen Litigation Group took the action; in truth, Public Citizen represents Teamster members who are long time fund participants. Third, the International says the reports contain “little new information.” This statement is interesting, and was immediately reported to Judge Moran by the members’ attorney, because in court the International’s trustees claim the exact opposite: that vital secret information will be revealed. The same false statements are posted on the Central States site.
TDU, the Central States Pension Improvement Committee and concerned members and local officers will continue the fight for pension justice. This is one more victory in a long march toward that goal.