Treasury rejects plan to cut Teamsters' pensions
Milwaukee Journal Sentinel 5:03 p.m. CDT May 6, 2016
(Photo: Roy Henderson, Getty Images/iStockphoto)
The U.S. Treasury Department rejected a plan Friday that would have slashed pensions promised to more than 200,000 Teamsters.
The decision deals a victory to retired truck drivers, dockworkers and others who furiously battled against the cuts, which, in many cases, would have sliced promised pensions by more than half.
"I am so proud of these retirees for standing up for themselves," said Mary Packett, executive director of the Iowa-Nebraska Committee to Protect Pensions. "I am so proud of these people who never should have had to have this fight in the first place. Somebody listened."
In Iowa, 6,700 retirees would have faced cuts proposed by the Central States Pension Fund. The fund has $17.3 billion in net assets and covers more than 250 local union shops. But it has been paying out about $3.50 for every $1 taken in and stands to go bankrupt within 10 to 15 years.
Packett, whose 76-year-old father in Paullina, Iowa, would have lost about one-third of his pension, said Friday's decision was just the first of many battles. Left unresolved, and looming, is the financially precarious position of the Central States Pension Fund, which is unsustainable in its current form and is headed for insolvency.
All the same, the rejection of Central States’ request to make cuts — reductions that would be unprecedented in a plan that still has money — buys time for the retirees and their allies.
That offers them at least some hope of rallying support in Congress for a political fix to Central States’ dire problems.
"It's not over until the fund is fixed," Packett said. "We’ve got a long way to go. But we’re relishing the fact that we won one battle today. We've got a long way to go."
Packett has organized Teamsters in the Midwest and contacted members of Congress. In February, Sen. Chuck Grassley asked the Government Accountability Office to investigate the fund's oversight.
In Wisconsin, a group of Teamsters whooped loudly at Friday's news.
“I can’t stop crying, but that’s OK,” retiree Kenneth Stribling, who had faced a 50 percent reduction in his pension, told the Milwaukee Journal Sentinel. “Tears of joy.”
“Pretty ecstatic right now,” said Bob Amsden, a retiree who had been staring at a 55 percent cut and who emerged as a national leader in the grassroots effort to thwart the proposed cuts. “We took down big money, and we won the first battle. We know the war’s going to go on.”
Nearly 400,000 people either draw pensions from Central States or are eligible for them upon retirement. Of those, more than 200,000 faced benefit cuts.
Thousands of retirees, perhaps tens of thousands, would have seen their pensions cut in half, and it appears that the average reduction would have topped 30 percent.
The financial troubles at Central States run deep. As of January 2015, the plan’s $35 billion in liabilities was more than double the value of its assets, and the gap had grown by $3.5 billion since 2011.
Those problems helped drive a fundamental change in federal rules governing pensions.
Until then, as long as a plan had money, it had to pay the pension promised. But in December 2014, with the holidays approaching and a possible government shutdown looming, Congress passed a massive spending bill that, among other things, rewrote the rule book on pensions covering millions of Americans.
The changes, which critics say were enacted in haste and with many in Congress not fully understanding them, apply to “multiemployer” pension plans. Those, unlike the more common single-employer plans, cover more than one company’s workers under contracts with unions.
Such plans, prevalent in trucking and some other industries, provide pensions for about 10 million people across the country. But Central States, based in suburban Chicago, is one of the biggest multiemployer plans, with almost 400,000 working and retired participants.
The thinking behind the Multiemployer Pension Reform Act of 2014 was that if plans such as Central States' can’t cut payments, they’ll go broke, creating an even worse situation.
About 1.5 million people are in severely underfunded multiemployer plans. The federal Pension Benefit Guaranty Corp. insures those benefits, but only up to $12,870 a year.
Meanwhile, single-employer plans are insured up to $60,136 a year.
And the Pension Benefit Guaranty Corp. multiemployer program has a huge funding deficit.
Before the 2014 legislation was passed, the agency said the program faced a 90 percent chance of going broke by 2025.
Many angry Teamsters have been blaming the investment practices of Central States, and its executives and trustees. Among the sore points: Thomas Nyhan, executive director of the pension fund and its companion health and welfare plan, got $32,000 more in compensation in 2014 — on the eve of the proposal to cut retirees’ pensions.
In an email, Nyhan said much of the increase was reimbursement for out-of-pocket expenses that was considered compensation for reporting purposes. He noted that two-thirds of his pay comes from the health plan, which is legally distinct from the pension fund and has different participants.
Nyhan’s employment agreement provides for a 3 percent cost-of-living increase, he said.
In any event, despite long-standing questions about how Central States is run, the most important reason for the pension fund’s precarious situation is the federal government’s deregulation of trucking, scholars who study the industry have said.
Until 1979, the government tightly controlled interstate trucking, restricting entry into the field and specifying where firms could operate. Deregulation opened the industry to thousands of new, nonunion carriers that drove down shipping rates and pushed many of the legacy trucking firms out of business.
As their numbers dwindled, so did those of the workers and companies contributing to Central States.
In 1980, with deregulation just beginning, Central States had four working Teamsters for every retiree. Today, the plan pays benefits to five retirees for every worker.
Register Reporter Kevin Hardy contributed to this story.
Akin to NYCDCC's 1994 Consent Decree, retirees in Central States and all other Funds across the U.S.A. participating in Multi-Employer Pension Plans; Congressional hacks & the NCCMP originators ensured that all rank & file members would have no "standing"
to bring forth any charges or to file any countersuits in any Federal Court.
Given this fact; the "standing" denied card will be played to the hilt and the Central States Trustees / Fiduciaries will surely re-submit and amend their prior request to the Treasury Department and eventually, Feinberg will approve their request & the slashing of Retiree Pension Benefits will begin.
How many lawyers, accountants, congressman, big banks & their executives or Wall St. insiders are serving hard prison terms for the Great Recession thieving w/ the mortgage derivative scandals? How many too big to fail banking executives or investment firm executives who conjured up the racketeering scams are serving hard prison terms? The answer is simple - none!The law slipped into the Omnibus spending bill which passed last December 16,2015 was the Pension Plan Trustee / Fiduciary Get of Jail Card
and it is allowing crooks like McCarron & his corporate puppetmasters the wiggle room to again illegally use the LMRDA to impose trusteeships, raid benefit funds & offshore the monies prior to the plans formal filing for retiree benefit cuts. They'll rape the funds, the submit the plan for the benfit cuts & that is how the racketeering scam will work and when they do, you will not have the standing to sue anyone for any reason.
And people wonder why the so called "mob" exists?
The simple fact is - when the Unions, their accountants, lawyers, benefit fund trustees & fiduciaires, the Wall St crowd, the Congress, every Federal government agency including U.S. Attorneys, Department of Justice, the FBI & the Inspector General all roll over and play dead and corrupt judges go along with the known criminal racketeering schemes; the aforementioned parties justify the mobs very existence and any & all outcome flowing therefrom - as you have simply left the people no choice but to apply other rules of society which inure to even the playing field and send a clear message to all those with deaf ears.
another article - Kansas City Star
All criminal suspects are innocent until proven guilty in a court of law; or, are they?