New York Teamsters Get Reprieve From Pension Cuts, For Now
Thousands of upstate New York retired Teamsters have dodged a potential pension cut, at least for now, thanks to a recent decision by the federal government.
And the retirees may face smaller cuts than the original plan called for as reductions could have been up to 31%.
Still, the respite could be short-lived as the timetable for possible cuts has been pushed forward from July 1 to Oct 1.
"We need to file another application to the Treasury Department," said Tom Baum, volunteer retiree representative for Teamsters Local 294.
Also known as the Upstate Teamsters, Local 294 represents about 16,500 retirees and 18,500 who are employed.
Many are or were truck drivers or other employees of the UPS parcel delivery service, as well as drivers who worked for car haulers, who transported new vehicles from train depots to auto dealerships across the region. Most are in upstate New York with a few in New Jersey.
UPS Inc. ranks No. 1 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.
Like a number of private sector unions, the Teamsters union over the years has seen its membership dwindle due in part to federal deregulation of the trucking industry.
With fewer members to support retirees and after the 2008 crash, the pension fund has hit rocky financial waters. Fund administrators say if cuts aren't made, they could become insolvent by 2025.
Any cuts, though, must be approved by the federal Treasury Department.
Earlier in April, the Treasury Department sent back the Upstate Teamsters' application to make cuts.
They offered several suggestions including an updating of the fund's actuarial mortality tables. They also wanted the fund operators to make a more optimistic assumption about their rate of return, which was pegged at 6.75% for the next decade.
"The fund's investment earnings during the last few months have been better than expected, which could help make deeper cuts unnecessary. It's still possible, however, that the new proposed cuts will be deeper than 31%,'' according to a web page that has been set up, http://nysteamstersfundretireerep.com.
"The 6.75% [projection] is too conservative,'' Baum said of what federal regulators told union officials.
In the meantime, UPS has offered a plan which would enact across-the-board cuts of 20% rather than the cuts of up to 31% contemplated in the current proposal.
Under the current plan, cuts would vary based on length of service and age, as well as disabilities.
The UPS plan, though, would give no preference to disabled retirees.
It also would enact a $10 monthly employee fee. They also would seek low interest loans from the government in order to shore up pension fund finances.
UPS spokesman Steve Gaut in a written statement said that was just one of several options the company was exploring in efforts to help deal with the problem.
''The company is working with stakeholders to explore legislative solutions which could help minimize the impact of required restructuring of multi-mployer plans facing critical funding problems,'' he said. "However, there is no single proposal or agreed solution to comment on at this time."
A number of pension plans from various unions including Teamsters have run into financial problems in recent years. They can seek to lower payouts, but if the Treasury Department says no, then the plans can be at risk of folding.
That means that many of the most endangered plans eventually need to devise a proposal for benefit cuts that the Treasury Department agrees with.
At least one Teamsters fund has become insolvent: the New York City-based Teamsters Local 707 fund.
The Pension Benefit Guarantee Corp. a federal agency, stepped in, but it is only paying $570 per month — less than half of most pensions.
The cuts were enabled by Congress in 2014 as part of that year's ongoing budget resolution to fund the federal government.
The pensions in question are "multiemployer" plans which cover employees like union truck drivers who may have worked for a variety of employers such as delivery or trucking companies over the years.
"A lot of retirees are very nervous about this," said Joellen Leavelle, communications and outreach director at the Pension Rights Center, a Washington-based organization that advocates for pensioners.
Leavelle said Vermont senator and former presidential candidate Bernie Sanders has proposed cutting tax loopholes to help shore up pension funds. She said that proposal is expected to come again in May.
