Pension Fund Targets Fall for Disclosing Benefit Cuts
This story appears in the Aug. 31 print edition of Transport Topics.
The troubled Central States Pension Fund, which includes about 200,000 retired members of the Teamsters union, now is targeting “early fall” to disclose how much benefits will be reduced under the requirements of a 2014 law.
Central States, which pays $3.45 in benefits for each $1 in contributions, is developing pension reduction plans to comply with the Multiemployer Pension Reform Act. The fund, which is in “critical and declining” status, according to the agency, needs to cut payouts, now topping $2 billion annually, to ensure its long-term survival.
“Sometime early this fall, the Central States Pension Fund Board of Trustees expects to complete their work to develop a necessary and fair pension rescue plan and then to file it,” Executive Director Thomas Nyhan told Transport Topics last week.
Two months ago, he said the target date for notifying participants and the Treasury Department was “before the end of the summer.” No specific date was given in either of his comments, and no amount of reductions has been disclosed. Last year’s average Central States monthly benefit was $1,284.
Central States’ members include active workers and retirees from companies such as YRC Worldwide and ArcBest’s ABF Freight. The fund also pays benefits to retired workers, known as “orphans,” who worked for failed carriers such as Consolidated Freightways.
“This has been a challenging and deliberative process, requiring careful analysis of the expansive guidance issued by Treasury, as well as thoughtful attentiveness to the circumstances and needs of our participants and employers,” Nyhan said.
“All participants will be receiving a personalized letter explaining our proposed pension plan and its impact on their benefits as soon as our board has completed its work.”
Two months ago, proposed rules were published. Now, the Treasury Department is preparing for a hearing next week of public comment on its proposed rules for implementing the law.
A sample of more than 2,000 comments received during a comment period that ended earlier this month shows agency officials will likely face some angry questions and comments at the hearing:
“I am unable to sleep,” one Missouri retiree wrote. “I have been worried about how my wife and I will survive with any reduction of my Central States pension. I have been retired for 14 months after working 44 years as a truck driver. My pension is my only investment. My wife and I are pleading and praying you will help prevent this.”
A Florida retiree with 37 years of service said, “If the proposed cut goes into effect, I have no doubt I will lose my home, car and not be able to afford our medical bills. Our expenses are cut to the bone already.”
“I know that this commentary will probably fall on deaf ears, but what the heck,” wrote a Minnesota trucker with 39 years of experience, calling the measure “a shame and sham. There was no possible input from any of us or discussion of any possible rectification of this dilemma.”
Coupled with the protests were comments with some alternative approaches.
An Ohio retiree from the Central Ohio Concerned Teamsters for Pension Protection offered three suggestions: delaying any reductions until Jan. 1, 2017, phasing in any reductions greater than $500 monthly and changing survivor benefit decisions made before the law was passed.
One commenter asked that “plan trustees protect me by making all other possible cuts before cutting retiree benefits. Please require that your plans’ trustees reduce other expenses.”
The International Association of Machinists and Aerospace Workers labeled the measure “a shameful betrayal of American workers and retirees.” The union called on the Treasury Department to “assist plan mergers as a way to avoid benefit cuts to the maximum extent possible.”
