Truckers’ pension cuts may be coming soon. The Central States Pension Fund, which represents approximately 400,000 Teamsters, may soon slash its retirement benefits to prevent insolvency. The truck drivers pension fund cuts are allowable under a controversial new law that allows adjustments to be made in retirement benefits.
Administrators of the massive Central States Pension Fund have stated that reducing retirement benefits of both current and former Teamsters is the only course of action that could save the pension plan, MSN reports.
“A realistic rescue plan is needed now,” said fund executive director Thomas C. Nyhan. “The longer we wait to act, the larger the benefit reductions will have to be.”
— Rob Vescovo (@RobVescovo) October 8, 2015
The Teamsters union pension fund proposal for Central States’ employees and retirees would be cut by about 23 percent under the proposed plan. Reportedly, disabled retirees would not be subjected to the pension cuts. Older pensioners would see smaller cuts, while workers of now-defunct companies that did not keep up with retirement fund obligations would experience the steepest cuts.
The new law impacting pensions is attached to a $1.01 trillion spending bill expected to be passed by the Senate today. For the first time in four decades, retirement benefits of pensioners could be cut as part of an effort to keep some of the most distressed plans solvent. The pension funds likely to be affected include plans of workers in the trucking and construction industries and supermarket workers, according to the Washington Post.
The Central States Pension Fund cuts proposal was submitted to the Treasury Department several weeks ago. The plan states that both the reduced number and age of its workers has left the fund paying out $3.46 for every dollar it makes. The plan now reportedly disburses about $2 billion more in retirement benefits than it accrues via employer contributions each year.
— Nick Harrys (@NickHarrys) October 8, 2015
Approximately one million people who participate in multi-employer pension plans are reportedly threatened by insolvency in the near future. If the large union retirement plans are permitted to collapse, the federal insurance fund, which protects the plans, is also reportedly in danger of failing as well. Due to the looming money woes, a group of pension fund trustees and union leaders have decided that the only way to save distressed plans is to allow benefit cuts.
“Pension fund participants and beneficiaries did not cause the problem of underfunding,” International Brotherhood of Teamsters General President James P. Hoffa said in a letter sent to the Central States Pension Fund leaders. “They worked day in and day out to earn their pension credits. It is monstrously unfair that they will end up holding the short end of the stick.”
Democratic socialist presidential candidate Bernie Sanders, along with some union leaders, said the federal government (via taxpayer dollars) should step in to bolster distressed pension plans. Sanders introduced a bill that would repeal the legislation, which allows pension funds to be slashed in order to prevent insolvency. Nyhan said the Central States union would embrace the Bernie Sanders plan, but that such a solution is likely a political impossibility.
The Treasury Department has 225 days to review the Central States Pension Fund cuts proposal before a vote is taken by union members to approve the benefit reduction. If the Teamsters union members vote down the plan, the new law could still be used to achieve the same cuts by citing the need to protect the pension plan.
What do you think about the Central States Pension Fund cuts and the Bernie Sanders plan to have the taxpayer bail out failing union retirement plans?
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