The struggle to fix a Teamsters retirement fund took another turn Thursday when the Central States Pension Fund said it will not propose another plan to prevent the fund from running out of money in 10 years.
Instead, Central States Pension Fund wants Congress to pass legislation to protect pension benefits.
George Bauer, who retired from the old Pevely Dairy in St. Louis and now lives near Troy, said he hopes Congress will act.
“You’re dealing with a lot of people,” he said. “And I don’t think if they let this go down the tubes that it’s going to be good for anybody.”
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You’re dealing with a lot of people. And I don’t think if they let this go down the tubes that it’s going to be good for anybody.
George Bauer, Central States pensioner who lives near Troy
Bauer, a retired Teamster who gets a Central States pension, said if the pension fund becomes insolvent, the pensioners will not take it lightly.
“These people are old but they’re not dead.”
Bauer also said the leadership of the Central States Pension Fund needs to be replaced.
On May 6, the U.S. Treasury Department rejected Central States’ proposal to slash benefits permitted under a law signed by President Barack Obama in December 2014. Central States was the first pension plan to propose cuts under the Multiemployer Pension Reform Act of 2014.
Many metro-east Teamsters faced pension cuts of 50 percent to 60 percent on July 1 if the Central States’ plan had been approved by the Treasury Department. There are 1,800 Central States retirees in St. Clair and Madison counties. They have been waiting to hear their fate since last fall when Central States announced plans to cut benefits.
“The rescue plan was a proposal of last resort, and clearly not the option that the (fund trustees) preferred. It was, however, based on a realistic assessment that benefit reductions under a rescue plan were the only available, practical way to avoid the hardship and countless personal tragedies that will result if the Pension Fund runs out of money,” said Thomas Nyhan, the fund’s executive director, in a news release.
The rescue plan was a proposal of last resort, and clearly not the option that the (fund trustees) preferred.
Thomas Nyhan, executive director of the Central States Pension Fund
“In the coming months, we will do everything in our power to support a legislative solution that protects the pension benefits of the more than 400,000 Central States participants and beneficiaries, who should not have to bear the emotional trauma of waiting until the fund is at the doorstep of insolvency before Congress acts. The moment for action and for doing the right thing is now,” Nyhan said.
Central States, which is based in Rosemount near Chicago, reports that for every $3.46 it pays out it pension benefits, only $1 is collected from employers, resulting in an annual shortfall of $2 billion. Also, the fund has said it has about $17 billion in assets but $35 billion in obligations.
Fund leaders say the shortfall was caused by deregulation of the trucking industry and two “devastating” recessions since 2000.
Over 200,000 Central States participants faced cuts to their pensions under the plan proposed by Central States.
The Treasury Department said it rejected Central States’ plan to cut benefits because the plan did not follow the pension reform act. One of the reasons cited was the reductions were not “equitably distributed” throughout the participants and beneficiaries of the fund.
Central States said it disagreed with the Treasury Department’s reasons.
In Congress, Democratic presidential candidate Sen. Bernie Sanders has sponsored the Keep Our Pension Promises Act, which would halt the pension cuts allowed by the Multiemployer Pension Reform Act, and it would give funding to troubled pension plans and the Pension Benefit Guaranty Corp. by modifying two tax shelters used by wealthy investors and large estates, according to the Pension Rights Center.
The Pension Benefit Guaranty Corp. is the government’s pension insurance program and Central States said it is also projected to run out of money.