The Treasury Department on Friday rejected a bid by the Central States Pension Fund to cut current retiree benefits for 270,000 Teamster truckers by as much as 50 percent.
Kenneth Feinberg, the special master to the Treasury tasked with handling proposals by pension funds to cut benefits, said he was not persuaded that the plan would solve Central States’ solvency problems because of faulty assumptions.
Feinberg also noted that the proposed cuts were not “equitably distributed” to all beneficiaries, and that notices to employees announcing the cuts were too confusing.
As I wrote last month, the 2014 “CRomnibus” budget bill contained a provision allowing multi-employer pension plans to apply to the Treasury to make cuts to current retirees, in order to stretch dwindling resources and prevent insolvency. This repealed a 40-year ban on cuts to earned pension benefits, enacted with the 1974 Employee Retirement Income Security Act (ERISA). President Obama supported the 2014 bill that made these changes and whipped for its passage.
Had the Treasury approved the plan, the average benefit cut for current retirees would have been around 23 percent. But some retirees would have seen much larger cuts, up to 50 percent. Central States’ plan, according to Feinberg, did not adequately explain why some classes of retirees would see higher benefit cuts than others.
For example, some UPS drivers covered would have been protected by a 40 percent cap on the benefit reduction. But others would have received less protection, with cuts up to 50 percent. “The different treatment,” Feinberg wrote, “violates the requirement that the suspension of benefits be equitably distributed.”
Feinberg, who handled compensation funds for victims of September 11 and the BP oil spill, also argued that notices to beneficiaries used highly technical language, undefined terms, and material that defied understanding.
Central States expressed disappointment in the rejection, and said in a statement that it would consider next steps, including re-applying after tweaking the benefit formula. It maintained that the fund will run out of money to pay any benefits by 2025 if nothing is done. The cuts, Central States said, were “the only realistic solution to avoiding insolvency.”
Advocacy groups want the federal government to step in with resources, or give retirees a place at the negotiating table to work out a resolution. Friday’s rejection brings those possibilities closer to reality.
“Teamster retirees worked for decades and paid into the Central States Pension Fund under the promise that when they retired their pensions would be there,” said Sen. Al Franken, who led a congressional coalition that urged Treasury to block the cuts. “Congress needs to have an open and honest debate. … We must uphold the promises made to all workers.”
Top photo: A truck driver navigates a rain-covered highway on the outskirts of Chicago.
.. sad.
I the trustees of the central States mismanaged assets and then the Federal Govt expected corporations to bail them out.
One of the first jobs I had when I left school was in Pensions.
Old ladies – it is usually the man that croaks first – would phone in sobbing and say they’d been paying in two Brontosaurus bones and some flint knappings since before Moses was knee-high and so could we please tell them how much she would now be getting to keep her in her dotage days?
I would then report back after a swift call to Actuarials it would be about £40 per month or a lump sum of £603.24 or some such hideously pathetic amount, to which the response would be even greater sobbing and the ubiquitous cry of “The man at the brokers told us it would be worth a lot more…”
Broke my heart.
The Witch of Grantham saw this Retirement Boom coming 60-odd years after the post-WW2 Baby Boom and it was all part of her Master Plan to make her buddies rich and destroy the UK’s Left Wing State.
But I never could understand how private companies could handle such a hugh responsibility better than a government – private companies take more risks, and they think only of short-term profits for a minority – salesmen, agents, brokers, bankers, shareholders, and top management – in a medium-term business lifespan. The fat they promised 40+ years down the line would be just an old greasy stain by the time they came to be paid out.
A pensions company should be the antithesis of the corporate world – slow, steady, long-term, transparent, secure, not taking risks, there to serve everyone and to do that evenly and fairly.
I saw the future when I was an 18 year old. Here it is now. More fool you all, corporatising everything. Corporations are not for everyone and they have better lawyers than most. Oh dear.
8 years of ZIRP guaranteed that pensions would fail.
I wouldn’t have expected anything less from Obama than pushing for a bill containing a 50% reduction in benefits to certain union members. I can’t for the life of me understand how any union member could ever have voted twice for Obama, but many did.
I’m hoping someone can come along here and explain in some fashion how Obama has been a friend to the working class. How has this guy remained popular among blacks, when he’s virtually turned his back on them on everything from unions, to gun control, to unleashing Rahm Emanuel on millions in Chicago.
What interests me is, what has he actually done–what action has he taken–that would show his appreciation for, and solidarity with, the lower-middle class (what’s left of it), the working poor and the underemployed, millions of whom are minorities?
I don’t really recall Obama saying anything supportive of these people even in a general sense, so it’s not as if he made promises and couldn’t pull through. He didn’t promise anything. He just didn’t–and doesn’t, still–give a crap for these folks. The reason is obvious: He doesn’t need them, especially now that he’s had his two terms.
I think Obama’s treatment of the lower economic groups has been shameful. especially for a Democratic president. Yet, as manufacturing and labor disappear–and we know how that happened–this treatment will only continue throughout a Hillary Clinton tenure.
It’s the new Democratic Party, and it has me looking for a new political home.
Central States under fed the pension fund for years.
More of the same old neo-liberal bs that was unleashed by that monster, Friedman, back in the 70’s. Now applied at home, as well as abroad. I have to wonder what the endgame is. Or is there one? Has it even been considered by those pulling the strings and levers?
Glad that I’m older… I have a bad feeling America has yet to see its real destiny.
If a CEO hallows out a given company, in order to gain “economic’ efficiency for absent, don’t give a fuck shareholders, then the company loses intrinsic value.
How short-sighted these organizations are!
If and when a CEO is paid 20 million dollars in stock options per year, that stock option is tax deductible so the local community does not gain the tax benefits, and also this is money not put back into employee wages, training, business development, production.
When companies spend millions of dollars to buy back their own stock, it means there is less stock publicly trading so prices go up for shareholders, especially shareholders who own large amounts of stock. But, the company ‘profit’ that is used to buy its own stock also does not put that profit back into the organization, employees, or future production to expand the business.
Why are these companies unable to fund future pension obligations? Probably many reasons, but certainly because they have hallowed themselves out to ensure shareholders earn a few more dollars per quarter. Again, I use Verizon. Health benefits are being cut and jobs move overseas for cheaper labor, but yet the CEO brings in a 20 million dollars salary in one year. It makes no sense, unless of course you are operating your business for shareholders.
Private companies that have chosen not to go public, neglecting shareholder demands, are doing great these days.
Take a truck driver that loses half their pension, how are they going to contribute to the economic cycle, buying products and services? They can’t.
So it leads one to wonder, are the super rich, who have stacked the political offices, purposely trying to make every person a slave to debt with no options to participate in the economy because they can’t afford to because they have been laid off so their company can pay a quarterly dividend to a shareholder?
Short of an uprising, there are many people around the world opting out of representational democracies because they no longer represent the people. They are participating in organic, grassroots, horizontal communities outside of the system. Barter systems, bitcoin, etc.
Remember, the American public bailed out the too big to fail banks and financial crooks at a public cost of 4 trillion dollars added to the national debt that our children and grandchildren will pay…forever.
All of the shell money hiding, by American Elites, ought to be used to wipe clean the entire American debt load for a fresh start. Then the economy will be natural and healthy. As it is, debt to banks is the design and man is looked at as only a peon to work and die for the company.
Something is bound to happen in the near future to stop this madness, and I look forward to the shake up, as I believe it is necessary. I think the next showing of frustration is going to make Occupy look like child’s play.
If the pension funds are not solvent, then why? Fix that shit- yes, even if it hurts big money players, and life will be much improved.
The answers are there, the will to enact them much harder. Debt needs to be cleaned off the books, yes that hurts the bankers, but it helps the mass of humanity.
All so well put.
What is even more disgusting is these CEO’s actually receive enormous golden parachutes when they screw up a company and are let go.
You mentioned the “American public bailed out the too big to fail banks and financial crooks at a public cost of 4 trillion dollars”. I am sorry to correct you but you are being too kind to the “Banksters” the cost was far greater.
According to the limited GAO audit of the Federal Reserve that was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the grand total of all the secret bailouts conducted by the Federal Reserve during the last financial crisis comes to a whopping $16.1 trillion.
http://theeconomiccollapseblog.com/archives/have-you-heard-about-the-16-trillion-dollar-bailout-the-federal-reserve-handed-to-the-too-big-to-fail-banks
banks always paid 5% /yr, until they took over. now its 0. if the funds cant get the 5% they were expected, they run out. ONE more reason how our government has failed the 90%. the government now protects polluters, tax cheats (just the rich ones). bp oil spill, fukushima, 2008 bank bailout for wall street/ bullshit for main street. what’s next? i expect japan will wise up, and unleash fukushima’s full fury on to the world, obama and every world leader should have mobilized to do everything possible before now ….how sad…
CEOS, managers, and boardmembers of companies that try to strip retirees of their pensions should be garrotted in a cell, then suspended from poles in front of their office buildings.
Was Central bought or sold recently? Does his reflect corporate financial shenanigans? Did the company deliberately under-fund the pension and siphon off profits?
Usually this type of thing follows some sort of reorganization.
It’s funny how when a bank is large, they say it’s “too big to fail.” All its losses have to be covered by taxpayers, while those who paid themselves the bonuses setting up those losses fly away to some tropical island.
But when the Teamsters fund threatens to call on funds that supposedly exist to cover pension insolvency, well, then it’s too big to _succeed_. And something has to be done to screw all those workers so they don’t even tap into existing funds, much less get a bailout!
WE have spent 4 trillion on the folly of the middle….WE WILL PREVAIL – – that was said both H.W. & W. Bush along with Obama – – WE ARE LOSING all around the world ! Except in their minds and their land of make-believe WASHINGTON…..examine their pensions & perks – – the double dippers and the vacations every month – F R A U D that proves they are snake-oil salesmen / flim-flam /charlatans. Pretending to be running our country into the abyss.
A pension is to ensure you a reasonable life after you are no longer able to work because of your age – BOUGHT & PAID FOR….now trying to be stolen from you. Oh, yes – – someone must pay that 4 trillion dollars debt of FRAUD….war after war of lies – – war on poverty – war on drugs – war on the people / by WALL STREET & the banks – – bail-outs and the FED covers for them – – FORECLOSURES – – pensions?? Attacks on Social Security / cut food stamps…….
UNIONS! The balance of power for life support and return on productivity.
It matters.
Nice work, except for the photograph. As far as I know, Swift is a non union outfit. You should find a picture of yellow/roadway, USA Holland or another Teamsters represented company. Otherwise spot on.