ALBANY, N.Y. — October is the first month thousands of retired upstate New York Teamsters will feel the hit from a 29% cut in their monthly pension checks.
But the union and its membership are hoping that one of its major employers, United Parcel Service, can help ease those cuts with help from a series of federal loans to shore up the pension fund over the next 15 years.
Members of Local 294, also known as the Upstate Teamsters, will learn more details about what UPS and the union are considering at a meeting Nov. 4.
While some pension activists and union members have pondered such a loan for a while, Tom Baum, the volunteer retiree representative for the local, notes that UPS has lobbying power necessary to open doors in Congress.
The Upstate Teamsters have what is known as a multi-employer pension plan. The union-run plan is for members such as truck drivers who may work for a number of employers through their careers.
But the number of Teamsters has dwindled over the years, thanks in part to a deregulated trucking industry and a boom in retirement-age workers.
Facing future insolvency, the union enacted the 29% cut for 16,000 retirees, with some exceptions. The move also entails an 18% future reduction for 21,000 Teamsters who are currently employed.
Pension amounts vary widely depending on when and for how long one worked. Some retirees get less than a $1,000 per month, while a few get more than $4,000.
UPS remains the major large employer in the fund with about 76% of active members, or contributors, working for the company.
The loan is one of two possibilities being raised, although it’s unclear how much headway either one will make.
In a variation of the plan, pension activists say two Democratic lawmakers, Sen. Sherrod Brown of Ohio and Congressman Richard Neal of Massachusetts, are preparing a bill that would create a new bureau with the U.S. Treasury Department to deal with the numerous underfunded pensions that are facing long-term solvency problems.
Their plan would involve selling bonds to help shore up the pension funds. But since both sponsors are members of the minority party in the House and Senate, there are serious doubts that the bill can move forward.
U.S. Sen. Bernie Sanders, I-Vt., had earlier offered a proposal that would cap tax-free contributions to retirement plans at $5 million and eliminate tax breaks on 1031 Exchanges, also known as the like-kind exchange rule. But that hasn’t gained any traction.
A slew of multi-employer pensions face long-term challenges. The biggest may be the midwestern Teamsters Central States fund with 115,000 retirees and 155,000 current workers. Like the Upstate Teamsters, it could face insolvency in the next decade unless cuts are made.
That in turn could bankrupt the federal Pension Benefit Guarantee Corp., a federal entity created to offer at least some backstop for pensions that go broke.
So far, the only funds to have enacted multi-employer cuts are the Upstate Teamsters, an iron workers union in Ohio and one for furniture workers in Tennessee.