The Central States Pension Fund intends to cut retirement payouts 23% on average for all 407,000 participants as the benefit plan for Teamsters tries to finalize a long-term survival plan.
Details of the program that has been submitted to the U.S. Treasury Department were disclosed on the fund’s website. The largest pension fund for Teamsters retirees said that benefits for 33% of participants wouldn’t be affected, and that 41% of retirees would be partly or fully protected from cuts due to age. More than 220,000 participants are retired.
The cuts would be effective July 1, if the Treasury Department endorses the plan and it is either approved by participants when they vote on it, or is imposed on them. The retirement cuts were mandated under late 2014 legislation that established a process for funds such as Central States to right themselves financially.
Central States pays out $3.46 for each $1 received in contributions from working plan members. Last year, it disbursed $2 billion more than it received.
“That math will never work,” an overview guide posted on the fund’s website said. “A realistic rescue plan is needed now. The longer we wait to act, the larger that benefits reductions will have to be. The goal of our rescue plan is to remove both risk and doubt.”
After the Treasury Department’s June announcement containing the rules for implementing the cuts, the agency received thousands of comments, including statements from retirees that the cuts would leave them without money for housing or food.
Also earlier this year, some members of Congress proposed legislation to blunt the effect of cuts. That measure hasn’t been taken up by the House or the Senate. Less than a week before the fund disclosed its plan, Teamsters General President Jim Hoffa asked CSPF Executive Director Thomas Nyhan to slow the cuts and back the legislation. Nyhan responded that the legislation was “praiseworthy” but that the fund was required by law to proceed.
The fund has said it would run out of money in a decade, given current trends.
The retiree group includes 43,000 workers known as “orphans,” whose entire careers were spent at union trucking companies such as Consolidated Freightways that failed.
Under a law passed in the 1970s, those orphan workers receive benefits from CSPF, while active workers at unionized carriers, as well as the fleets such as YRC Worldwide, pay into the plan.
The fund’s communications, including individual letters to participants, emphasized that the changes are not identical for everyone.
“This is not a one-size-fits-all plan,” the CSPF overview said. “It is very specific and different to every participant.”
In addition to sending individual letters to participants, the fund plans video and online “town hall meetings” starting Oct. 15.