Retired Teamsters won’t have their pensions cut as had been proposed last year by the Central States Pension Fund (CSPF).
CSPF , a multiemployer pension fund that covers more than 400,000 active and retired Teamsters, had planned to reduce pensions by an average of 34 percent in order to return the pension fund to solvency.
To do so, the fund needed the permission of the US Treasury. After reviewing CSPF’s application requesting the pension cuts, the Treasury Department on May 6 announced that it was denying the request.
Retirees who were facing the pension cuts had mounted a strong grassroots movement that mobilized thousands of Teamster retirees and others to oppose the proposed benefit reductions.
They formed more than 60 regional committees that informed retirees about the proposed cuts. Retirees responded by writing letters to Congress, attending hearings on the proposed cuts, and holding local rallies to protest the cuts.
All this activity culminated in a demonstration in Washington DC where thousands of retired Teamsters gathered a month ago to protest the cuts.
Their message was clear–a pension is a promise that must not be broken.
“It showed that the government listened,” she added.
“I feel as if a huge weight has been lifted,” said Greg Smith whose pension would have been cut by more than 50 percent. “The pension that I worked all those years for will continue to be there for me.”
While retirees were relieved to hear the good news, the structural problems that caused CSPF to propose benefit cuts have not been resolved.
These problems, which led actuaries to estimate that CSPF would be insolvent by 2025, took shape 30 years ago as the trucking industry was being deregulated.
As new trucking firms entered the market, they sought to undercut market rates by lowering labor costs. Workers for these companies usually did not have a union to stop this race to the bottom.
As a result, fewer trucking companies are providing their workers with a pension, which means fewer pension contributions are being made by employers.
In the 2000s, as more Teamsters with pensions began to retire, the number of retirees grew while the number of active workers in the plan grew smaller.
Today, CSPF is paying $3.46 in benefits for every $1 it collects.
To make matters worse, CSPF suffered another blow when the fund’s investments took a big hit during the 2008 financial crisis and its aftermath. The fund has since recovered from the economic fallout of the crisis.
Action at the federal level will be needed to keep CSPF and other multiemployer pension plans solvent.
Two bills have been introduced that could protect retirees whose pensions come from pension plans like CSPF
The Keep Our Pension Promise Act by Sen. Bernie Sanders and Rep. Marcy Kaptur would ensure that multiemployer pension plans like CSPF will have enough money to continue to pay promised pensions.
“Pensions are earned benefits just like a paycheck,” said Rep. Kaptur after introducing the bill in the US House of Representatives. “These workers aren’t asking for a favor or a handout. They’ve put in long hours over the course of a lifetime and deserve the compensation they are owed. They certainly deserve better than to be abandoned after that lifetime of work to retire in poverty or be forced to depend on their families or the government for support.”
The Pension Accountability Act by Sen. Rob Portman and Rep. David Joyce amends the Multiemployer Pension Reform Act (MPRA), which made CSPF’s proposed cuts possible.
The bill by Sen. Portman and Rep. Joyce would give workers and retirees a seat at the table where decisions about their pensions are made.
“The MPRA was a horrible piece of legislation that would have never passed through Congress on its own merits,” said John Murphy, the Teamsters’ eastern regional international vice president. “In the short term, we intend to continue to push through legislative remedies that will fix the negative aspects of the MPRA while fighting to repeal the law in the long term.”
Despite the challenges that remain, those most affected were glad to hear that the Treasury Department had rejected the proposed cuts.
“I worked for 31 years with the expectation that when I retired my pension was going to be there to support me through my golden years,” said Mike Walden, a Teamster retiree from Akron, Ohio. “A pension is a promise made by the company to the employee and there is no acceptable reason that the promise should be broken. This was the right decision.”