Treasury Department says no to proposed Teamster pension cuts

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.

Karen Friedman, executive vice president of the Pension Rights Center, told the Minneapolis Star Tribune that the Treasury Department’s decision is, “a tremendous victory of retirees.”

“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.”


Texas pension bill improved after union mobilizations; more work to be done

Late Thursday night, the Texas House of representatives postponed action on a bill that would have cut pension benefits for future state employees and raised employee and state contributions to the Texas Employees Retirement System (ERS) pension fund.

The original version of the bill, CSHB 1882, would have cut pension benefits that had already been earned for almost two-thirds of the state employees whose pension is administered by ERS.

CSHB 1882 passed out of the House Pension Committee on April 22, but the day before the bill was taken up by the full House, the bill’s sponsor, Rep. Bill Callegari, told the Austin American Statesman that he had accepted changes that would exempt current employees from the pension cuts and apply them only to new hires.

Originally, the till would have reduced pension benefits for most current employees by

  • increasing the number of years used to calculate final average salary to  five, effectively reducing most employees’ pension benefit;
  • eliminating the use of unused annual leave for calculating  pension benefits’;
  • disallowing the use of unused annual leave to calculate years of service for retirement eligibility; and
  • raising the age at which an employee could retire with full pension benefits.

Rep. Callegari said that he agreed to the changes because so many state employees had voiced their opposition to the bill.

After CSHB 1882 passed out of committee, members of the Texas State Employees Union CWA Local 6186 (TSEU) staged a mass call-in to their lawmakers to protest the cuts.

To bolster the call-in, rank-and-file members on May 1 held a Pension Defenders Lobbying Blitz. “TSEU members visited the offices of 30 House Republican members who we felt could be persuaded on this issue,” said Derrick Osobase, TSEU’s political director. “Eight Republican House members agreed with TSEU and committed to oppose the bill in its current form. Some others were uncommitted but expressed their willingness to look at the issues more closely.”

Osobase said that the amended bill is better than the original, but the new version does create yet another tier of unequal pension benefits.

TSEU members on May 8 held another Pension Defenders Lobbying Blitz.

“We broke into four groups to talk to Democrats this time,” said Vicki Clark-Bradley, a retired social worker who worked at the Austin State Assisted Living Center. “The Democrats were solid in opposing the original bill but were slipping a bit with the amendment. We really hate to pit new against older employees.”

If the new version of CSHB 1882 passes, it will be the second time in four years that lawmakers changed pension eligibility rules, which create unequal tiers of pension benefits depending on when an employee started to work for the state. In some cases, employees will be receiving unequal pension benefits even though the are doing the same job.

TSEU is concerned about the effect that creating these unequal benefits will have on state services.

“Cutting the retirement benefits of future employees will increase turnover among these workers and hurt the state’s ability to deliver needed services to Texans,” said Osobase. “High turnover rates are bad for our agencies and universities, and bad for the ERS and TRS (teacher and public higher education pension) funds. When current workers are retired, we need stable and strong pension funds that can provide annuity increases for retirees. This will be less likely with a future workforce that has to work years longer for fewer benefits.”

TSEU is also working with the Texas Federation of Teachers and the Texas State Teachers Association to improve another pension bill that originally called for pension benefit cuts for public school and public higher education employees.

That bill, SB 1458, passed out of the Senate on May 8 and now heads to the House. Like CSHB 1882, the original version of SB 1458 cut pension benefits that had already been earned for hundreds of thousands of public school and public higher education employees. The teachers’ unions mobilized thousands of members to protest the cuts.

The new version significantly reduces the number of employees affected by the cuts; however, those with fewer than five years of service will still see their pension benefits cut.

TFT in a message to members said that when the bill goes to the House for consideration, the union will try to eliminate the cuts that affect those with fewer than fiver years of service and try to win a cost of living raise for all retirees.