In the News

May 7, 2018 – CNN Money

What happens when your pension fund runs out of money

Click here for an article and video about the impact on participants of a different multi-employer pension plan that was forced to cut benefit payments.

December 13, 2017 - Pensions and Investments

Kroger officially withdraws from Teamsters Central States

Kroger Co. and the International Brotherhood of Teamsters have ratified a new labor agreement to withdraw active Kroger participants from $15.3 billion Teamsters Central States, Southeast & Southwest Areas Pension Fund, Rosemont, Ill, a joint news release said.

Cincinnati-based Kroger's withdrawal from the Central States fund, which is projected to go insolvent in 2025, was effective Dec. 10, and Kroger will make the requisite payments to Central States to fulfill its withdrawal liability obligation.

The agreement, which affects about 1,800 participants, includes current participants working in facilities in Indiana, Kansas, Michigan, Texas and Tennessee, all of whom become participants in the new IBT Consolidated Pension Fund. A Kroger subsidiary, Roundy's Supermarkets, bargained for a similar withdrawal on Feb. 19 that transfers Kroger participants to the new pension fund.

That new pension fund, Kroger and International Brotherhood of Teamsters officials wrote in September, "cannot become insolvent, like Central States," because employer contributions are based on how well funded the plan is, rather than the traditional flat rate.

In May 2016, Central States' application to reduce benefits to avoid insolvency was denied by Treasury Department officials overseeing the Kline-Miller Multiemployer Pension Reform Act of 2014. The pension fund spends $2 billion more in benefits a year than it receives in contributions.

The new IBT Consolidated Pension Fund calls for a retirement age of 62, with accrual rates starting at 0.75% of salary and rising to 1.125% in later years. Further details are not available.

Keith G. Dailey, Kroger spokesman, did not immediately have additional information. Officials at IBT and Central States could not be immediately reached to provide further information.

April 12, 2017 - Pension & Investments

3 more pension funds apply to reduce benefits under MPRA

Three more multiemployer pension plans have applied for permission to reduce benefits to remain solvent, according to Treasury Department’s website list of applications under the Kline-Miller Multiemployer Pension Reform Act of 2014.

Alaska Ironworkers Pension Plan, Anchorage, with 1,573 participants, is projected to be insolvent in 15 years without permission to reduce benefits. In its latest financial report, it reported assets of $56.5 million and a 59% funding level.

International Association of Machinists of Motor City Pension Fund, Troy, Mich., with 1,197 participants, also projects insolvency in 15 years. A call to the benefit administrator for the pension fund was not returned at press time.

Local 805 of the International Brotherhood of Teamsters Pension & Retirement Fund, New York, with 2,065 participants, is projecting insolvency within six years. As of March 31, 2016, the most recent data available, the pension fund had $51.7 million in assets. A call to the fund administrator was not returned at press time.

Further details on the plans’ financial conditions and applications were not available on the Treasury website.

Separately, New York State Teamsters Conference Pension and Retirement Fund, Syracuse, notified Treasury officials in an April 5 letter that it was withdrawing an application submitted in August but intends to file a new one shortly. As of Jan 1, 2014, the most recent 5500 filing, the plan was 46.5% funded, with $1.46 billion in assets and $3.14 billion in liabilities.

April 7, 2017

In the News: Recent Headlines Highlight Multiemployer Pension Plan Challenges

Like the B&C Pension Fund, multiemployer pension plans covering union-represented employees across the U.S. continue to face financial uncertainty, and the Federal agency created to insure failed multiemployer pension funds, known as the Pension Benefit Guaranty Corporation (PBGC), continues to have its own financial challenges.

According to a March 6, 2017, article in the Kansas City Star, the Central States Pension Fund, which the Missouri Teamsters draw on for pension benefits, “is so large and its problems so deep that its failure would wipe out the resources the Pension Benefit Guaranty Corporation (PBGC) has for covering all multiple-employer plans.”

The PBGC is expected to “run out of money in 8-10 years,” according to the NY Daily News March 1, 2017, article, titled “Pension Benefit Guaranty Corporation running out of cash to cover union pension funds.” The article goes on to say that payouts covering failed multiemployer pension plans are “cut, often down to about one-third of what the worker is due,” and that, if the PBGC “went under,” retirees could expect to see their already-reduced benefits “slashed by (another) 80%.”

According to the NY Daily News, “the prognosis is gloomy for upwards of 10 million Americans over the next few decades if several large funds collapse — particularly the Central States Pension fund that covers 407,000 Teamster truckers in the Midwest and South.” The Department of Labor website lists 75 multiemployer pension plans in ‘Critical and Declining’ Status, and the NY Daily News report said that these “too will soon have to apply for permission to cut retiree payouts,” and that “about one million Americans have pensions on the verge of insolvency.”

To prevent insolvency, many multiemployer pension plans are seeking to cut benefits.

The Washington Post reported on January 27, 2017, that “in an unprecedented move,” a pension fund for Iron Workers in Cleveland “became the first plan to approve benefit cuts for current retirees — even though it is still years away from running out of cash.” Critics, according to the report, said that “the move could open the door for other troubled pension plans to follow suit.”

According to a nwLaborPress.org post, dated February 28, 2017, “Under a proposal submitted Feb. 15 by trustees of the Western States Office and Professional Employees Pension Fund, they would have their pension benefitspermanently reduced by up to 29 percent.Those affected are current or former members of Office and Professional Employees International Union (OPEIU) in Oregon, Washington, and several other Western states.”

Last October, Pensions & Investments reported that the Automotive Industries Pension Plan sought Treasury Department approval to further cut benefits, despite having already removed all early retirement subsidies, joint and survivor subsidies, disability pensions and other options.
For further information:

March 1, 2017 - NY Daily News

Pension Benefit Guaranty Corporation running out of cash to cover union pension funds

The clock is ticking for 71 penniless union pension funds that rely on a federal insurance company to support their retirees — because the agency itself is also running out of cash, its director said Wednesday.

The Pension Benefit Guaranty Corporation’s limited liquidity is part of the spiraling U.S. pension crisis that threatens to wipe out the retirement savings of more than a million Americans.

The PBGC talked about its reduced circumstances Wednesday as it announced that it is now officially making pension payouts for Teamsters Local 707.

The New York union’s pension fund — covering 4,000 retired truckers across the city and Long Island — hit rock bottom in February.

The PBGC stepped in, as it has with 70 other bankrupt union pensions.

But PBGC only has about a decade’s worth of cash in its coffers, director Tom Reeder warned.

“This is a big issue for us. It’s a big issue for Local 707 and it’s a big issue for others in the same situation across the country,” Reeder said.

“We’re projected to run out of money in eight to 10 years. Many union pension plans are projected to run out in 20 years,” he explained.

“There are going to be people in plans who run out of money after we do, and there will be no water in the well.”

Right now, PBGC has $2 billion in assets built up over 42 years, Reeder said.

The company makes its money through premiums charged to unionized multi-employer pension funds — many of which are caught in an unprecedented financial crunch that’s decimated thousands of union retirees.

Last year, when PBGC was supporting 65 bankrupt plans, it paid out $113 million, agency officials said.

In 2017, with even more insolvent plans on its books, PBGC is shelling out even more.

Local 707 alone, with its 4,000 retirees, costs PBGC $1.7 million a month, agency officials said.

In order to keep afloat, PBGC doesn’t try to match a retiree’s union pension. The payouts are cut, often down to about one-third of what the worker is due.

Ex-truckers with Local 707 shared their new financial reality with the Daily News last week.

Ray Narvaez, 77, retired in 2003 after more than 30 years as a Teamster with a $3,400 monthly pension.

Now his monthly take home is $1,100 before taxes.

Narvaez is actually one of the luckier ones in 707.

According to PBGC officials, the average 707 retiree was getting $1,313 a month from the union pension fund.

Now that the fund is broke and dependent on PBGC’s insurance payouts, the average monthly take home is $570, agency officials said.

But that’s nothing compared to the cuts that would hit union retirees if the PBGC went under, said Reeder.

If that were to happen, PBGC would have to rely solely on what it earned from incoming premium payments.

Retirees could expect to see their benefits slashed by 80%. In other words, less than one-eighth of the $570 average check PBGC is able to give Local 707 retirees now.

“The amounts would be negligible. Their retirement payouts would be very low,” a PBGC official said.

The disaster that’s struck Local 707 is looming for several other, much larger Teamster pension funds.

Retirees in construction, mining and the retail and service industries have been hard-hit too.

All of the critically underfunded pensions are multi-employers plans — meaning they were created by various companies that all employed union workers across the same industry. The Teamsters, predominantly a trucking union, has seen its pension funds devastated by stock market crashes and a shrinking employer base.

Two of the largest union pension funds teetering on the brink of insolvency — the Central States Pension Fund and the New York State Teamsters Pension Fund in the Albany region — cover Teamsters.

If the Central States Pension fund goes broke, it could swamp PBGC — if it hasn’t gone broke first.

The majority of union multi-employer pension funds are doing well, as are single-employer union pension funds, Reeder said.

“It’s a minority, but a significant minority, of the multi-employer plans that are in trouble,” he said.

Reeder and many of the union pension funds are pinning their hopes on Congress.

The PBGC is looking for an increase in the premiums it can charge the union funds, which requires Congressional approval.

“It won’t be painless” to shore up the insurance fund, Reeder said.

But it will be far cheaper to do it now than to wait until the last minute, he said.

“We are fairly confident that we will be insolvent on the multi-employer side by 2022 or 2028 barring a legislative change,” he said.

For Edward Hernandez, 67, a retired Local 707 trucker whose monthly pension just got slashed $2,422 to $902 before taxes, the time to sound the alarm was nearly two decades ago.

“I was saying back then to Local 707, ‘Why don’t we do something about it now, let’s go to Washington,’” he said. “Even 15 years ago we were getting letters that our fund was becoming insolvent. Why couldn’t anyone find a way to fix this then?”

December 21, 2016

Iron Workers' Multi-Employer Pension Plan Gets Approval to Reduce Retirees’ Pension Benefits

Cleveland.com reported that the Treasury Department said an Iron Workers union retirement fund in Cleveland can cut retiree pensions deeply for the sake of keeping the fund solvent. The report went on to say that this is the first federal approval to allow a multi-employer pension plan in “critical and declining” status to reduce retirees' pension benefits. In the Treasury Department’s letter to the Board of Trustees for the Iron Workers Local 17 Pension Fund, they said that the plan is “eligible to reduce benefits.”

Without a deep reduction in benefits, the Cleveland.com report said the Iron Workers’ pension fund was projected to run out of money within a decade.

Similarly, the Bakery and Confectionery Union and Industry International Pension Fund (B&C Pension Fund), which is also in “critical and declining” status, is projected to be insolvent in about 13 years. Since 2010, the B&C Pension Fund Trustees have taken actions to reduce benefits due to the Fund’s poor financial condition. One example of this benefit cutback is how the Trustees have amended the pension plan so that it would be impossible for a former employee to “age into” a Golden 80 pension.

Because the B&C Pension Fund is in “critical and declining” status, the Trustees have the ability under the law to seek Treasury Department approval to further reduce benefits for both retirees and active employees in order to avoid insolvency.

March 2, 2016

In the News – Multiemployer Pension Plans

Yesterday, Orrin Hatch (R-Utah) chaired a U.S. Senate Committee hearing on “The Multiemployer Pension Plan System: Recent Reforms and Current Challenges.” The discussion dealt with the current multiemployer pension plan crisis, and specifically focused on those plans that are underfunded, like the B&C Pension Fund. The following are direct quotes from Senator Hatch’s opening remarks:

  • “Ten million Americans are covered by multiemployer pension plans, and, currently, more than one third of those people are in plans that are critically underfunded. Many are in danger of default.”
  • “In the case of a default, the PBGC would pay out pensions to retirees. Those payments are capped by law and would be no greater than $12,870 per year. In fact, in many cases it would be far less. That would be a steep drop for a retiree who was promised an annual pension of $30,000 or $40,000 in a plan like the Central States Teamsters Plan…”

[The PBGC is a federal agency to protect pension benefits in private-sector defined benefit plans. If the event a defined benefit plan is terminated without sufficient money to pay all benefits, PBGC's insurance program will pay you the benefit provided by your pension plan up to the limits set by law]

  • “There are several plans – like the Central States and United Mineworkers Plans, for example – that would bankrupt the PBGC if they were to default. The PBGC insurance program for multiemployer plans just can’t handle that load. And if the PBGC’s insurance assets are ever exhausted, pension payments will drop to nearly zero.”

Dr. Andrew Biggs, Resident Scholar at the American Enterprise Institute shared the following conclusion during his testimony yesterday:

“What employees need are well-designed, well-run defined contribution plans that offer automatic enrollment at responsible contribution rates coupled with simple and low-cost investment options such as target date funds. The other bells and whistles, which seem to offer something for nothing, pose the risk of delivering the opposite.”

To view the full Senate hearing or read the transcripts, click the link below:
http://www.finance.senate.gov/hearings/the-multiemployer-pension-plan-system-recent-reforms-and-current-challenges

February 12, 2016

Pensions may be cut by 50% for some retired truck drivers and others in the Central States Pension Fund

A plan to slash pensions for retired Teamsters has activists warning a dangerous precedent could be set for other plans. Read article from Detroit Free Press. (February 6, 2016)

January 28, 2016

Third Multiemployer Pension Plan Files Rescue Proposal

A New Jersey-based Teamsters local pension fund has become the third multiemployer pension plan known to apply for Treasury Department approval of benefit suspensions. In a Dec. 28 petition, the Teamsters Local 469 Pension Plan in Hazlet, N.J., joined the Central States, Southeast and Southwest Areas Pension Fund and the Iron Workers Local 17 Pension Fund in Cleveland in seeking to use provisions of a 2014 federal law to suspend the accrued benefits of its plan participants on the basis of seeking to avert future insolvency. The Treasury Department reported the new petition, as well as the Iron Workers' Dec. 23 filing, in separate notices. Thirty-nine employers were part of the plan in 2014, and it included 1,781 total participants, only 128 of which were active, the plan said in its 2014 Form 5500 filing. Current assets were $122.6 million and liabilities were $279.9 million, the local reported.

January 25, 2016

In the News: Troubles for Another Multiemployer Pension Fund

A second multiemployer pension fund has announced a plan to reduce benefits under the Multiemployer Pension Reform Act of 2014. Cleveland-based Iron Workers Local 17 Pension Fund became the second fund to request Treasury Department approval to reduce benefits for the fund’s 2,064 members, as part of a rehabilitation plan to prevent insolvency. Iron Workers Local 17 Applies for Multiemployer Benefit Cuts (Pensions & Investments, January 7, 2016)

January 20, 2016

In the News: More on Health Care Premium Trends

Fresh details on employer-sponsored health care premium trends have just been published by the Journal of the American Medical Association (JAMA). Though premium increases have slowed in recent years, JAMA reports a 203% increase since 1999, among other trends affecting the cost of health care for workers.
Recent Trends in Employer-Sponsored Health Insurance Premiums (JAMA, January 5, 2016)

In the News: Recent Headlines Highlight Challenges for Multiemployer Pensions

Recent financial challenges and new regulations put a spotlight on multiemployer pension plans. Read recent news articles about multiemployer pensions like yours.

The Central States Pension Fund is the first to initiate a new process – created by multiemployer pension regulation in 2014 – that may reduce benefits to nearly 400,000 current and retired teamsters.

Teamsters Pension Fund Warns 400,000 of Cuts (New York Times Dealbook, October 7, 2015)

Multiemployer pension funds face challenges from market turmoil and demographic factors.

Thought Secure, Pooled Pensions Teeter and Fall (New York Times Dealbook, April 12, 2014)

The Pension Benefit Guaranty Corporation (PBGC) – which insures multiemployer pension plans – is in financial danger if the Central States Pension Fund becomes insolvent.

Teamsters Multiemployer Pension Fund Puts PBGC In Jeopardy (National Legal and Policy Center, October 19, 2015)

Recent Headlines Focus on Health Care in the United States

Costs for health care services are increasing. Read recent news articles about health care trends and regulation changes.

Among the largest health care expenses for many families, prescription drug costs are estimated to cost $564 billion annually by 2024.

Administration is Seeking Ways to Keep Prescription Drugs Affordable (New York Times, November 20, 2015)

The Kaiser Family Foundation, a health care research organization, analyzes results from the Employer Health Benefits Survey to show trends in the cost of health care coverage.

Premiums and Worker Contributions Among Workers Covered by Employer-Sponsored Coverage, 1999-2015 (Kaiser Family Foundation, September 22, 2015)