Could the Central States Pension Fund Go Insolvent?

August 22, 2012: It's an ugly question, but one that has to be faced. And then our union needs to take action to deal with the problem, to prevent it from happening.

The Hoffa administration has all but given up on the Central States Pension Plan. This decision could have dire consequences for 280,000 Teamsters and retirees, numerous Teamster officers, and the financial viability of hundreds of Teamster locals.

What can be done to prevent this train wreck for Teamster pensions and Teamster power?

The key turning point came in late 2007 when James Hoffa and Ken Hall gave UPS management their long-sought concession: pulling out 44,000 full-time Teamsters—and said good-bye to the $800 million (and growing) that UPS would be contributing annually.

This sell-out set off a cascade of events. Other companies pulled out; added withdrawal liability to YRCW's balance sheet; and a ratio of retirees to actives which is now over 3:1. Then the stock market, which the fund became heavily dependent on, took a tumble.

It gave UPS workers some short-term security, but now their pensions are in the hands of the company for decades to come. It also endangered the local unions that UPS workers belong to.

In late August, Hostess Brands Teamsters are voting on a proposed national contract which would pull thousands of more Teamsters out of the Central States Fund (and other Teamster pension plans). Hostess is in bankruptcy.

The 2011 Financial and Analytical Reports for the fund show that it ended the year with $17.7 billion, down $2.2 billion in a year. The fund depends on investment returns to pay benefits, and now must earn 12 percent a year on investments to tread water. This is not viable.

Fund Director Thomas Nyhan testified two years ago before Congress that the fund could be insolvent in a decade, without a lifeline of relief.

The Consequences

Over 213,000 retirees depend on the fund for their promised retirement after a lifetime of Teamster work. Another 67,000 active members have been promised a pension in the future.

If the fund becomes insolvent, Teamsters would be dependent on the Pension Benefit Guaranty Corporation (PBGC), which has a maximum payout per month of $1,080 for a Teamster with 30 years credit.

That tells you how devastating this would be.

Officers and Local Unions

Among the biggest losers would be Teamster local officers and business agents throughout the Central and Southern Regions and the Carolinas. Most of them retire with high seniority and a good pension.

For most of them, Central States provides their only pension, and it stands to be slashed to about $1,000 per month.  (Officials in the South have an additional, officers-only pension plan.)

And if the fund fails, who then will want to become a union officer? The local unions cannot leave the Central States Plan, because the withdrawal liability payment would break them financially.

Our local unions would then be financially burdened and weakened.

Incredibly, most of these officers campaigned last year for James Hoffa and Ken Hall, the architects of the disaster in their own pension plan.

Concerned Teamsters need to stand up and speak out. It's not too late to save our pensions and union but the clock is ticking.

The International Union needs to take a firm stand that no more corporations will be allowed to pull out. Hoffa has done the opposite, and in fact just bargained the National Pipeline Agreement to allow more companies out of Central States.

In addition, we need a political movement to save pensions in this country, initiated by the Teamsters but with a broad coalition of support. That won’t happen in this election year, but its time to start laying the basis for it.

Two years ago Senator Robert Casey of Pennsylvania sponsored a bill to help protect pension plans, and strengthen the PBGC and increase its guarantees. It had some bipartisan support, and was announced at the YRC terminal in Carlisle, Pa.

There was talk among Teamster members and officers about a march on Washington and building a broad coalition in defense of pensions. Members and retirees responded very favorably to this kind of action. The Hoffa administration poured cold water on it, in favor of lobbying politicians behind the scenes.

It's time to put protection of pensions front and center on the Teamster agenda and on the national political agenda.

Comments

please, please, who is writing this comment about officers and agents, and one pension check.

these officers and agents are receiving at a minium three checks. yes they are receiving one from cspf

but they are also receiving from their joint councils, the int. and one from their local , where the officer or

agent put in one dollar and was matched with two dollars of members dues.

99% of the members know nothing of this and this all fits in with the congress's pension benefits.

 

james cousins

Hoffa is the worse thing that has happened to the Teamsters since I've been a member, 29 yrs. He has done nothing to build up the union but has done everything to fill his pockets at our expense. I can't understand how so many are so deceived into reelecting this clown.not once, but twice!! Want to fix the union? Then get rid of Hoffa!!

I have been a Teamster for 35 years. I have never seen so many officials such as Hoffa derailing the teamsters union. they always forget where they came from. We need better protection for our pensions. I can honesty say that I did not vote for Hoffa, he is not as strong as his dad. Teamsters, it is past time to unite for the better for our union and pension fund.

I retired with the hopes that a good life was in store, with Hoffa and his friends not going after YRC for their non-payment of what they owe to our fund, makes you wonder where the money is going!!! YRC wanted to buy out ABF, my company, if they can come up with that kind of money why can't they pay their fair share??? I was a Teamster for 40 yrs. between Chicago 710 and 41 in Kansas City. My future is not what I expected. I worked for that retirement, I hate to think our leadership sold us down the river.