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.
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.