March 11, 2009: Many Teamster members are worried about their retirement and want to know more about how their pension works and how they are protected.
In part one of a series of educational articles on Teamster pensions, Teamsters for a Democratic Union collected some of the most frequently asked questions and got answers from pension attorneys and fund managers.
This month, we’ll look at questions from Teamster multi-employer funds. In the next issue of Convoy, we’ll take a look at questions from the new UPS pension fund.
Do you have a question about your pension? We can help. Call Teamsters for a Democratic Union at (313) 842-2600, or email info [at] tdu [dot] org.
Q: Why do some Teamster pension funds pay better benefits than others, even to Teamsters at the same company, such as UPS or YRC?
This is a big question with no single answer. It’s true that various regional (and local) pension plans pay different benefits, sometimes substantially different.
One important element is the degree to which a pension fund has a broad base of participating companies, including in growing or healthy industries. The Western Conference Fund, for example, maintains a broad base of participating employers. The Central States Fund has a narrower base, and is thus more dependent on freight, carhaul, construction, and grocery distribution companies.
A related element is the question of UPS part-timers as participants. This is a young and growing demographic which helps to support a healthy fund. Unfortunately, only the Upstate New York, New England, and Western Conference Funds have UPS part-timers in the fund.
There are a number of other factors in why benefits vary, including: investment strategies, funding level policies, and benefit structures. Pension benefit levels are set by the trustees; half of them are Teamster officials, and half are employers.
To read TDU’s special report on the Pension Divide and to see a comparison between the best and worst-paying Teamster plans, go to www.tdu.org/pensiondivide.
Q: Can my pension be cut?
Yes and no. Your pension future accruals can be cut, and most Teamster funds have cut the accrual rate, which is the amount your pension will go up each year in the future.
Fortunately there is an anti-cutback provision in federal pension law, making it harder to cut already-earned pension credits. Those cannot be cut, unless your pension fund gives you notice that it is in critical status, also called the Red Zone.
TDU has consistently fought to maintain the anti-cutback protection, even when our International Union was fighting to eliminate that good law.
The fact that a pension fund is in the Red Zone does not necessarily mean it will cut already-earned credits; for example, the Central States and New England funds, which are in the Red Zone, have not done so.
Q: What happens if my pension fund goes bankrupt?
This is fairly unchartered water, because generally multi-employer union plans have not failed, as too many single-employer plans have.
The Pension Benefit Guaranty Corporation (PBGC) provides partial benefits to workers from failed plans.
The PBGC is financed by premiums paid by pension plans. Multi-employer plans pay lower premiums because they are more secure.
The PBGC is not nearly big enough to handle the pension crisis facing American workers and retirees: we need a pension bail-out, just as the banks have been bailed out.
Fortunately, while some of our Teamster pension funds are in serious condition, none is on the verge of failure.
Q: Would I be better off with a company pension?
In the great majority of cases, the answer is no. Millions of retirees in company pension plans have had benefits cut.
Multi-employer pension plans, like our Teamster funds, are still the safest bet for a secure retirement. We need to strengthen and defend our union plans, not let companies break our funds up or lure us into less-secure company plans.