Oct 12, 2015
Many Teamsters Union retirees received letters informing them of possible drastic cuts of up to 60 per cent in their pension checks starting in July 2016. For some retirees this will mean a drop in their checks from $3200 to less than $1300.
The immediate reason for the cuts is that the Pension Benefit Guaranty Corporation (PBGC), which provides benefits when pension funds fail, has deemed the Teamsters’ Central States Pension Fund (CSPF) as likely to go broke within 15 years. The CSPF is what the PBGC calls a multiemployer pension fund, since unions like the Teamsters represent workers from many different employers, and pooled their members’ pensions as a way to provide stability to their funds.
In late 2014, the politicians in Congress passed the Multiemployer Pension Reform Act (MPRA), and President Obama signed it into law. The MPRA gives the Treasury Department, the PBGC, and the Labor Department the power to oversee reductions in retirees’ benefits as a means to keep so-called “failing” pension funds solvent.
The Teamsters are not the only union facing such drastic cuts to their pensions. Experts believe there may be 100 to 200 other union funds benefitting up to 1.5 million retirees that could face similar cuts in the future as a result of the MPRA.
In passing the MPRA, the politicians put the burden of solving the pension funds’ crisis on the backs of retirees. But the real cause of the funds’ insolvency is the failure of the companies that employed these union workers to properly fund their pensions. Union workers gave up wages in exchange for promises of receiving pensions when they retired.
In the case of the Teamsters, many of the companies they worked for have gone bankrupt. Their employees, known to the pension funds and government agencies as “orphan retirees,” still are owed benefits. These companies used bankruptcy as a way of passing on money to the people who owned them, while cheating the pension funds out of money they owed.
The government has chosen to go after the Teamsters first because they are an easy mark. The media point to “corruption” in the Teamsters Union as the reason why their pension is underfunded.
They give the example that the Teamsters pension fund loaned money to Las Vegas casinos in the early 1960s. They’re using “corruption” from 50 years ago to convince other workers that the attack on the Teamsters’ pension is somehow justified!
Workers should not fall for these lame attempts to justify the theft of pension benefits promised to workers, many of whom worked 30 years or more for their pensions.
The attack on the Teamsters’ pensions, and on the hundreds of other plans likely to be cut, is part of a more general attack on union pension funds, like the attack on City of Detroit retirees and other public employee unions across the country. With the MPRA, the politicians went after multiemployer plans. But it’s only a matter of time before they apply the same methods to single employer plans.
Nothing is safe. All those promises that workers believed – what were they but hot air? The only thing that will allow workers to protect themselves is the willingness to fight for themselves – to fight collectively along with all those other workers who find themselves also under attack.