Retired Teamsters Get Reprieve as Federal Government Rejects Central States Pension Cuts
May 6, 2016
By: Jim MacKinnon, Beacon Journal
May 6, 2016
Retired Teamsters facing imminent massive cuts to their pensions won a significant battle Friday that preserves their monthly retirement checks but still leaves open the huge issue of how to keep their pension plan solvent in years ahead.
The struggling Central States Pension Fund, which sought to cut monthly pensions — some by as much as 69 percent — to hundreds of thousands of Teamsters starting July 1 to remain solvent, had its proposal denied.
“What a victory,” an emotional Mike Walden said after hearing the news. “Man, what a victory. ... I don’t know whether to drink or cry. Probably do both.”
Walden is the retired Teamster from Cuyahoga Falls whose Northeast Ohio Committee to Protect Pensions helped spearhead a national campaign to preserve pensions from being cut under a 2014 federal law.
Kenneth Feinberg, special master for the U.S. Treasury Department charged with reviewing reform proposals from financially troubled multi-employer pension plans, announced Friday afternoon that Treasury rejected the Central States plan.
But there were no solutions proposed to fix the major funding issues in the Central States plan that went along with the rejection.
“As Special Master, appointed by the Secretary, I am writing to notify you of Treasury’s decision to deny the application because the suspension fails to satisfy the statutory criteria for approval of benefit suspensions,” Feinberg said in a letter to Central States.
Feinberg spoke about his decision in a conference call with journalists at 2 p.m.
“It is unanimous that the application fails to meet the statutory prerequisites,” Feinberg said. In addition, he said that the plan would not avoid insolvency.
The proposed pension cuts also were not equitably distributed among retirees and Central State’s proposal was not understandable to plan participants, he said.
“We will not accept, we cannot accept [the plan],” Feinberg said. “The cuts proposed by Central States will not take place.”
Waiting for new plan
Central States will be able to submit a new plan.
“They have options. That’s up to them,” Feinberg said. “What Central States wants to do, our doors are open.”
Central States posted a statement on its website www.cspensionrescue.com that, in part, read:
“Although the decision by our trustees to file this application ... was gut wrenching, we are disappointed with Treasury’s decision, as we believe the rescue plan provided the only realistic solution to avoiding insolvency.
“The Central States Pension Fund Trustees will carefully consider the most appropriate next steps, based on this denial and the final guidance issued by Treasury on April 26.
“Central States Pension Fund remains in critical and declining status and is projected to run out of money within ten years, or even less.”
Retired Teamsters from around the nation, including thousands in Ohio, have strongly lobbied the federal government, including protest rallies in Washington opposing Central State’s plan to reduce monthly pension payments.
There are about 48,000 retired Teamsters in Ohio, including thousands in the greater Akron area. Most of the retirees worked for trucking companies that had paid into the Central States fund.
The Multiemployer Pension Reform Act of 2014, backed by some unions and passed late that year with bipartisan Congressional support, then signed into law by President Obama, allowed private multi-employer pension plans to reduce monthly payments to retirees to remain solvent.
Treasury made a legally and morally sound decision, said Karen Friedman, executive vice president and policy director at the Pension Rights Center in Washington. The center has provided significant support to the retired Teamsters cause.
“I burst out crying when I heard the news,” Friedman said. “It shows the little people won against the big guys. ... This was a democratic victory. It just goes to show when people work together, they can win.”
What’s next?
The next step will involve finding ways to keep Central States and the federal backstop Pension Guaranty Benefit Corp. financially sound, she said. “You can’t just repeal without coming up with the money. There has to be ways to get money in the plans and in with the PGBC.”
Walden said he and others will continue to work to repeal the Multiemployer Pension Reform Act, find solutions to keep Central States solvent, and also replace all of the people who now oversee the union pension plan.
“I understand insolvency,” Walden said. “There are solutions out there.”
Central States should join the retiree groups to help with the solutions, he said.
“If they are smart, they will get on our side,” he said. “They will have 60 committees [around the nation] on their side.”
Norton resident Greg Smith, a retired Teamster and member of the Northeast Ohio Committee to Protect Pensions, said his group fought hard the last two years to preserve their pensions.
“We started out in March of 2014 with only about a dozen members in the Akron area,” Smith said “We now have thousands of members in over 50 pension committees across the country. We won a major battle today, but we’ve got more battles ahead to save the Central States Pension Fund from insolvency.”
Another retired Teamster, Norton resident Rick Kepler, praised Friday’s decision but said other major issues remain.
“[I am] naturally delighted that all our efforts were not in vain,” Kepler said. “But the class war, cutting pensions, attacking unions, continues as Wall Street is celebrating that both presidential candidates will dance to their tune and do nothing to stop this assault on the American worker.”
Response in Ohio
Ohio’s federal lawmakers praised Friday’s decision.
“Today’s decision is a victory for the hard-working families who deserve better than these massive proposed cuts in the pensions they earned,” U.S. Sen. Rob Portman, R-Ohio, said in a news release.
Portman introduced the Pension Accountability Act, which he has said is intended to give Ohio workers and retirees a voice in the pension reform process.
“The decision today, rightfully and justly, will require a reevaluation and reset of how to protect the hard-earned pension benefits of 270,000 Teamster retirees, of which 48,000 are Ohioans,” U.S. Rep. Marcy Kaptur, D-Toledo, said in a news release. She is a co-author of the Keep Our Pension Promises Act, which would repeal and replace the Multiemployer Pension Reform Act.
“Thousands of Teamsters from Ohio and across the country stood at the Capitol last month and told Treasury to stop these cuts. Today we learned that Treasury heard that message loud and clear,” U.S. Sen. Sherrod Brown, D-Ohio, said in a news release.
U.S. Rep. Tim Ryan, D-Niles, said that as many as 4,000 retired Teamsters in his district would have had their pensions cut if Treasury had decided differently.
“Pensions are not ‘benefits’ given as a gift from employer to employee, they are payment for work that was already done,” Ryan said in a news release.