Retired Truck Drivers Facing Significant Cuts in Pensions
March 26, 2016
By: Lou Wilin, The Courier
March 26, 2016
Retired truck driver John Fredritz’s pension could be cut by 53 percent, to $1,335 per month, as early as July. It is part of a “pension rescue plan” proposed by Central States Pension Fund for members of the International Brotherhood of Teamsters.
But for Fredritz, 66, of Carey, and for others, it feels more like being thrown under the bus.
Over 400,000 other pension members would see benefits reduced.
It is a particularly bitter pill for Fredritz and over 220,000 retirees who would lose 50 to 70 percent of their pensions.
He and many others gave up years of pay increases, even took pay cuts, and contributed thousands of dollars from their pay each year toward their promised pensions. Today, many of them have little savings outside of their pension benefits and Social Security.
“Somebody’s not doing their job. Somebody’s not overseeing this,” said retired trucker Gary Holden, 63, of Findlay. “I’m sorry to say, I think the federal government is leaving a lot of us hanging.”
Holden would lose 66 percent of the pension benefits he contributed to and was promised for 30 years.
The proposed cuts are not a done deal, but it looks like Teamsters members face some type of pension cut.
U.S. Treasury Secretary Jacob Lew has appointed attorney Kenneth Feinberg to decide in May whether to approve the proposed cuts.
The pension fund said it has no choice but to cut benefits. It pays out $3.46 in benefits for every $1 in contributions it receives from employers, the fund said. So it pays out $2 billion more than it receives each year, the fund said.
The pension fund’s troubles are the result of trucking industry deregulation in 1980, declining union membership and two devastating recessions, the fund said. Hundreds of employers who once made contributions to the fund have closed their doors or gone bankrupt.
If Feinberg approves the fund’s proposed rescue plan, participants will be able to vote against it. But even if most fund members vote against the plan, it still could be implemented.
That’s because the Treasury Department would be required by Congress to implement an approval by Feinberg, or to modify it. To make any changes, the Treasury Department would consult with the federal Pension Benefit Guaranty Corp. and the Labor Department.
It is all part of a law Central States Pension Fund lobbied heavily for, and Congress passed, in December 2014. It was a rider, attached at the last minute, to an unrelated massive spending bill to keep the federal government running.
In the rush to keep the government running, lawmakers also passed a law which weakened 40-year-old federal rules against cutting pensions. Those rules were passed by Congress in 1974 after many retirees saw their pension benefits reduced.
U.S. Sen. Sherrod Brown, D-Ohio, and U.S. Rep. Marcy Kaptur, D-Toledo, and other senators and representatives have urged Feinberg to reject the pension rescue plan. Brown and Kaptur also have proposed legislation which would protect pensions.
But retirees fear it will be too little, too late for them.
Milton Ward of Findlay would lose 66 percent of his monthly benefit. He is weighing his options.
“I can go climb in a truck and start driving again. I’m 72 years old and I don’t want to do that,” he said. “So, I guess I could go to work at McDonald’s, clean tables. You know, to make up $12,000. … I’m going to have to work a lot of hours at McDonald’s.”
Or, he can get a job driving truck for a company with the Teamsters union, he said.
“So I can pay into Central State for 10 years and recover my losses. That makes me 82 years old. How much more time do I have to live?” Ward said. “Go work for a company that pays into the pension plan. That’s crazy. I’m paying into a plan that’s failed me, supposedly.”
John and Mary Fredritz said they will not starve if their pension is cut. Mary used to chide John for being stingy with money. Today, they are thankful for those cheap ways, which have brought a little relief in these worrisome times.
“I think we’re going to be OK,” Mary said. “It’s not going to be great, but it’s going to be OK.”
“I’ve been real careful with my money over the years, but some people have not. They’re the ones that are going to get hurt,” John Fredritz said. “I guess being cheap over the years kind of helped a little bit.”
Though it helped, the Fredritzes will feel the pinch if John’s pension is cut by 50 percent, as proposed. The occasional trips they love to take will be fewer and farther between.
For others, the recommended cuts would cause despair.
The Teamsters union no longer covers retiree health insurance. At 63, Holden still must wait a couple of years before being eligible for Medicare. Health insurance and health care are costing the Holdens heavily.
“That’s where it’s hitting us hard,” he said.
And the proposed pension cut would be devastating.
“If everybody went into work Monday and their boss called them in and told them they were going to take a 66 percent pay cut, where does that leave you?” Holden said.