Monday, April 17, 2017
Teamsters Get a Reprieve From Pension Cuts
Thousands of upstate retired Teamsters have dodged a potential pension cut, at least for now, thanks to a recent decision by the federal government.
And the retirees may face smaller cuts than the original plan called for as reductions could have been up to 31 percent.
Still, the respite could be short-lived as the timetable for possible cuts has been pushed forward from July 1 to Oct 1.
"We need to file another application to the Treasury Department," said Tom Baum, volunteer retiree representative for the Teamsters' Local 294.
Also known as the Upstate Teamsters, Local 294 represents about 16,500 retirees and another 18,500 who are currently employed.
Many are or were truck drivers or other employees of the UPS parcel delivery service, as well as drivers who worked for car haulers, who transported new vehicles from train depots to auto dealerships across the region. Most are in upstate New York with a few in New Jersey.
Like a number of private sector unions, the Teamsters over the years have seen their membership dwindle due in part to federal deregulation of the trucking industry.
With fewer members to support retirees and following the 2008 crash, the pension fund has hit rocky financial waters. Fund administrators say if cuts aren't made they could become insolvent by 2025.
Any cuts, though, must be approved by the federal Treasury Department.
Earlier in April, the Treasury Department sent back the Upstate Teamster's application to make cuts.
They offered several suggestions including an updating of the fund's actuarial mortality tables. They also wanted the fund operators to make a more optimistic assumption about their rate of return, which was pegged at 6.75 percent for the next decade.
"The Fund's investment earnings during the last few months have been better than expected, which could help make deeper cuts unnecessary. It's still possible, however, that the new proposed cuts will be deeper than 31%,'' according to a web page that has been set up http://nysteamstersfundretireerep.com.
"The 6.75 percent (projection) is too conservative,'' Baum said of what federal regulators told union officials.
In the meantime, UPS has offered a plan of its own which would enact across-the-board cuts of 20 percent rather than the cuts of up to 31 percent contemplated in the current proposal.
Under the current plan, cuts would vary based on length of service and age, as well as disabilities.
The UPS plan, though, would give no preference to disabled retirees.
It would also enact a $10 monthly employee fee. They would also seek low interest loans from the government in order to shore up pension fund finances.
UPS spokesman Steve Gaut in a written statement said that was just one of several options the company was exploring in efforts to help deal with the problem.
''The company is working with stakeholders to explore legislative solutions which could help minimize the impact of required restructuring of multi-employer plans facing critical funding problems,'' he said. "However, there is no single proposal or agreed solution to comment on at this time."
A number of pension plans from various unions including Teamsters have run into financial problems in recent years. They can seek to lower payouts, but if the Treasury Department says no, then the plans can be at risk of folding.
That means that many of the most endangered plans need to eventually devise a proposal for benefit cuts that the Treasury Department agrees with.
At least one Teamsters fund has already become insolvent: the New York City based Teamsters Local 707 fund.
The federal Pension Benefit Guarantee Corp. a federal agency, stepped in but they are only paying $570 per month, which was less than half of most pensions.
The cuts were enabled by Congress in 2014 as part of that year's ongoing budget resolution to fund the federal government.
The pensions in question are "multi-employer" plans which cover employees like union truck drivers who may have worked for a variety of employers such as delivery or trucking companies over the years.
"A lot of retirees are very nervous about this," said Joellen Leavelle, Communications and Outreach Director at the Pension Rights Center, a Washington, D.C.-based organization that advocates for pensioners.
Leavelle said Vermont Senator and former presidential candidate Sen. Bernie Sanders has proposed cutting tax loopholes to help shore up pension funds. She said that proposal is expected to come again in May.