30,000 Michigan Teamsters face pension cuts
The Central States Pension Fund, one of the largest Teamsters funds, has filed for reorganization and has sent letters to an estimated 30,000 Michigan members warning that their benefits must be cut.
James P. Hoffa, general president of International Brotherhood of Teamsters, last month called the move in a letter to the fund executive director “tantamount to highway robbery.”
According to Teamsters for a Democratic Union, a Detroit-based grassroots organization of thousands of members across North America, the proposal was submitted to the U.S. Treasury Department on Sept. 25, and individualized letters were mailed out Tuesday to all retirees, working participants and those vested in pension plans.
“This is only a proposal, which has not been approved by the U.S. Treasury Department,” according to a statement on the website of the Teamsters for a Democratic Union. “That process will take several months. And, there will be a vote on the proposal. It is important that all retirees and active Teamsters cast a vote and stand in solidarity to vote NO.”
TDU national organizer Ken Paff said Wednesday that he believes 30,000 active workers and pensioners will be affected by the cuts. Nationally, the number is 400,000, according to an article Tuesday in the New York Times.
“This is a very, very large issue. These are not just individuals, these are families. Many have children and it is devastating. ... These cuts are much more Draconian than expected,” Paff said from the TDU office in Detroit.
The pension fund divided members into groups, Paff said, referring to “orphans,” or members whose companies have gone out of business. That group is bracing for up to a 60 percent cut. Others who are not orphans are expected to see cuts of up to 50 percent.
It was unclear Wednesday how many Teamster pensioners in Michigan belong to the orphan group or how much their pensions would be cut.
Last month, James P. Hoffa, general president at the International Brotherhood of Teamsters, wrote a letter to Thomas Nyhan, the executive director for Central States, Southeast and Southwest Areas, Health and Welfare and Pension Funds, urging pension fund trustees not to vote to file a petition with the Treasury seeking the cuts.
“I can appreciate the need to help the Central States Fund avoid insolvency. But, it is nothing short of outrageous that to do so the fund may propose draconian benefit cuts that will impose significant hardships on the very people the fund is supposed to serve,” he wrote. “… The benefits they have earned were the result of the hard work of members of this union. Simply to wipe out those earned benefits in order to balance the books is tantamount to highway robbery.”
Hoffa also wrote that he opposed the Kline-Miller Multiemployer Pension Reform Act of 2014. Through the measure enacted in December, “Congress established a new process for multi-employer pension plans to propose a temporary or permanent reduction of pension benefits if the plan is projected to run out of money,” according to the Pension Benefit Guaranty Corp. website.
Hoffa said the reform act “also creates the false illusion of participatory democracy by purporting to require a vote of retirees and other participants and beneficiaries that can then be simply ignored if a negative vote would cause significant liability to the Pension Benefit Guaranty Corporation.
“In other words, participants and beneficiaries get to vote, but their vote only counts if they vote to cut their own pensions. The people who conceived that cynical scheme should be ashamed.”
More than 10 million Americans rely on multi-employer pension plans for their retirement security, and if “action is not taken to protect pensions, some 1.5 million workers in 200 retirement plans nationwide are at risk,” according to a news release last month from the International Brotherhood of Teamsters when the U.S. Treasury Department held a hearing in Washington on finalizing a rule paving the way for retiree pension cuts.
If the rule is finalized, the brotherhood said, “it would be the first time that pension retirement security has been compromised since President Gerald Ford signed the Employee Retirement Income Security Act (ERISA) into law 41 years ago.”
The act was established in 1974 and grew to include amendments in later years to allow workers the right to continue their health care coverage through COBRA after they lost their jobs, and then later, HIPAA.
TDU’s Paff said U.S. Sen. Rob Portman, R-Ohio, introduced a bill Wednesday to require a fair vote on pension cuts, including those proposed by the Central States Fund.
Portman’s “Pension Accountability Act” would require a vote in which only the yes and no votes are tallied, with the non-voters not counted, and that the vote by retirees and active Teamsters would be the final say, Paff said.
“Right now those who don’t vote are considered a yes vote and the vote can be overridden,” he said. “It’s a real tragedy. It’s going to be bad if we don’t get this stopped. Just saying no does not solve the problem. We want an alternative solution.”
Pat Boudreau, 65, of Flushing, said his monthly pension will be cut 65 percent from $3,000 to $1,200 a month. A truck driver who hauled cars for 30 years, Boudreau said he does not dispute there is a problem with the fund.
“It’s so unfair the way they did this with no input from retirees. They appointed a rep; she was appointed by the fund. We had no say,” he said.
Boudreau said he will have to cut back a lot.
“I can pay my bills. I’m single. I don’t have dependents now,” he said. “I knew something was coming. I prepared for it, but not for something this drastic. It’s not fair.
“A lot of guys have house payments and kids in college. I don’t know how they are going to do it.”
The Central States Pension Fund issued a statement on its website saying all fund participants were sent a postal mailing on Oct. 1 with detailed and individualized information about “how our proposed pension rescue plan may impact their current or future benefits.
“You should consider the effect of the potential benefit suspension on any retirement decision or election that you make,” it said.
A Central States Pension Fund representative was not available for comment.
Staff Writer Mark Hicks contributed.