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30,000 Michigan Teamsters avoid pension cuts

Detroit News staff and wire

Washington — More than 30,000 Michigan current and retired workers avoided pension cuts — for now — when the Treasury Department rejected a Teamsters Central State Pension Plan proposal that would have started in July.

Treasury Secretary Jacob Lew said in a letter to members of Congress released Friday that while the decision blocks the pending pension cuts for 273,000 current and retired workers across the country, it does not resolve the issue because the pension plan remains severely underfunded and is projected to become insolvent within the next 10 years.

The review was conducted by Kenneth Feinberg, the outside attorney selected by the Treasury Department to review the case. Feinberg has worked with victims of the Sept. 11 terrorist attacks and General Motors’ ignition defect recall.

Lew said the rejection of the proposed cuts was based on Feinberg’s findings that the plan failed to demonstrate the reductions would keep the pension plan from becoming insolvent or show they were being equitably distributed. It would have affected retired truck drivers, warehouse workers, dock workers and their widows and spouses.

Michigan congressional Democrats and the Teamsters union welcomed the rejection of the plan, which would have imposed cuts of 60 percent to 70 percent this summer.

Teamsters General President Jim Hoffa praised Feinberg and Treasury for the decision, saying it protected thousands of retired workers from “massive cuts that would destroy so many lives. ... We will find a solution to this problem that will allow members and retirees to continue to retire with dignity.”

U.S. Rep. Debbie Dingell, the Dearborn Democrat who led a bipartisan 88-representative coalition in opposition to the proposal, said retirees and their advocates must continue to fight because potential pension cuts still loom.

“While we are pleased that Treasury agreed that placing an inordinate burden on workers and retirees is not the only option for Central States, it is now time for all stakeholders to return to the negotiating table to find a solution that guarantees workers the pensions they have earned and doesn’t threaten their security in their retirement years,” Dingell said in a statement.

“We will not stop fighting until these retirees get the benefits they deserve.”

Although the multiemployer Central State Pension Fund’s executive director said trustees would “carefully consider the most appropriate next steps,” he said the rejection makes it more difficult to craft a viable alternative. The fund has said that without the proposal, more draconian cuts would be needed in the future.

“Although the decision by our Trustees to file this application under provisions of the Multiemployer Pension Reform Act of 2014 (MPRA) was gut wrenching,” Executive Director Thomas Nyhan said in a statement, “we are disappointed with Treasury’s decision, as we believe the rescue plan provided the only realistic solution to avoiding insolvency.”

“For every $3.46 that the fund currently pays out in pension benefits, only $1 is collected from contributing employers, which results in a $2 billion annual shortfall.”

The proposal was prompted by the Kline-Miller Multiemployer Pension Reform Act of 2014, which was included in the omnibus federal budget bill passed in mid-December 2014. Congress created a new process for certain multiemployer pension plans to propose a temporary or permanent reduction of pension benefits if a plan is projected to run out of money before paying all promised benefits.

The Teamsters union objected, saying the Central State’s plan made unrealistic projections about pension finances. Affected retirees turned out in droves to voice their displeasure about the proposed cuts at several hearings that Feinberg held around the nation.

More than 500 people filled a February public hearing at Wayne State University in Detroit, many of them angry over the proposal, some of them in tears.

“I worked for this. It’s ridiculous,” 70-year-old Fred Bora of Riverview told Feinberg at the February hearing. He retired in 2002 after 30 years as a truck driver in Teamsters Local 299.

Bora said his pension would have been slashed from about $3,000 to $1,200 monthly if Treasury had approved the plan.

Detroit resident Terry Elswick, 57, said the Central States’ proposal would have forced Teamsters pensioners to choose between medicine and food. She advocated that “Congress does away with this (law) ... and starts over.”

Sen. Rob Portman, R-Ohio, also praised the Treasury action, saying he hoped that all sides would now “re-engage on a more thoughtful plan to address the Central States pension crisis.”