Detroit Free Press – by Susan Tompor
Retired truck driver Jerry Deaton, 69, says every time he received his monthly Teamsters pension check, he would get the chills and worry how much money he could lose in the future given all the rumors.
On Monday, he got the answer he dreaded: His pension could be slashed by roughly half.
His $2,700 a month pension is targeted to be cut to around $1,317 a month as of July 1, 2016, as part of a massive proposed rescue of the troubled Teamsters Central States Pension Fund.
“It doesn’t leave you with much options,” said Deaton, who lives in Osseo in Hillsdale County. “I’ll be 70 years old in December. Who’s going to hire a 70-year-old truck driver?”
The giant Central States Pension Fund — which has $17.3 billion in net assets — covers more than 250 union locals with more than 400,000 participants who live in 37 states. Currently, the fund said it pays a pension benefit to more than 220,000 retirees nationwide and about 115,500 retirees across the U.S. face reductions now.
Retirees started receiving letters in the past week that detail how they would individually be impacted by a proposed pension rescue plan.
In Michigan, the fund said it covers 24,205 current retirees — and 13,179 now face benefit reductions.
The rescue is designed to save the pension fund. But retirees say the rescue could sink their budgets.
Most everyday retirees typically wouldn’t worry about risks to pension checks. But the risks are going up for some. The City of Detroit’s retirees took cuts to their pensions as part of the city’s historic Chapter 9 bankruptcy. And federal legislation passed in late 2014 changed the rules for reducing pensions regarding plans that covered groups of employers.
About 10 million Americans participate in pension plans that cover groups of companies, such as those in trucking, entertainment, mining, construction and retailing.
The Multiemployer Pension Reform Act of 2014 allows deep-in-the-red pension plans — those that would be insolvent within 15 years without intervention — to take the drastic step and slash pension checks of current retirees. Disabled and older retirees do have more protections.
Shortly after the law was passed, experts said the troubled Central States Pension Fund, based in Illinois, was the most likely candidate to make drastic cuts under the new rules.
Other retirees in troubled multiemployer plans are watching because this rescue plan could end up being a model to copy elsewhere.
The Central States Pension Fund’s own checkered history means it is not exactly a sympathetic character in the labor movement’s fight to hold on to pensions for retirees. The fund was ripe with corruption. In the early 1960s, the fund lent money to Las Vegas casinos. In 1982, the fund ended up under a federal consent decree, which had the fund being run by Wall Street firms and monitored by the U.S. Labor Department. Even in 2004, many raised concerns about a possible failure of the fund.
Under the new law, the Central States Pension Fund submitted its proposed rescue plan to the U.S. Treasury on Sept. 25. Treasury has up to 225 days to review the proposed rescue. If Treasury approves the plan, participants would be able to vote on whether the plan should be implemented.
James P. Hoffa, president of the International Brotherhood of Teamsters, has written a letter to the Central States leadership arguing that such cuts should not be made. Hoffa acknowledged he has no authority over the operations of the Central States fund.
Hoffa wants Congress to pass a “Keep Our Pension Promises Act.” He maintains that the Multiemployer Pension Reform Act unfairly shifts the consequences of unfunded pension liabilities to retirees and participants.
Yet others argue that a Central States insolvency would destroy the multiemployer portion of the federal Pension Benefit Guaranty Corp. The federal insurance program for single-employer pensions is not in jeopardy as a result of this issue, experts said.
The Central States fund pays out $3.46 for every $1 taken in, according to an overview statement from the fund. That means the fund is paying out $2 billion more than it takes in every year through employer contributions, according to the fund.
Even so, individual retirees are struggling to figure out how they’re going to keep up with their own bills — heating, phone, even some mortgages — with such deep cuts.
“People are absolutely furious. People can’t believe it — 50%? Fifty?” said Maurice Curran, 71, of Livonia.
Curran, who retired 10 years ago, used to drive a truck for Spartan Stores in Plymouth. His pension now is $3,000 a month but is set to be cut July 1.
“I’ll lose $1,500 a month — $18,000 a year,” Curran said. “This is draconian. The Teamsters are not bankrupt.”
Fred Bora, 69, who lives in Comins in northern Michigan, said his potential cut would be about 60% and drive his monthly pension down to about $1,288 a month. His pension can face a deeper cut because the company where he worked went out of business in the Great Recession.
“I worked 30 years and they promised me a pension. How can they take it away?” Bora said.
Right now, Bora said he and his wife, Katherine, 80, have two mortgages. They pay about $800 a month on their retirement home.
“$800 — that’s almost my full pension check” after the cuts, Bora said.
But the couple, who have been married for 21 years, plan to sell the retirement home and move to a less expensive home in Riverview near Detroit because Katherine doesn’t like living away from the metro area.
Retirees say such cuts won’t just hit them personally, adding that they’re likely to spend far less in their communities at supermarkets, restaurants and even in their donations to charities.
“If you take $1,300 away from me each and every month, it’s going to have a big impact on how I would live,” said Deaton. “It’s not just going to affect me personally.”
Contact Susan Tompor: 313-222-8876 or stompor@freepress.com.
The Teamster Union Officers will likely get a raise or Bonus.
ns
you know that is the case
Wow only half of their pensions stolen from these wall street kikes.
Consider yourselves lucky. Cause they’re coming for the rest.
Wait till you get a check of half of what they stole from you!
wait until the bank you put it in goes “bail-in”
…I have no money in the bank because I have no money
You mean “by” these Wall St. kikes? When the Mafia ran the fund, the retirees got 13 checks a year. The fund was rolling in dough. The government took over & now this. Half went to an index fund & is performing well. The other half went to Goldman Sucks,(Cruz) Morgan Stanley, etc. That’s where the money went. Just like MF Global (Corzine) not a fn thing will happen to these crooks.
yeah, this happened to the carpenter’s pension funds too. (at least a year ago, if not more)
the double-whammy is that in addition to losing half the dollars, the dollars you do get have already lost about 40% of their buying power over the last decade.
If you have money tied up in a pension fund, I think it would be wise to cash it out, take the loss, and spend it on useful items. No one’s retiring anymore (unless they have bull whips, and wetbacks with steel balls chained to their ankles)