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Pension Reductions Only Way For Truckers To Save Plan From Insolvency
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Pension Reductions Only Way For Truckers To Save Plan From Insolvency
(Michael A. Fletcher) Nearly 300,000 former truckers and their families would suffer significant losses under a proposal that uses a controversial new law to cut once sacrosanct pension benefits.
The huge Central States Pension Fund, which administers retirement benefits for some former and current Teamster truckers, said the reductions are the only way to save the plan from insolvency.
“A realistic rescue plan is needed now,” said Thomas C. Nyhan, executive director of the Central States Pension Fund. “The longer we wait to act, the larger the benefit reductions will have to be.”
Under the proposal, pensions for Central States’ 407,000 participants would be cut by an average of nearly 23 percent. But the pain would be distributed unevenly. Some participants, including the disabled, would not be subject to reductions. Older retirees would generally receive smaller cuts, while those who worked for defunct companies that did not keep pace with their pension funding obligations would face steeper reductions.
The proposed cuts were detailed in a plan submitted to the Treasury Department late last month. In it, Central States said the reduced number and increased age of its participants have left it paying out $3.46 for every dollar it takes in. The result is that the plan is disbursing $2 billion more in benefits than it takes in through employer contributions each year.
Officials say the pension plan was hurt by significant membership losses after the trucking industry was deregulated in the 1980s. Central States also suffered catastrophic investment losses during the stock market crash that accompanied the Great Recession. Since then, its investments have returned about 13 percent a year, but that has not been enough to return it to sound footing. Without changes in its benefit formula, the pension plan is on course to be insolvent by 2026, Nyhan said……More Here
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