Teamster Retirees Demand Trustees 'Stop the Rush' to Slash Pensions in Half
They thought their pensions were secure—but now they’re fighting to keep them. Retired and active Teamsters in 25 states from Florida to Minnesota received notice this fall that their pensions could be cut by as much as 60 percent, beginning July 1.
Most are facing a reduction of 50 percent.
“The bulk of the people who are active are between 60 and 75,” said 71-year-old Whitlow Wyatt, who is facing a 61 percent pension cut, from $3,300 a month to $1,300. He drove over the road for 33 years, for four different companies that were all solvent while he worked for them.
Organizers for Teamsters for a Democratic Union report anger and activity among retirees on an unprecedented scale.
This past month, meetings in Columbus, Ohio, and Kansas City, Missouri, drew 600 and 500 Teamsters and family members, respectively. Milwaukee saw nearly 300 and Cincinnati more than 200. Retirees have formed active “Committees to Protect Pensions” in 20 cities, with Facebook pages set up in a dozen more.
The Columbus meeting drew retirees from as far away as Buffalo, said Wyatt, a leader of the Central Ohio Committee to Protect Pensions. “Louisville sent a bus, they were carpooling from Jackson and Detroit in Michigan, a few came from Indianapolis.”
Before December, the Columbus group had already been drawing 100-150 people to its monthly meetings, and in the fall sent 40 people to Washington for a public hearing about changes to the pension law.
The pension committees are demanding that trustees of the Teamsters’ mammoth Central States Pension Fund, with 407,000 members, stop the rush to achieve solvency on their backs, and find another way to shore up the fund’s ailing finances.
Rug Pulled Out by New Law
Dave Scheidt of the Missouri-Kansas City Committee to Protect Pensions said he’d caught wind of employers organizing to change the pension law as far back as 2012. The 1974 ERISA law used to prohibit any cuts to retirees already receiving pensions. Scheidt got Local 41 in Kansas City to call a meeting in April 2013; nearly 3,500 showed up.
“It was a mob scene. We hadn’t seen anything like that,” Scheidt said. An official of the Central States Fund assured the worried Teamsters that no bill to cut pensions existed, “nothing with an HR number on it.”
That was true—“he put it to rest,” Scheidt said—but it was also true that “all the time, Central States was working behind the scenes” to craft legislation that would permit pension cuts by certain troubled funds.
Congress passed the Multiemployer Pension Reform Act (MPRA) in December 2014, after heavy lobbying by Central States, with no public hearings and no debate.
The law was written specifically to accommodate the cuts wanted by Central States. It sets up three tiers of retirees:
“Orphans” like Wyatt, those whose companies have gone out of business and no longer contribute to the Fund. Their cuts must bring them down to 10 percent above the maximum level previously guaranteed by the federal Pension Benefit Guaranty Corporation (which the government set up to aid stranded pensioners when their companies or pension funds went broke). Orphans will now get a maximum of $14,147 per year—for those with the highest pensions.
Those who worked for a company that is still contributing. About 1,800 companies are in this category, most very small. Their cuts are generally 45 to 50 percent. This group includes UPS retirees pre-2008.
UPS retirees who retired in 2008 or after. In 2008 President James Hoffa allowed UPS, by far the largest employer of Teamsters, to pull out of the Central States Fund. The Fund’s annual income would be about double what it is now if 45,000 UPS workers in the Central States area were still members.
If Central States doesn't pay these workers the pensions they're owed, UPS is required to make up the difference. So the company is eager that these workers' payouts not to be cut.
The Pension Rights Center said of the MPRA that UPS retirees "are given special protection: their benefits are last in line to be cut. This provision is reportedly the result of a last-minute deal, with language added to the law, designed to save UPS an estimated $2 billion that it would otherwise have been contractually required to pay to its retirees.”
UPS is still unhappy with its treatment under the trustees’ proposal, however, and is threatening to sue to stop it.
Bad News in the Mail
In October, retirees began receiving individual letters telling them how much their new pensions would be under the trustees’ proposal. (Four trustees are appointed by the Teamsters International and four by contributing employers.)
Under the law, the retirees now have the right to make their opinions known, and to vote on the proposal, although the Treasury Department may overrule them if they vote no.
The Treasury Department has appointed a “Special Master,” Kenneth Feinberg, to gather retirees’ concerns. Feinberg is holding meetings across the country; it was his presence that brought out the big turnout in Columbus December 8.
Feinberg is the attorney who oversaw the Troubled Asset Relief Program (TARP) and the payments to families of 9/11 victims. Wyatt says he is “approachable” and “like your favorite uncle.” Feinberg told the Milwaukee meeting in December that he thought retirees hadn’t had much chance to be heard.
He has the power to reject the Central States trustees’ plan on certain narrow grounds, but the fact that “it will ruin participants’ lives” doesn’t seem to be one of them. He may send it back for changes if it doesn’t seem to solve the Fund’s financial problems, or if its cuts exceed what’s actually needed. Feinberg emphasizes, though, that he cannot change the law.
Organizing the Advanced
The retirees are organizing with old methods and new. Wyatt says about 150 of the 350 people on his list don’t have Internet access, so he activates a phone tree, in addition to email and Facebook, to notify them of meetings and delegations.
He thinks their movement needs to garner national news coverage, as well as the local stories they’ve been receiving.
He also thinks they need help from other unions, who are seemingly unconcerned. There are 1,400 multi-employer pension plans in the U.S., with about 10 million participants, including miners and construction, hotel, and grocery workers as well as Teamsters.
A couple of locals whose officers are running against Hoffa in next year’s Teamsters election have pledged money to campaign against the cuts. The funds are to be managed by the Pension Rights Center. Local 89 President Fred Zuckerman of Louisville, Kentucky, asked Hoffa to join the fight, but his request has received no reply.
The protesting Teamsters have, however, forced their International union to finally, at the deadline for comments this month, issue a letter to Treasury and Feinberg opposing the Central States plan.
Scheidt says Hoffa’s last-minute opposition is “in my opinion, too little, too late. He’s up for reelection, he can’t afford to look like he’s not doing anything.”
Hoffa had been on the board of the National Coordinating Committee for Multiemployer Plans, which lobbied for MPRA, but “all of a sudden his name disappeared,” Scheidt said.
‘Won’t Be the Last’
Scheidt warns of the writing on the wall for other workers. “If they get by with doing this to us, look out,” he said. Central States is the first pension fund to use the MPRA. “We may be the first but we won’t be the last.”
“We are the largest multiemployer fund that is in trouble,” Wyatt said. “We’re going to be the template for all funds to follow.”
He referred to the old maxim that retirement is a “three-legged stool”—Social Security, pension, and savings. “They just chopped one leg down to a third,” he said. “That stool is not going to stand without that third leg.”
Meanwhile, the MPRA law contains a nasty surprise for those still working, too. Between 2021 and 2025, the age for retiring without reduction of your pension will rise from 62 to 65.
[The deadline for the public to comment on the Central States proposal to cut pensions has been extended till February 1. Anyone may comment here.]
CORRECTION: The original version of this article mistakenly described the third tier of the MPRA as pre-2008 UPS retirees. In fact this tier is those who retired in or after 2008. Some additional explanation was added in this section. Also, the deadline for public comment is February 1, not the end of February.