Rank-and-File Teamsters Campaign Against Pension Cuts

A brewing fight over pension cuts is shaking the ground inside the International Brotherhood of Teamsters (IBT). Wide-scale rank-and-file dissatisfaction over cuts in pension benefits last year by the Central States Pension Fund (CSPF) has sparked a member-driven campaign that has challenged the highest levels of leadership in the union.

CSPF, a joint union- and employer-run pension fund that covers 400,000 participants in 22 states from Minnesota to Florida, announced cuts to current and future retiree benefits on November 19. Since then, thousands of concerned union members from Minneapolis to Miami have been packing public meetings organized by Teamsters for a Democratic Union (TDU) and the Central States Pension Improvement Committee.

“The pension cuts affect everyone, not just retirees,” says retired Atlanta-area freight driver and CSPIC chairman Greg Charron. “We see young people, retirees, spouses, and workers about to retire at these meetings. Everyone has a stake in getting involved.”

Much of the anger over the cuts is directed at the Central States Trustees, half of whom are from the union. Many involved in the campaign believe the fund’s rules should be changed to make the trustees more accountable to members. Many Teamsters are advocating direct election of pension fund trustees, as is the case for IBT officers.

Some longtime Teamster observers note that the growing campaign has revived the efforts of the reform movement inside the union. They point to possible setbacks to the 2006 re-election campaign of Teamster President James P. Hoffa, Jr. and others around him. Hoffa’s slate ran under a “No Dues Increase, 25-and-Out” slogan in the last election.

BENEFIT CUTS, PREMIUM HIKES

Central States Teamsters now face penalties for early retirement and earn pensions at a reduced rate. Many members see this as effectively terminating the Teamsters’ prized “30-and-out” rule, won in the 1980s, permitting trucking industry and UPS workers to retire after 30 years of work, regardless of age, with a monthly pension of $3,000 and affordable health insurance.

Retirees are already hurting from the most dramatic changes-increased health insurance costs and new restrictions on reemployment rules.

Since Willie Hardy retired from Roadway last year, his health insurance premiums have increased from $50 to $250 a month. The trustees say premiums will increase another $100/month this year and $100 every year until further notice. “These are costs I hadn’t anticipated on having when I retired,” says Hardy. “By placing this unfair burden on retirees they’re making it impossible for people to retire.”

Younger retirees can anticipate even steeper hikes. Workers who retire before age 57 will now pay up to $510 a month for an individual and $1,020 with spousal coverage.

CSPF has also changed the enforcement of the Teamsters’ longstanding reemployment rules. The changes prevent retirees from taking jobs in any occupation that falls under the union’s jurisdiction-which the trustees interpret as almost anything. Retirees found in violation forfeit all benefits for as long as they are employed, and are forced to pay back any pension money they collected while working.

Earlier this year, CSPF relaxed some provisions of the reemployment rules, a small victory which CSPIC attributes to a petition it circulated last year protesting the restrictions. CSPIC is circulating a new petition demanding the restoration of retiree benefits and greater accountability of trustees.

After the November announcement, interest in the campaign among Teamster members took off. In less than three months, activists have organized over 60 public pension meetings in dozens of cities affected by the cuts.

Becky Pettengill, a TDU member and wife of a UPS driver, is one of many spouses leading the fight against the pension cuts. After attending CSPIC meetings, she contacted a local pension attorney for information and advice. Armed with this resource, Pettengill organized what she calls “a small but mighty group” of Flint, Michigan-area Teamsters to educate local members, organize a strategy, and demand accountability from Central States.

“We need to hold the employers and the union accountable for the benefits we were promised,” says Pettengill. “That’s the whole point of collective bargaining. That’s why we pay dues.”

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“It’s a new trend for spouses to get involved,” says Larry Macdonald, a steward at Yellow Freight in Atlanta. “We need more of that.”

Macdonald’s own wife, Theresa, helped organize Georgia Teamsters to sell over $2,800 in raffle tickets in a recent CSPIC fundraiser. The money will go to help fund an independent actuarial study of the finances of the Central States Pension Fund and the causes of the pension cuts.

Many Teamsters at CSPIC meetings support the idea of taking legal action against the Central States Pension Fund. In fact, CSPIC has a lawsuit over the reemployment rules in a court of appeals, with a ruling expected later this year. However, CSPIC and TDU agree that lawsuits are too time-consuming, expensive, and unpredictable to rely on as a sole strategy.

“A lot of people expect to come to a meeting, write a check, and TDU or CSPIC will fix everything,” says Charron. “Teamsters must realize that they have to take responsibility for their own futures.”

CSPF has been sending representatives to locals to explain the cuts and answer questions. Teamsters in Macdonald’s local worked with TDU to develop a list of questions Teamsters should ask Central States with the hope of clarifying some of the conflicting information they’ve received. The strategy appears to be working, and Central States has provided its representatives with a list of printed responses to many of these questions.

Citing the recent economic downturn and rising health care costs, more and more employers are reducing or even eliminating retirement benefits. A recent Hewlitt-Kaiser survey finds that 71 percent of employers surveyed report increasing retiree contributions for health coverage. One fifth of employers also report that they plan to eliminate health coverage for retirees in the next three years.

Pension and retiree health care cuts have hit other private sector unions, such as airlines and steel, particularly hard in the last two years.

A PERFECT STORM?

Central States lost assets in what IBT officials are calling “The Perfect Storm”: a spell of economic bad luck marked by stock market declines, low interest rates, soaring health care costs, and increasing numbers of retirees. The cuts, the trustees say, are needed to stabilize the fund.

A recent Wall Street Journal article suggests that employers may simply be using the “perfect storm” as an excuse to cut benefits. Pension funds, including CSPF, are showing signs of recovery. The Philadelphia Inquirer recently reported that, due to stock market recovery and rising interest rates, the nation’s 1,000 largest pension funds gained 12 percent last year. Central States improved at an even faster rate, growing from $15.5 billion to $17.7 billion in 2003, a 14 percent gain.

Every other Teamster pension fund has managed to weather the storm better than Central States, and none have implemented such dramatic cuts. Although a few funds, like Western States, have recently made smaller cuts in the actuarial rate, most have been able to maintain benefits and some, like IBT Local 705 in Chicago, have even increased benefits.

“One of the hardest questions to answer is ‘Where do we go from here?’” says Charron.

Pension activists like the Pettengills and the Macdonalds are pushing local members to get involved. TDU and CSPIC have organized these groups into a nationwide network, making it possible for activists to exchange ideas and plan a comprehensive national strategy with other Teamsters.

“This won’t change overnight,” says Charron, “but we can’t afford to sit back and do nothing. People need to get informed, get involved, and raise hell.”

Nicolle Schaeffer is an intern for Teamsters for a Democratic Union in Detroit.