“Cloud Nine” retired Teamsters girding for next round of potential pension cuts

Although they successfully fended off the first attempt by government and officials from Central States Pension Fund to impose draconian cuts in their pension benefits, Teamsters union retirees say they are not resting on their laurels. Instead, they are preparing a long-term fix to the fund’s fiscal problems.

But first there was a little celebrating to do after winning the first round of their David vs. Goliath fight.

“We did feel were kind of like on Cloud Nine,” Mike Walden, 66, chairman of Northeast Ohio Committee to Protect Pensions who worked 31 years for now-defunct Roadway Express and retired in 2010, told LM. The Cuyahoga Falls, Ohio, resident was one of 400,000 Teamsters participants in 250 Local Unions in 37 states of which 220,000 are retired and facing draconian cuts. He says his pension would have been cut from around $2,900 a month to around $1,450.

On May 6, the Treasury Department sided with Walden and the retirees by rejecting Central States’ application for those cuts. Special Master Kenneth Feinberg, a veteran negotiator with experience in the 9/11 and many lawsuits in high-profile airline disasters, ruled Central States failed to show solvency of the fund, the cuts were not equitable and it used convoluted logic and language to make its case.

This touched off countless private celebrations among Teamster retirees, who now outnumber active workers by a 4-to-1 ratio in the Central States fund. “I guess there were a few celebrations, but I can’t really comment on those,” Walden said, laughing. Turning serious, he said, “We know we have a lot of work ahead of us.”

The good news for Teamsters retirees is they have at least delayed these cuts. But they are not resting, even though Central States reports it still has at least $17 billion in assets, and probably won’t become insolvent at current benefit levels until around 2027.

“We view this as Round One of a 15-round fight,” Walden told LM.

In fact, Walden was in Washington in June actively lobbying Congress and other regulators to inform them of the retirees’ plight and try to forge a long-term solution to the pension dilemma. Having successfully completed Plan A – the proposed pension reductions – the retired Teamsters now are focusing on other actions, which are:

• Stop further applications to reduce pension reductions. This is largely completed with Central States say they have no further applications planned;

• Form small groups to seek solutions, repeal or amend the 2014 pension laws, and keep committee leaders informed to fully support the goals;

• Repeal or modify the law through Congress;

• Create Solvency of the Fund; and

• Remove current administration at Central States and include other unions in the fight.

The Teamsters already have enlisted help on both sides of the aisle. Sen. Chuck Grassley, R-Iowa, chairman of the Senate Finance Committee, has requested that the Government Accountability Office do an investigation of the oversight of the Central States Fund by the Department of Labor, U.S. 8th District Court and Special Counsel.

The GAO investigation may include the Labor Department’s oversight (or lack thereof). The GAO will be assisted by the Department of Justice, Treasury Department, and the Pension Benefit Guaranty Corp. Teamsters are embarking on a rank and file campaign to write and tell the GAO and the DOJ of their concerns.

From the Democratic side, Rep. Marcy Kaptur, D-Ohio, has introduced Keep our Pension Promises Act (KOPPA), a bill that would create a long-term solution to the Central States funding issue. Although this bill is a longshot to pass in an election year, Teamsters retirees insist this is not an issue that should wait until after the November election.

“We need them to work on it now,” Walden said. “We need to keep them (Congress) motivated.”

Another goal of the retirees is to remove Thomas Nyhan, the long-time executive director of the Central States fund and get current trustees in the fund removed as well. After having their pensions cuts plan rejected by Feinberg, Central States officials have more or less given up trying to make the fund solvent in the longer term, saying it is out of their hands now.

Teamsters retirees are frustrated with Central States officials. They feel Central States haven’t worked with union, come up with any solution except benefit cuts, refused to show any transparency, and say have used nearly $8 million in Teamsters union money to lobby against the retirees.

Sen. Bernie Sanders, I-Vt., is in favor of creating a fund to shore up the PBGC, which theoretically guarantees private pensions. But in fact, the PBGC guarantees only about $1,300 a month in benefits because of lack of funding from employers. The Sanders plan would boost funding levels.

Other plans include tax credits and raising contributions levels, Walden said.

“I am very optimistic and I’ve been optimistic from the beginning three years ago,” Walden told LM. “From being a participant in the plan, I see wrongdoing and that’s what made me optimistic.”

Walden said there is not one single silver bullet answer to the pension dilemma. Rather, the retirees’ goals are to change legislation to allow more and better organizing by the Teamsters to increase the current number of active workers to retirees.

“There are not enough active workers going in to keep pensions solvent,” Walden explained. “The locals and IBT (International Brotherhood of Teamsters) are organizing, but they’re just not putting them in the pension fund. They can’t put people in a fund that they knowingly will go broke.”

The Motor Carrier Act of 1980 that deregulated trucking is partially to blame. In 1979, the last year of the regulated trucking industry, there were more than 500,000 active trucking industry workers in the Teamsters union. Today, that number has fallen to fewer than 60,000 (mostly in YRC, ABF and a handful of smaller LTL companies.)

UPS employs 260,000 Teamsters, but they exited the Central States plan in 2007, paying $6.1 billion in a one-time exit payment. UPS’s exiting the plan is widely viewed as exacerbating Central States’ current fiscal plight.

“Congress has to wake up—this isn’t about party lines, this is about peoples’ lives,” Walden said. “Had the Central States been talking to participants the way Ken Feinberg and I did they would understand they weren’t happy with half a loaf (in benefits). But you can’t live on half of loaf. I want to see Congress come together, forget about party lines and think about our lives.”