Multiemployer pension a ‘ticking time bomb’ for Teamsters’ trucking retirees

It’s an election year and Congress is counting the days until members can get out of town and try and get re-elected. But that hasn’t stopped thousands of Teamsters union retirees from lobbying Congress to solve the looming fiscal crisis regarding their multiemployer pensions.

And that small army of Teamsters retirees have at least one ally in Congress who is fighting hard to assure these oldsters get the secure retirement benefits they were promised decades ago.

“This issue cuts to the heart of everything we aim to be as a country,” said Sen. Sherrod Brown, D-Ohio, has been sounding the alarm on a pending pension crisis for years. “These workers have earned a secure retirement.”

In what Brown said  is “a war on the middle class,” the looming multiemployer pension plan crisis is a ticking time bomb that affects the retirements of thousands of retirees, many former Teamsters who worked in the trucking industry.

Since deregulation in 1980, there have been more than 500 Teamsters-covered trucking companies close, fail or go out of business. That has left just a handful of unionized LTL carriers often supporting tens of thousands of retirees who never actually worked for the surviving companies.

Brown’s home state of Ohio was headquarters to Roadway Express (before it was merged with Yellow Transportation, now called YRC Corp.) and scores of unionized LTL carriers which have gone bankrupt since deregulation in 1980.

“These folks have come to Washington by the busload to get their country to keep their promises,” said Brown, co-chair of the Senate’s newly-formed Joint Select Committee on the Solvency of Multiemployer Pension Plans. “They come from everywhere in our country. They are all at risk of losing their pensions if Congress does not act,” Brown said during a recent speech at the National Press Club.

Brown is serving as co-chair with Sen. Orrin Hatch, R-Utah, giving the issue bipartisan support. The committee is comprised of 16 members of Congress, eight from each party, from both the House and Senate members. The group held its first meeting on March 14. Brown said he needs at least a majority to get the multiemployer issue solved.

Unlike most issues in Washington, Brown said this has bipartisan support. He said he has a “very good working relationship” with Sen. Hatch., among others. The U.S. Chamber of Commerce and the American Association of Retired Persons (AARP) are among the Washington powers backing reforms in the multiemployer pension arena.

The U.S. Chamber has estimated multiemployer plans contributed more than $2.3 trillion to the U.S. economy in 2015, the last full year for which records are available.

The multiemployer pension plans of 1.5 million workers and retirees nationwide are facing shortfalls and are at risk of insolvency in the coming decade. Multiemployer plans are at risk because there are about four retirees pulling benefits for every active worker. There are only about 80,000 unionized workers, mostly Teamsters, in the heavy freight sector of the trucking industry. Their dues are supporting perhaps as many as 350,000 unionized retirees, many in trucking industry. (UPS Teamsters, which number about 260,000, are in separate pension plans).

The Teamsters Central States pension plan is the largest multiemployer plan in the nation. Sen. Brown said there are “more than 100” multiemployer plans at risk, threatening tens of thousands of workers and businesses around the nation.

The Central States plan is forecast to become bankrupt sometime in the next decade. Central States receives contributions from just 54,698 active workers to pay out benefits to 214,243 retirees—a ratio of 1 active to 4 retirees vs. the 4 actives to 1 retiree ratio in 1980.

“It’s not just retirees who are at risk,” Sen. Brown said. “Small businesses are at risk if they are on the hook for these failing plans.”

Sen. Brown said “thousands” of small businesses are at risk. The Pension Benefit Guaranty Corp., the government entity charged with protecting pensions, is woefully underfunded. The PBGC currently has $67 billion in liabilities, with just $2 billion in assets, Brown said. “If one of these largest multiemployer plans goes bankrupt, so does the PBGC. The problem gets worse, and more and more expensive, the more we wait. Congress must act, and it must act before the end of the year.”

Three years ago just days before Christmas recess, Congress passed a unilateral agreement that would allow troubled plans to cut benefits by as much as 70 percent. So far, none of the plans has made those cuts. But the Central States plan already has applied for such draconian cuts, but it was rejected by the Treasury Department, which oversees such activities.

Actuaries have said there is a 50-50 chance of the Central States plan failing in the near future. That’s why Brown said it is urgent that Congress devise a plan soon—even in this mid-term election season. The average retiree in these plans is owed about $1,000 a month, Brown said.

“They (the retirees) feel nobody is paying attention to them,” Brown said. “And they’re right.”

During the budget negotiations in the spring, Brown said he failed at obtaining a bipartisan solution to the multiemployer pension crisis. But Brown said members of both parties “are serious” about solving this issue.

The Joint Select Committee was created by Congress in February as part of the recent budget compromise. It is trying to find solutions and is supposed to report its plans to both the House and Senate by the end of November. But that date is flexible, Sen. Brown indicated.

“We will not necessarily put out the report before the election,” Sen. Brown said. He said in December, after the mid-term elections during a lame-duck session, might offer the best timing.

 President Donald Trump has been uncharacteristically silent on this measure, but Sen. Brown said he’s confident the president won’t veto it.

 “If we do this right,” Sen Brown said, “the President will sign the bill.”