The plight of the Teamsters’ Central States, Southeast & Southwest Pension Plan has been in the news lately and its prospects are not good.
Documents filed at the end of 2012 by the Rosemont, Ill.-based fund show that its liabilities are almost double its assets – $34.9 billion vs. $17.8 billion.
A number of forces came together to put the fund in its current hole including market downturns with losses possibly exacerbated by heavier investments in stocks compared with other pension funds; company bankruptcies; businesses moving out of the country; and the withdrawal of UPS from the plan.
WHAT’S BEING DONE TO FIX IT?
The Teamsters back an austerity plan to keep Central States afloat. Those who receive pension benefits would feel that austerity. The union is part of the leadership of a group of employers, unions and pension funds urging Congress to take steps to revamp laws governing the plans. Included in their proposals is one that would allow funds at risk of being insolvent within the next two decades to cut benefits to current retirees and those who leave the workforce in the future.
WHAT IF IT GOES BUST?
If Central States can’t meet its obligations, the government mandated insurance agency, the PBGC, would take over paying benefits. But retirees will lose out, big time.