Sen. Charles Grassley, R-Iowa, has requested theGovernment Accountability Officeinvestigate the Department of Labor’s oversight of theTeamsters Central States, Southeast and SouthwestArea Pension Plan.

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In 1982, the DOL entered into a court enforced consent decreewith the Central States fund to assure that it was being managedfor the sole benefit of plan participants, as required under theEmployee Retirement Income SecurityAct.

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Almost from the point of its inception in 1955, the pension fundwas dogged by allegations that assets were routinely loaned toorganized crime interests, often to several Las Vegas casinos, andthat Jimmy Hoffa, the famed Teamsters boss, received kickbacks fromproviders to the funds.

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In his request that the GAO review DOL’s oversight of theCentral States fund throughout the past three decades, Sen.Grassley said he wants to know what actions the DOL has takenregarding the fund’s investment managers and investmentstrategies.

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Specifically, Grassley wants to know if DOL had any influenceover how the $6.1 billion lump sum that United Parcel Service paidwhen it withdrew from the multiemployer plan in 2007 wasinvested.

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“Given the current financial problems facing Central States, andthe risk its insolvency poses to the PBGC, the time is ripe for GAOto update Congress on DOL’s oversight of Central States,” Grassleywrote in his request for an investigation.

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“It appears that the department hasn’t done enough to prevent amajor failure of the fund that could mean a big financial hit forretirees in Iowa, Nebraska and elsewhere around thecountry,” added Grassley in a statement.

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“Central States plan beneficiaries deserve to have a betterunderstanding of what led to the financial failings of CentralStates and ultimately put their retirement at risk,” said theSenator.

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A representative from Sen. Grassley’s office said the GAO hasnot yet agreed to Grassley’s request.

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Last year, the Central States plan was the first to apply to theTreasury Department for the right to reduce retiree pensionbenefits, a process created by the Multiemployer Pension Reform Act of2014 for collectively bargained pension funds that arefacing impending insolvency.

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Once the envy of collectively bargained pension plans, theCentral States plan has suffered from dwindling contributions overthe past two decades, as employers such as UPS left the plan.

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The plan’s funding level was also severely affected byinvestment losses incurred during the 2008 financial crisis.

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But the pension’s troubles are perhaps bestexplained by the ratio of inactive to active participants in theplan.

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According to papers filed with Treasury, actuaries say there arenow 5.3 retirees collecting benefits for every one activeparticipant contributing to the pension fund.

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In 2015, the pension’s funding status was 47.7 percent, with amarket value of assets of $17.8 billion, and more than $35 billionin future obligations to retirees and workers, according toactuaries.

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The plan is projected to be insolvent by 2026.

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Nick Thornton

Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.