Active and retired Teamsters covered by the New York State Teamsters Conference Pension and Retirement Fund are in for an unpleasant change: Their pensions are being cut.
According to a report in the Buffalo News, some 35,000 Teamsters across New York are going to have to deal with the fact that retired workers' benefits, with some exceptions, will be cut 29 percent; active workers' pension benefits will be cut by 18 percent.
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The New York State Teamsters fund is a multiemployer pension plan, with multiple businesses paying into it. But lots of MEPs, as they're known, are underfunded—with as many as 114 of them, covering 1.3 million workers, being underfunded by $36.4 billion and expected to become insolvent within the next 20 years.
According to Cheiron, an actuarial consulting firm. The firm is cited in the report saying that the plans won't have enough money to pay participants the full benefits earned.
Fund participants were asked to vote on cuts proposed by New York State Teamsters fund officials. But while nearly 10,000 voted against them, and just about 4,000 in favor, roughly 21,000 voters failed to return ballots. As a result, the final tally indicated that a majority of eligible voters didn't vote against the benefit reductions, so the cuts were approved.
Even if a majority of eligible voters had opposed them, the cuts could have been imposed anyway. The Treasury Department can do that if it finds that a fund would create at least a $1 billion liability for the Pension Benefit Guaranty Corp., which acts as a backstop for plans.
At the end of last year, the New York State Teamsters fund had $1.25 billion in assets and $3.3 billion in liabilities.
There are some exceptions, such as for workers already 80 or older, or who have a disability pension; they won't get benefit cuts.
In addition, workers who are already 75–79 years old won't be hit as hard, based on their age.
Market losses, the departure of contributing employers and the loss of a number of participating trucking companies through consolidation, shutdown or bankruptcy are responsible for the problem, fund officials say.
In 1990, the fund had 490 contributing employers and nearly 38,000 participants, 27 percent of whom were retired.
But by 2016, the fund had only 184 contributing employers and about 35,000 participants, 46 percent of whom were retired.
Teamsters officials are calling for investigations and a halt to the cuts, as well as a legislative solution to the MEP problems.
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