14,800 Minnesotans face deep cuts to their pensions
Ken Petersen spent 30 years as a Teamster trucker, loading and hauling utility poles, fertilizer and other freight. All those years his employers socked money away for the monthly pension check Petersen has received since he retired from trucking in 2003. Now, to save the Teamsters Central States Pension Fund from collapse, its trustees want to slash the pensions of 272,600 fund members, nearly 15,000 of whom are Minnesotan. Thousands are already retired and living on the pensions.
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The $17 billion Central States fund is the first to seek cutbacks under the 2014 Multiemployer Pension Reform Act. The controversial law, affixed by parliamentary maneuver to a budget bill by Republican Rep. John Kline of Minnesota and former Democratic Rep. George Miller of California, allows certain financially stressed plans to cut benefits already being paid to retirees.
It’s a radical shift from long-standing federal laws safeguarding private pensions, which prohibit ongoing plans from cutting benefits that have already accrued. The new law creates an exception. The cuts must be approved by the U.S. Treasury Department, but the agency is required to do so if the pension fund trustees meet certain requirements. The Teamsters get to vote on the deal, but if the requirements are met, Treasury has to approve the cuts regardless of the vote’s outcome.
Some worry that approval will lead to a wave of actions by other pension funds, jeopardizing the retirements of hundreds of thousands of people in multiemployer plans and setting the stage for additional legislation that extends to single-employer pensions.
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Many of the 272,600 affected Central States fund members are, like Petersen, former truckers. (People over 80 and those who retired with a Central States disability pension are shielded from reductions.) More than a third of those affected already are retired and living on their pensions. The average cut nationally is 34 percent, although some cuts top 60 percent or more.
Retired Teamsters argue that the current solution unfairly shifts the burden of a bailout onto them. They have a right to what they have earned, they say.
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Kline said the pension cuts bill “was supported by both business and labor because it’s the only realistic option … for saving these troubled pension plans before the plans go bankrupt. Those who are trying to undermine these reforms are promising nothing but greater pain for millions of Americans.”
Still, the proposed cuts are so unsettling that they have led to bills from Democrats and Republicans to reform the reform.
Would-be Democratic presidential candidate Sen. Bernie Sanders wants to repeal the cuts allowed by the Kline-Miller bill. Democratic Sen. Al Franken of Minnesota is a cosponsor.
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The Central States fund is one of the nation’s largest multiemployer, defined benefit pension plans. These are typically union pensions that several employers pay into and, unlike 401(k) plans, promise a set monthly payment.
But where there once were four Teamsters working for every retiree, there are now five retirees for every worker. The fund pays out $2 billion more than it takes in each year from employers.
The Pension Benefit Guaranty Corporation, the federal insurance agency that is supposed to pay retirees whose pension plans default, is running huge deficits itself. It cannot afford to offset the Central States fund losses.
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http://www.startribune.com/14-800-minnesotans-face-deep-pension-cut/361746031/
= new reply since forum marked as read
no lack of money to fight New Wars with.
You guys remember "The Sequester" (first proposed by the Obama White House)?
The Prime Directive of The Sequester was that new spending must be offset with cuts to other programs or an increase in revenue.
Where are these Military Cuts to offset the new spending for a new War of Choice in Syria?
If we are going to be involved in these New Wars, then we must Raise Taxes on the RICH to pay for it.
(Wonder why nobody in The Media or either Party care to mention this).
BTW: "The Sequester" was brilliant politics.
"They" (Democrats & Republicans) figured a way to slash the safety net without having to cast a vote to do so. They get to go back home with big crocodile tears saying:
"I didn't cut your benefits. The Sequester did it",...
so no single politician has to face the voters at home and say, "Yes. I cut the programs you depend on.".
