Big changes will be coming to those who are current Teamsters union members. The powerful union began informing retirees and current workers that their pension benefits will be cut, according to union representatives.
In a funny twist, the union spent its members' own money on a lobbying campaign to win the right to shrink their retirement pay.
The decision could ultimately affect 410,000 current pension participants and more than 10 million U.S. workers nationwide. The cuts will begin next year.
The pension reductions were made possible after a lame-duck Congress passed the Multiemployer Pension Reform Act (MPRA) late last year, enabling any multiemployer pension fund to cut benefits to workers and current retirees if the plan is underfunded by 20 percent.
The Teamsters' fund has been struggling with severe shortages for years, while the union simultaneously poured millions of dollars into political election efforts and Washington lobbying.
In 2014 the union and its affiliates spent about $5.9 million on lobbying and political contributions, with its main objective the passage of the pension reform law that gave it the right to start reducing benefits.
To date this year the union has spent $397,000 into Washington lobbying.
“Like many of our nation’s multiemployer pension funds, Central States Pension Fund has become severely underfunded and is headed toward financial failure if we don’t take immediate, decisive action,” said a CSPF letter to pensioners, dated April 8th.
“Baby Boomers are retiring in record numbers and the union workforce has been steadily declining for years. As a result, the Fund currently has more than three times as many retirees as active members — so, fewer contributions are coming in than benefits being paid out. To put this into perspective, for every $3.46 that the Fund pays out in pension benefits, only $1 is collected from contributing employers, which results in a $2 billion annual shortfall. Clearly, that math will never work,” the letter went on to say.
The new law means that the group hardest hit by reductions will be current workers and retirees under the age of 75. Retirees over the age of 80 and those with disabilities will continue to receive full benefits, and benefit reductions for those aged 75 to 80 will be done on a sliding scale.
Funnily enough, in a vain effort to defect blame, the April 8th letter blamed Congress, saying that because the MPRA wasn't passed until December meant there was no legal solution in place that allowed the Teamsters pension fund “to develop a rescue plan from going broke.”