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Morethanaquarterofamilliontruckers,retireesandtheirfamiliescouldsoonseetheirpensionbenefits
severelycuteventhoughtheirpensionfundisstillyearsawayfromrunningoutofmoney.
Withinthenextfewweeks,theTreasuryDepartmentisexpectedtoannounceacrucialdecisiononwhetheritwill
approvereductionstooneofthecountryslargestmultiemployerpensionplans.
ThepotentialcutsarepossibleunderlegislationpassedbyCongressin2014thatforthefirsttimeallowed
financiallydistressedmultiemployerplanstoreducebenefitsforretireesifitwouldimprovethesolvencyofthe
fund.Thelawweakenedfederalprotectionsthatformorethan40yearsshieldedoneofthelastremainingpillars
thatworkerscouldrelyonforfinancialsecurityinretirement.
Formanyworkers,thepromiseofaguaranteedincomestreamforlifeabenefitnownearlyextinctforyounger
generationswasattimesstrongenoughtoconvincethemtosacrificepayraisesorotherjobopportunities.But
afterdecadesofchallengesthatleftmanypensionfundsintoughfinancialstraits,somepeoplearelearningin
retirementthatthepromisesmadetothemmayhavetobebroken.
TheCentralStatesPensionFund,whichhandlestheretirementbenefitsforcurrentandformerTeamsterunion
truckdriversacrossvariousstatesincludingTexas,Michigan,Wisconsin,Missouri,NewYorkandMinnesota,
wasthefirstplantoapplyforreductionsunderthenewlaw.
Consumeradvocateswatchingthecasesaythemovecouldencouragedozensofotherpensionplansacrossthe
countrythatarefacingfinancialstrugglestomakesimilarcuts.
Thisisgoingtobeanationalcrisisforhundredsofthousands,andeventuallymillions,ofretireesandtheir
families,saidKarenFriedman,executivevicepresidentofthePensionRightsCenter.
Likemanyotherpensionplans,theCentralStatesPensionFundsufferedheavyinvestmentlossesduringthe
financialcrisisthatcutintothepoolofmoneyavailabletopayoutbenefits.Whilethestockmarkethasrecovered
sincethen,theimprovementswerenotenoughtomakeupfortheshortfallthatgrewasthenumberof
companiescontributingtotheplandeclinedandthenumberofpeopleretiringandcollectingbenefitsincreased,
saidThomasNyhan,executivedirectoroftheCentralStatesPensionFund.
Thatimbalanceleftthefundpayingout$3.46inpensionbenefitsforevery$1itreceivedfromemployers.The
shortfallhasresultedinthefundpayingout$2billionmoreinbenefitsthanitreceivesinemployer
contributionseachyear.
Ifnothingisdone,thefundcouldbecomeinsolventby2025,saidNyhan.Andbecauseofitssize,theplancould
overwhelmthePensionBenefitGuarantyCorporation,theinsuranceagencymeanttoshoreupprivatepension
funds,ifitwentunder,Nyhansaid.
TheCentralStatesPensionFundpaysout$2.8billionayearinbenefits,whichwouldbereducediftheplan
becameinsolvent.Bycomparison,thePBGCfundthatbacksmultiemployerplanshasroughly$2billionin
assetsandisalsoprojectedtobeinsolventby2025.
Thiswasaveryharddecision,agutwrenchingdecision,Nyhansaid,addingthathefearednottakinganyaction
couldleaveretireeswithnopensionatall.Itsnotaquestionofiftherearegoingtobecuts.Thequestionis
whereandwhen.
IfTreasuryapprovesthefundsproposal,thenretireescouldseetheirpaychecksshrinkbyJuly1.Themove
wouldgivethefundatleasta50percentchanceoflastingforanother30yearsasopposedtorunningoutofcash
in10yearsifnochangesaremade,Nyhansaid.AdecisionisexpectedbyMay7.
Butopponentssaytheremaybesomenegativeconsequencesifthecutsareapproved.
Itsgoingtoopenthefloodgatesforothercuts,saidFriedmanofthePensionRightsCenter.
Outofthe10millionworkersandretireescoveredbymultiemployerpensionplans,roughly1millionpeopleare
inplansthatcouldrunoutofmoneyoverthenexttwodecades,accordingtoestimatesfromthePBGC.Already,
threeotherpensionplansthatpaybenefitstotruckdriversandironworkershaveappliedtotheTreasurytohave
theirpensionbenefitsreduced.
TheproposalintroducedinSeptemberbyCentralStateswouldcutbenefitsforcurrentworkersandretireesby
23percentonaverage,thoughexactamountswouldvarybasedonpeoplesage,healthstatusandwherethey
worked.
Formanyretirees,thelossesmaybemuchsteeper.
AvaMiller,64,andherhusband,EdNorthrup,68,couldseetheircombinedmonthlypensionincomecutto
about$3,000fromthenearly$7,000theyreceivenow,accordingtoalettertheyreceivedfromCentralStatesin
October.
Ifthecutsgothrough,Miller,whoworkedasadispatcherinFlint,Mich.,saidtheywillneedtodipintotheir
savingstohelpcovertheir$1,300mortgagepayment,heatingbillsandtripstovisither84yearoldmother.
Northrup,aretiredcarhauler,hasstartedapplyingfortruckdrivingjobsthatcouldsupplementtheirpotentially
smallerpensionpayments.
Whatmakesthecutsmorepainful,Millersaid,isthatshetookpaycutssothatthecompanycouldcontinue
makingcontributionstothepension.
IdideverythingIwassupposedto,Millersaid,addingthatsheandherhusbandmadeextrapaymentsontheir
carloantocutdownontheirmonthlybillsaftertheyreceivedlettersinOctoberinformingthemofthepotential
cuts.
Criticsofthecutssaythefundstillhastimetocomeupwithanalternativesolution.Someretireesandother
supportershaveralliedbehindabillintroducedbyDemocraticpresidentialcandidateBernieSanders(Vt.)that
wouldrepealthemeasureallowingthecuts,callinginsteadforthegovernmenttoprovideassistancetotroubled
pensionfunds.
Nyhansayshealsosupportsthatproposalandwouldwelcomethemoney,butfeelsthechancesthatitwillpass
politicallyareslim.
Ifthecutsareapproved,theproposalwouldbeputtoavotebyall407,000participantsoftheplan,including
currentworkersandretireeswhoareexemptfromthecutsbecauseoftheirageoradisability.Butevenifa
majorityofthemembersvoteagainsttheproposal,thepensionfundissolargethattheTreasuryDepartment
maystillberequiredtoimplementthecutsinordertoprotectthepensionguarantyprogram.
Lastweek,hundredsofretirees,workersandfamilymembersfromMichigan,Wisconsin,Texasandotherstates
gatheredonthelawninfrontoftheCapitoltorallyagainstthecuts.Theywavedsignsandperiodicallybrokeinto
chantsofNocuts.
Asteadystreamoflawmakers,includingSens.ElizabethWarren(DMass.),ChuckGrassley(RIowa)and
TammyBaldwin(DWis.),walkedontoastagetospeakagainstthelegislationandtopushforanalternative
solution.
RoyWroblewski,64,aretiredtruckdriverfromDetroit,stoodnearthestagepumpinghisfistandholdingupa
signthatsaidnocuts.
Wroblewski,whohauledcarsforabout30yearsbeforeretiringat58,saidhehadjustbeguntofeelstable
financiallytwoyearsbeforewhenhebegancollectingSocialSecuritybenefits.Ifhispensionpaymentsarecutin
halftoabout$1,300,hesayshellhavetogobacktowork.Butaftertwokneesurgeries,truckdrivingisnolonger
anoption.
Likeotherretireesattherally,hesaidhisunionoftenprioritizedpreservingthepensionoverotherbenefitslike
payraises.Wealwayssaidthemoneywasgoodenoughbutwewanttohave[ourpensions],Wroblewskisaid.
Nowwerebacktofightingagain.
Readmore:
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LaborDepartmentrulesetsnewstandardsforretirementadvice
Thetinychangethatcanleaveyoumuchbetteroffinretirement
WhatyouneedtoknowaboutthelucrativeSocialSecuritystrategythatsgoingaway
Jonnelle Marte is a reporter covering personal nance. She was previously a writer for
MarketWatch and the Wall Street Journal.
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