Teamsters Facing Cuts in Pensions of Up to 60 Percent

When pension funds go empty, all bets are off

October 10, 2015

NY Post - Some 407,000 Teamsters are learning a painful lesson: Their private-sector pensions aren’t as safe as they once thought.

Pay attention, government workers — and taxpayers — in New York and New Jersey.

Last week, letters informed these Teamsters they’re facing cuts in benefits of up to 60 percent. Why? Because their pension fund is going broke.

The Central States Pension Fund covers workers from more than 1,500 trucking, construction and other companies in 37 states. Thanks to trucking deregulation, declining union rolls, aging workers and weak stock-market returns, the fund is now paying out $3.46 in benefits for every $1 it takes in. That’s $2 billion a year in red ink.

At that rate, doom arrives in 2026, sinking Central States and maybe even the federal fund that’s supposed to insure such private-sector pensions. Retirees would get even lower benefits — or maybe nothing at all.

Which is why Congress and President Obama last year gave “multi-employer” funds like Central States the green light to restructure if necessary — and slice benefits.

At least a few big pension systems are sure to follow Central States.

And so the retirement security countless workers have long counted on went poof.

Government pensions aren’t immune. Yes, many state constitutions bar pension cuts — and if the funds sink, politicians would find it easier to hit up taxpayers in a crunch than anger unions and their members by trimming benefits.

Easier at first, anyway. But when the well runs dry, what’ll happen?

That’s the nut New Jersey governments have been grappling with in recent years. New York’s situation is better — but it, too, faces a reckoning.

That’s even though Jersey’s funds need a whopping $200 billion to make good on their pension promises, while Empire State funds need $308 billion. Driving the shortfalls: Too many retirees for each current worker, as with Central States; overly generous pension promises pols made to please unions — and governments’ habit of not paying what they should into the funds.

Trouble is, New York and New Jersey taxpayers already bear a heavier load than in any other state and have been fleeing the area for years. Squeeze them too hard to plug pension gaps, and you start losing taxpayers in a downward spiral.

That’s part of what drove Detroit to bankruptcy — and when the Motor City went belly-up in 2013, a judge OK’d cuts in public-worker pensions — never mind what it said in Michigan’s constitution.

Local public-sector unions and their members would do well to rethink their stubborn resistance to reforms and their endless fight for ever-costlier benefits.

“What we’re asking is to let us tap the brakes a little now, and let us avoid insolvency,” says Central States Executive Director Thomas Nyhan. “The longer we wait to act, the larger the benefit reductions.”

That math is the same everywhere.