The Teamsters Central States, Southeast and Southwest Areas Pension Fund announced a “Rescue Plan” to members that includes a request to the Department of the Treasury to allow benefit reductions.
According to a letter from Susan Mauren, employee representative for the pension fund, the rescue plan distributes the burden of benefit reductions between retirees and active employees, but includes new re-employment rules for retirees and a cap for the maximum reduction. The Multiemployer Pension Reform Act of 2014 (MPRA) allows plans in “critical and declining status” to avoid insolvency by reasonably cutting benefits, including for those already in pay status.
Pension plan members will get a vote on the benefit reductions, but the ultimate decision will come from the Treasury Department. This may be the first request for benefit reductions under the MPRA.
An actuary report attached to Mauren’s letter says the Central States plan is projected to become insolvent in 2026. Maureen noted that there is now only one active member per four retirees for whom contributions are made to the fund. In addition, many employers have withdrawn from the fund in the past decade. Further, she said, the Pension Benefit Guaranty Corporation (PBGC) multiemployer pension insurance program is projected to become insolvent before the Central States pension fund.
“That leaves two alternatives. Do nothing and current retirees will receive the same amount of benefits each month for a few more years. But, their payments will cease completely in a few years, and many who are entitled to a pension but not yet retired will receive nothing. Or cut benefits now so that current and future retirees have a pension they can count on for years to come, even if it is smaller,” Mauren wrote.