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  • Teamsters Call On Congress To Address Underfunding of Pensions
    Posted On: May 15, 2016

    By JoAnne Powers, May 16, 2016

    On Friday, May 6th, the U.S. Treasury Department rejected attempts by the Central States Pension plan to drastically cut retirement benefits for 400,000 American workers, retirees and their families.  The department saved the workers from cuts enabled by a 2014 change in the law, but did nothing to address the underfunding of Central States and other multi-employer pension plans.  The 1974 Employee Retirement Income Security Act sets some minimum insurance payments for multi-employer funds that collapse, but Teamsters International Vice President John Murphy says these are far from sufficient:

    [John Murphy]: “So they’re in what I call a death spiral.  The whole multi-employer pension system in this country, and in fact the whole private sector pension system, really needs a major overhaul by congress.  It really needs to revamp the entire system.  The funding, which is solely by premiums from multi-employer pension plans, is totally inadequate to meet the liabilities.  The insurance benefits to collapsing plans was based on 1974 economics, and they’re woefully inadequate in terms of what’s a realistic benefit to be paid to workers whose pension plans have collapsed through no fault of their own.”

    The union is working with Congress to try to address the funding shortfall for multiemployer plans.  One option is a bill currently in Congress which would prevent the reduction of benefits by closing a pair of tax loopholes serving the wealthy:

    [John Murphy]: “Those two tax loopholes, under the Congressional Budget Office they’re estimated to generate over a decade about thirty billion dollars, which would be way more than adequate to solve not only the problems that Central States faces, but all the rest of the multi-employer pension plans which are in trouble.”

    Murphy says there is now a broad recognition in Congress that something needs to be done to shore up the private sector pension system in the U.S.: 

    [John Murphy]: “Two years ago, nobody would even have acknowledged that there is a problem, but because of the controversy of the proposed cuts by Central States, most members of Congress are aware of it, and a lot of them understand that something has to be done here.”

    While the efforts of the union contributed significantly to the Treasury Department rejection of Central States’ application, Murphy recognizes that there is still a long struggle ahead:

    [John Murphy]: “The International Brotherhood of Teamsters launched major, major intensive lobbying efforts over the last six months, and mobilized thousands of retirees and active members to help in that effort.  This is gonna be a multi-year fight and campaign, but we intend to pursue it, and I’m confident with enough hard work and commitment, we can pull this off.”

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