There are many Multiemployer (Union) plans that are as badly funded as your typical government plan (when valued honestly) since, even though union plans have rules, they have some ‘flexibility’ that allows them to keep using 7.5% interest rates for funding and, since 2014, cut benefits when they deem appropriate which is exactly what the Teamsters Central States Pension Plan is doing.
A little perspective:
As I predicted last June a government official (Kenneth Feinberg) is deciding how much participants get of whatever money remains and, though the participants get to vote, their vote only counts if is for the cuts:
Even if a majority votes no….the law requires the Treasury Department to impose the changes, once it approves them, because the Central States fund is so large that it qualifies as “systemically important.” That means that if it collapsed, it could take down the multiemployer wing of the Pension Benefit Guaranty Corporation, jeopardizing the retirees who currently get their pensions through the program.
So much for legislated democracy.
Checking out the plan’s 5500 filing for 2013* here are the important numbers as of 12/31/13:
- Trust assets: $18,740,758,554
- Number of retirees: 206,081
- Benefit Payouts during 2013: $2,822,507,812
- Average annual payout: $13,696
- Contributions for 2013: $571,103,756
- Plan funded ratio as of 1/1/13: 47.6%
That last number – 47.6% – is based on a 7.5% interest rate and is still higher than any plan Illinois sponsors.
* For those loath to look through all 424 pages here are the pertinent excerpts. The 2014 5500 should be on the internet next week and we will update these numbers.