Central States 5500 Data

How much trouble is the Central States Pension Fund (CSPF) in? You can get a pretty good idea from their 5500 filing for 2014 (the latest available) if you know where to look.

Paying out $3 billion while taking in less than $1 billion in contributions and withdrawal liability payments annually for a fund that likely has about $15 billion left in it now means depletion fairly soon considering that those benefit payouts would continue to grow and revenue sources dry up.  Assuming no revenue infusions (federal bailout) the percentage that benefits would need to be cut corresponding to the years until asset depletion would look something like this:

  • 0% – 5 years
  • 30% – 10 years
  • 50% – 15 years
  • 70% – 30 years
  • 100% – infinity\

This estimate is based on pertinent data taken from the 2014 5500 filing as presented below (note the last item which is a primary reason that this plan is looking to hang on rather than going though the PBGC distress termination process).

Plan Name: Central States, Southeast & Southwest Areas Pension Plan

EIN/PN: 36-6044243/001

Total participants @ 12/31/14: 397,492 including:

  • Retirees: 204,151
  • Separated but entitled to benefits: 128,814
  • Still working: 64,527

Asset Value (Market) @ 1/1/14: 18,740,758,554

Value of liabilities using RPA rate (3.64%) @ 1/1/14: $53,728,073,336 including:

  • Retirees: $31,828,345,983
  • Separated but entitled to benefits: $12,368,993,891
  • Still working: $9,530,733,462

 

Funded ratio: 34.88%

Unfunded Liabilities as of 1/1/14: $34,987,314,782

Asset Value (Market) as of 12/31/14: $17,863,105,558

Contributions 2014 (MB): $817,323,193

Contributions 2014 (H): $582,298,523

Payouts 2014: $2,822,248,296

Expenses 2014: $84,723,972

13 responses to this post.

  1. Posted by dentss dunnigan on May 7, 2016 at 5:18 pm

    could any pension get uglier than that ?

    Reply

    • Yes, those who don’t even have to file 5500s – public plans and a classification that gets no press at all – church plans. If they ever had to provide these numbers most would look worse.

      Reply

  2. Posted by S Moderation Douglas on May 7, 2016 at 6:32 pm

    Plans that may cut benefits as a result of the Multiemployer Pension Reform Act of 2014:

    The Center for Retirement Research at Boston College has compiled a list of 100 plans that may be permitted to cut benefits as a result of the new law.

    http://www.pensionrights.org/publications/fact-sheet/multiemployer-pension-plans-critical-and-declining-status

    Reply

  3. Posted by S Moderation Douglas on May 7, 2016 at 6:44 pm

    “A September study (2014) by Boston College’s Center for Retirement Research estimated that 27 percent of multi-employer pension plans overall were in critical status and another 14 percent were endangered.”

    “The silver lining for union members looking to retire is that the number of critical plans this year is down from previous years and the overall trend suggests the number will continue to decline should the economy continue to recover. The department listed 232 plans as critical in 2013 and 240 as critical in 2012. The number of critical plans hit a peak of 283 in 2010.”

    From: “Feds place 150 union pension funds in ‘critical’ status” Washington Examiner,  2/1/15 

    Reply

  4. Posted by Eric on May 8, 2016 at 12:22 am

    Should the economy continue to recover? Are you serious? The economy is built upon money printing and unsustainable debt since the middle class jobs have been outsourced due in part to treaties passed by politicians who sold out their constituents.
    Eric

    Reply

  5. Posted by Anonymous on May 8, 2016 at 5:00 pm

    John, how can a plan with 64,000 still working sustain 204,000 retirees not including those “separated” but still eligible for benefits?? What am I missing?

    Reply

    • It depends on the source of the funding. With union plans the ratio of actives to retirees is all-important since the only source of contributions (outside of withdrawal liability payments) are based on hours worked by the actives. As that ratio declines due to lower union representation in the population (and on top of the inadequate contributions made over the years) collapse is inevitable.

      On that score public plans are a little better off since their active workforces are relatively stable and it’s easier to squeeze more money out of taxpayers than participating employers in a union plan.

      Reply

  6. Posted by S Moderation Douglas on May 8, 2016 at 10:54 pm

    I would think the number of current workers wouldn’t matter …if… the plan was fully funded ( $53,728,073,336)

    If… all the orphan companies had paid in full before closing.

    If… one minor and one major recession hadn’t decimated the funds, and

    If… the funds had used the same discount rate required of single employer funds.

    If it’s properly funded, it’s not a Ponzi. The source of future funds is existing workers plus Return On Investment.

    Reply

    • Not for multiemployer (union) plans where the contribution amounts are based on hours worked for active participants based on negotiated amounts (typically understated to get companies signed up) and the funding rules allow that to be the contribution amount regardless of how much those contributions actually buy in benefits. This system would fall apart naturally but plummeting union membership sped up the default timeline quite a bit.

      Reply

    • what makes it a ponzi? if any of the funding is supposed to come from “investments”, it is a ponzi. why? when investments fail, the difference must be put into the fund. this means it is “pay-as-you-go”, by definition.

      “investing” anything over the amount needed to fully fund, in order to offset contributions, that might be prudent because they would not be risking the vested benefits of the participants.

      unless db plans can do that, they WERE, ARE and always WILL BE PONZI SCHEMES

      convert all db plans to dc plans immediately

      Reply

  7. not even the best con-artist actuary can escape those numbers. its mind numbing

    Reply

  8. Posted by S Moderation Douglas on May 11, 2016 at 6:37 pm

    notaponzi. of course the funding comes from investments. that’s the whole idea. most of the funding comes from investments. otherwise we might as well prefund by sticking cash in a coffee can and bury it under the parking lot in the corporation yard. (don’t forget to add some extra to allow for inflation.)

    Reply

  9. Posted by S Moderation Douglas on May 11, 2016 at 6:42 pm

    *convert all db plans to dc plans immediately”

    Reply

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