CSPF Resuce Plan – for those who run CSPF

The 5500 filing for 2014 for the Central States Pension Fund (CSPF) is 428 pages with 160 of those pages (12-171) being the Schedule C, a form where you report expenses being paid out of the trust which mostly go to Service Providers but for CSPF there are also several Trustees and Employees listed.

Were the Pension Benefit Guaranty Corporation (PBGC) to take over CSPF and cut benefits to the maximum allowed not only would participants take a substantial hit but these ‘Trustees’ and ‘Employees’ would be off the trust payroll entirely.

So it is that when the Treasury denied the CSPF rescue plan with its massive benefit reductions (encouraging larger reductions) the people who run the fund, on their website, fought back:

On May 6, 2016, the U.S. Department of the Treasury (Treasury) notified Central States Pension Fund that our proposed pension rescue plan has been denied. A copy of the communication from Treasury is available here.

Although the decision by our Trustees to file this application under provisions of the Multiemployer Pension Reform Act (2014) was gut wrenching, we are disappointed with Treasury’s decision, as we believe the rescue plan provided the only realistic solution to avoiding insolvency.

The Central States Pension Fund Trustees will carefully consider the most appropriate next steps, based on this denial and the final guidance issued by Treasury on April 26.

Central States Pension Fund remains in critical and declining status and is projected to run out of money within ten years, or even less. Because the Pension Benefit Guaranty Corporation (PBGC), the government’s pension insurance program, is also projected to run out of money, today’s decision means that, absent legislative action or an approved rescue plan, Central States participants could see their pension benefits reduced to virtually nothing.

Many Members of Congress, both in the Senate and House, have been vocal in calling for Treasury to reject our proposed pension rescue plan. Central States strongly urges these Members to act now to pass legislation that protects the pension benefits of the over 400,000 participants of Central States Pension Fund—something Congress and the White House did not do when we previously proposed a remedy in 2009 and 2010.

We strongly encourage all Fund participants to call their Congressional representatives to demand legislative action that protects their pension benefits. To find contact information for your U.S. Representatives and Senators:

The International Brotherhood of Teamsters, AARP and the Pension Rights Center, all of whom urged rejection of our proposed pension rescue plan, now must move beyond talk and take action to secure the funding needed to protect the pensions of all current and future Central States Pension Fund participants and beneficiaries.

We understand the uncertainty and anxiety that our participants and beneficiaries may be experiencing as this process continues. As always, our goal is to ensure that the Fund is able to continue to pay future benefits.

We will continue to provide updates on this website, through email for those who have registered to receive such communications, and/or by U.S. postal mail. You can also call our dedicated hotline at 1-800-323-7640 to listen to a recorded message with updated information.

Among the more obvious distortions:

  • “Central States participants could see their pension benefits reduced to virtually nothing.” – No, there is PBGC protection up to a maximum limit.  It is CSPF trustees and employees who could see their income reduced to nothing.
  • “Central States strongly urges these Members to act now to pass legislation that protects the pension benefits” – The legislation exists as the PBGC exists.

MPRA allows benefits to be cut but not below 110% of what the PBGC would cover.  If the people who run CSPF really had the welfare of their plan participants as their primary concern then they would be calling for either an increase in that 110% limit in MPRA or an increase in the underlying PBGC coverage limit.  They’re not since a PBGC takeover is the last thing they want to see (and probably the last thing their negotiating partners want to see also).


11 responses to this post.

  1. Posted by bpaterson on May 9, 2016 at 5:51 pm

    JB1-read the PBGC article you linked to. It discusses a maximum payout pension plan of $36,000 annually for 30 years of service, which seems on low side for NJ but sounds fair and probably is in parity to the private sector pensions plans that are left in good standing.. If enacted, this could be the silver bullet that corrects our states pension shortfall moving forward. The politicans could have corrected this issue 15 years ago if they weren’t pandering just to stay in office and explains the reason why they knew they couldn’t fund the shortfall all that time, deciding to kick the can down the road and let if fester until patient is almost dead.


  2. Posted by S Moderation Douglas on May 9, 2016 at 7:43 pm

    Where is the $36,000?

    I see a PBGC max benefit of $12,870 a year.


  3. Posted by Anonymous on May 9, 2016 at 8:24 pm

    36,000 sounds pretty good. How much were these people making over the course of their careers. In NJ the median salary for private sector is around 56,000

    Not adding up


  4. Posted by MJ on May 10, 2016 at 7:39 am

    As with any DB plan, I will never understand how promises of 3400.00 or 2800.00 a month as noted in the article can be promised for the entirety of one’s retirement. Again, it just doesn’t add up…………I don’t mean to sound heartless but surely these retirees would have saved up retirement money on their own instead of relying on a defined benefit. This is news to them?? No inkling of this happening? The figures just don’t add up and now the chickens have come home to roost. Im sure we have not heard the end of it.


  5. Posted by S Moderation Douglas on May 10, 2016 at 2:01 pm

    I don’t know why $3,400 couldn’t be promised. There are thousands, or hundreds of thousands right now living on those promises. I think all the pensions, both public and private, took a major hit in the last decade, and learned some valuable lessons along the way. But most are not in nearly as deep a hole as Central States.

    John McGinnis in his book “Future Forsaken”


    Describes a DC plan that includes 36 years working and 20 years of retirement.

    Page 24:
    “A person whose salary averages growth at 2% a year, can, over the course of 36 years of earnings, accumulate an annuity equal to 66.5% of his or her final salary, assuming 10% salary contributions per year and a 6% rate of return on investments.”

    The entire book is available as a free download at:


    If this is reasonable with a DC plan, it should be even more feasible with a DB. Primarily because of the sharing of longevity risk.


  6. Posted by MJ on May 11, 2016 at 7:42 am

    “Promises” with a whole lot of “assuming” never adjusted for longer life spans, longer retirement years, economy tanking, stock market and wages stagnant, less and less workers, more and more debt. outrageous health care costs…..in my mind that’s a whole lot of hoping that one will be dependent to receive a check every month for 25-30 years. People retiring who still have mortgages, car loans, credit card debt, 2nd mortgages….really? Living well above their means and wanting to continue that lifestylel in retirement without making any changes….commom sense to me…just doesn’t add up but this is only my humble opinion


  7. […] currently running (and being paid out of) the CSPF, […]


  8. Posted by S Moderation Douglas on May 11, 2016 at 3:13 pm

    Is it the $3,400 thing, or the “entirety of one’s retirement.” thing?

    Even with individual retirements, the so called experts have said that if you save 10-20% of your income, starting at age 25, you should have a secure, if not comfortable retirement. Doing the same savings in a DB plan just helps to make it more secure by spreading the risk.

    Even the California Policy Center, a Very conservative organization, has no objection to a DB plan per se, (at least, that’s what Ed Ring says) Their complaint is with the size of pensions and the underfunding, both through actuarial assumptions and outright failure to meet ARCs.


  9. Posted by MJ on May 12, 2016 at 7:20 pm

    Its not that I have a problem with either…the problem I have is that I just can’t see how something can be “promised” and paid for in the entirety of a 20-30 year retirement. With individual retirement plans, the withdrawals can be minimized if events occur that cause markets to tank, poor plan management or unexpected shifts in economy etc.
    I think of DB plans as promising people money that they most likely will never see and don’t have much control over it.


    • Posted by S Moderation Douglas on May 13, 2016 at 8:44 am

      Insurance companies make that promise all the time, with annuities, after they take their cut off the top.


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