On August 30, 2016 trustees of the New York State Teamsters Conference Pension and Retirement Fund out of Syracuse, NY became the ninth multiemployer (union) plan to file for benefit cuts under MPRA in an attempt to avoid insolvency. On April 5, 2017 they withdrew that application but, according to a story in the Albany Times Union, are planning to refile with a twist (emphasis added):
Thousands of upstate retired Teamsters have dodged a potential pension cut — at least for now — thanks to a recent decision by the federal government. And the retirees may face smaller cuts than the original plan’s call for a reduction in benefits of almost a third. Still, the respite could be short-lived as the timetable for possible cuts has been pushed from July 1 to Oct. 1.“We need to file another application to the Treasury Department,” said Tom Baum, volunteer retiree representative for the Teamsters’ Local 294.
Also known as the Upstate Teamsters, Local 294 represents about 16,500 retirees and another 18,500 who are currently employed. Many are or were truck drivers or other employees of UPS, as well as drivers who worked for car haulers transporting new vehicles from train depots to auto dealerships across the region. Most are in upstate New York, though a few reside in New Jersey.
With fewer members to support retirees, the pension fund hit rocky financial waters following the 2008 economic crash. Fund administrators say if cuts aren’t made, the system could become insolvent by 2025. Any cuts, though, must be approved by the federal Treasury Department. Earlier in April, the agency sent back the Upstate Teamster’s blueprint to regain solvency. The agency offered several suggestions, including an updating of the fund’s actuarial mortality tables. Federal officials also wanted the fund operators to make a more optimistic assumption about their annual rate of return, which was pegged at 6.75 percent for the next decade. “The Fund’s investment earnings during the last few months have been better than expected, which could help make deeper cuts unnecessary,” according to a website, http://nysteamstersfundretireerep.com, set up by Baum. “It’s still possible, however, that the new proposed cuts will be deeper than 31 percent.”
In the meantime, UPS has offered a plan of its own which would enact across-the-board cuts of 20 percent rather than the deeper cuts contemplated in the recently rejected proposal. Under the current plan, cuts would vary based on a worker’s length of service and age, as well as disabilities. The UPS plan, though, would give no preference to disabled retirees. It would also enact a $10 monthly employee fee. The fix would also seek low-interest loans from the government in order to shore up pension fund finances. UPS spokesman Steve Gaut said that was just one of several options the company was exploring in efforts to help deal with the problem. “The company is working with stakeholders to explore legislative solutions which could help minimize the impact of required restructuring of multi-employer plans facing critical funding problems,” he said in a statement. “However, there is no single proposal or agreed solution to comment on at this time.”
“A lot of retirees are very nervous about this,” said Joellen Leavelle, communications and outreach director at the Pension Rights Center, a Washington, D.C.-based organization that advocates for pensioners.
Leavelle said U.S. Sen. Bernie Sanders of Vermont has proposed cutting tax loopholes to help shore up pension funds. She said that proposal is expected to be offered again in May. Its prospects are dubious with Republicans controlling the levers of power at the federal level.
From their latest 5500 form (which was amended to fix the participant count error from the initial filing) here is the plan’s relevant data:
Plan Name: New York State Teamsters Conference Pension & Retirement Fund
Total participants @ 12/31/15: 34,270 including:
Separated but entitled to benefits: 6,758
Still working: 11,576
Asset Value (Market) @ 1/1/15: 1,561,393,592
Value of liabilities using RPA rate (3.51%) @ 1/1/15: $5,853,996,515 including:
Separated but entitled to benefits: $569,054,431
Still working: $1,617,233,708
Funded ratio: 26.67%
Unfunded Liabilities as of 1/1/15: $4,292,602,923
Asset Value (Market) as of 12/31/15: $1,381,300,242
If the Albany Times Union story is true then it is a toss-up as to which is the more bizarre revelation:
- The Treasury wanting more optimistic investment assumptions than 6.75% for a plan that is 26.67% funded; or
- mentioning a Bernie Sanders plan as if it had any chance of enactment in this environment.