By Teamsters General President James P. Hoffa
Published in the Detroit News, March 2, 2016
Michigan’s congressional delegation is responding to the concerns of thousands of Teamsters about a dire proposal put forward by the Central States Pension Fund plan that would decimate their retirement security.
Sens. Gary Peters and Rep. Debbie Dingell took the lead on separate bipartisan Senate and House letters sent last month to the Treasury Department. They demanded that authorities reject the Central States proposal that could leave some of the 270,000 workers and retirees across the Midwest facing cuts as high as 70 percent to their monthly checks.
None of this, of course, even addresses the fact that the proposal won’t solve the pension fund’s shortfall. Central States is totally unrealistic in its projections, and even if it were to meet them, pension fund officials admit there is only a 50 percent chance the fund would remain solvent long term.
For instance, the proposal assumes the fund will 7.5 percent each year to maintain solvency. But it has lost about $2 billion in value since the June 2015 numbers used in the report submitted as part of Central States’ application last October. Quite simply, there is no way to gauge whether the stock market will be able to hit such numbers over the long haul.
In addition, the Central States’ proposal presumes employers will continue to increase their pension contributions between two and four percent each year. That means in 50 years they will be paying $848 a week in pension payments for each employee alone. That’s not going to happen.
Maybe that message is beginning to sink in for Central States. Responding to the letter sent by Rep. Dingell and 83 of her House colleagues, pension officials suggested they are open to other ideas that would preserve the pensions many workers spent decades paying into to build a retirement nest egg.
There are several to consider. The most comprehensive solution is the “Keep Our Pension Promises Act” (KOPPA), which would protect workers and retirees from cuts to their earned retirement benefits. The legislation would roll back provisions that were slipped into the fiscal 2015 spending bill approved by Congress in late 2014 that made earned pension benefits vulnerable to cuts.
KOPPA would restore anti-cutback rules so that retirees in financially troubled multi-employer pension plans like Central States would be protected from having their earned benefits slashed. It ensures that the safety net system supported mostly by employers does not shift to one funded solely by taxpayers.
In order to shore up the long-term sustainability of the existing federal pension insurance program, KOPPA creates a $30 billion legacy fund over 10 years, paid for by closing two tax loopholes used almost exclusively by the super-rich to avoid paying taxes.
Active and retired Teamsters turned out in droves at Central States pension meetings hosted by the Treasury Department in Detroit and elsewhere last month seeking fairness. They want federal officials and those in Congress to understand their plight and come up with real solutions.
The Treasury Department has until May 7 to make a final decision on Central States’ pension plan. But it shouldn’t need that long. The proposal is broken. Instead, it’s time for the federal government to step up and protect the pensions of retirees as was required under previous laws.