Teamster retirees fear deep cuts to pensions

Susan Tompor | Detroit Free Press

Marsha Rarick, 66, worked 21 years driving a truck and hauling cars, mostly Jeeps out of Toledo, Ohio.

Rarick, who retired at the end of 2016, is collecting around $2,400 month from a Teamsters pension plan that's set to run out of money in a few years. She found herself Friday in a packed union hall at Teamsters Local 299 in Detroit fighting for her pension check.

"I'm worried it will be cut altogether," said Rarick, who lives in Toledo.

"I worked really hard, and now to lose the pension I was working for would be really devastating," she said.

Plenty of pensions created through collective bargaining agreements between a union and several employers in a given industry are on the verge of crashing. Many of these multiemployer plans cover union workers in construction, retail, mining and transportation.

"I've been retired 20 years. Now they want to take it away. What happened to the promise?" asked Robert Glass, 78, who lives in Westland.

Kimberly P. Mitchell, Detroit Free Press

Glass, who drove a truck for Airborne Express at Metro Airport, said he went to work every day for 38 years, did what he was supposed to do and hoped one day to have a secure retirement. He now collects about $3,500 a month in a pension but worries that check could be cut if the Teamsters fund runs out of money.

Pelosi in Detroit

On Friday, a town hall was held in Detroit to draw support for a pension fix, bringing together hundreds of retirees and active union members; politicians, including House Democratic Leader Nancy Pelosi and U.S. Rep. Debbie Dingell, D-Dearborn; and union leaders such as Teamsters General President Jim Hoffa and Gary Jones, the new president of the UAW.

Dingell is part of the bipartisan, 16-member Joint Select Committee on Solvency of Multiemployer Plans, which has a statutory deadline of Nov. 30 to provide recommendations to address the looming pension crisis.

"Failure is not an option," Dingell said before the event. "You see this room? These are people's lives."

Jan Kachur, 75, walked around the room with a cardboard sign saying "Retired Teamster Will Work for Food."

Kachur, who lives in Deerfield, Mich., near Dundee, said he's really not looking for a job. But he is fearful of what cuts might hit his $2,600-a-month pension check if no solution is found. His wife, who is 63, continues to work at a job where she hasn't built up pension credits for about the past 10 years, so what she collects when she retires will be limited.

Susan Tompor/Detroit Free Press

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Dan Scott, 59, of New Hudson isn't retired yet but worries what will be left for him when he does. He is a member of Teamsters Local 299 and works as a mechanic for new car hauler Jack Cooper in Wayne. He would receive a pension from the troubled Illinois-based Teamsters Central States Pension Fund.

Central States faces the largest of all multiemployer plan shortfalls with about $26 billion in unfunded liabilities. Central States is expected to be insolvent by 2025.

Scott, who grew up in Southfield, would like to retire at age 62. He goes online to see what kind of pension he might collect. It looks like it could be around $3,000 a month, but the website notes there are no guarantees given the precarious financial condition of the fund. His wife is a school bus driver and, after 18 years of working, her pension isn't expected to be nearly as much.

"I thought I'd be retired by now but things don't always work out for us," he said.

His big fear is that the fund will run out of money one day around the time he'd retire.

"They would be broke where we'd get nothing."

Drastic cuts proposed

Pete Byle, 57, of Garden City retired in 2007 because he needed a liver transplant. He receives under $2,000 a month in a pension after 25 years of working at a Spartan grocery warehouse in Plymouth, which closed in 2010.

Byle said he wanted to travel to Columbus, Ohio, last week for another rally on the pension issue, but he was in the hospital. So he came to the Detroit union local instead.

He says he cannot afford a cut to his pension. His wife works as a customer care manager for Michaels Stores and she doesn't have a pension.

About a year and a half ago, Byle was paying about $400 a month for his prescriptions. He said that price has dropped to about $135, and as a Donald Trump supporter, he believes those drug prices might have dropped because of pressure from the president. He'd like more relief when it comes to his pension fund's security.

The crisis has proved difficult to address, with all sorts of blame to go around and no resolution that would ease some serious fears.

A few years ago, the Central States plan proposed a strategy that called for drastic reductions in retirement payouts — some looking at seeing pensions cut in half. But that plan fell apart in 2016 after political pressure. The U.S. Treasury Department ultimately rejected the proposal submitted by Central States — much to the relief of many retirees and active workers.

Town halls were held in various cities, including one at Wayne State University in early 2016. Mediator Kenneth Feinberg, who was working with the U.S. Treasury in a special role, called for the public sessions and heard from hundreds of angry Teamsters.

But now what?

Susan Tompor/Detroit Free Press

Many union members and Democrats, including Pelosi, voiced support for the passage of the Butch Lewis Act introduced in late 2017. The legislation is named for Butch Lewis, the former president of Teamster Local 100 in Ohio who fought to save pensions and died in 2015. Some say that fight contributed to his poor health.

The proposed legislation would create a Pension Rehabilitation Administration within the U.S. Treasury Department. The agency would issue bonds in order to finance low-interest, 30-year loans to assist pension plans in financial distress.

"Two words: No cuts," Pelosi told the crowded union hall.

Hoffa told the crowd that union members already made sacrifices and need pension relief.

"We've already given. It's time to save our pensions," Hoffa said.

"Now is the time for you to retire with dignity."

It remains unclear whether the bipartisan committee ultimately will agree on a solution or one that includes the Butch Lewis Act.

Dingell said Friday that she will not disclose what options she would favor because there needs to be an open discussion and she wants to negotiate in good faith.

The joint select committee is holding a hearing in Washington on Wednesday to provide a platform for stakeholders and discuss policy options with experts to shore up the shaky multiemployer pension system.

Startling numbers

Pension plans ended up in financial distress for several reasons. The stock market fallout in the early 2000s — followed by the financial crisis in 2008 — hurt investment returns. Some investments were mismanaged. Many plans recovered but a significant number did not. Some companies went out of business, leaving behind unfunded benefits. Pressures of deregulation in the trucking industry continued.

Some startling numbers:

Up to 1.5 million Americans — or a bit more than one in 10 — participating in multiemployer plans are at risk and covered by pension systems that could run out of money.

Nearly 380,000 active and retired workers participate in the Central States Plan. In Michigan, there are 43,653 participants in the Central States plan — 22,944 retirees, 6,571 active workers and 14,138 inactive workers. About $4.7 billion worth of pensions in that plan are at risk in Michigan.

About 130 multiemployer plans are expected to run out of money over the next 20 years, according to the Pension Benefit Guarantee Corp.



The Pension Benefit Guaranty Corp. is providing financial assistance to 78 such insolvent multiemployer plans — and the numbers are expected to grow.

Three Michigan-based multiemployer plans are receiving assistance from the PBGC — Council 30-Sanders; the International Association of Machinists and Aerospace Workers AFL-CIO Local 2848; and Roofers Union Local 211.

The three insolvent plans in Michigan cover roughly 1,340 people.

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The PBGC doesn't take over multiemployer plans in the same way it deals with insolvent single-employer plans. Instead, the agency sends financial assistance to multiemployer plans so they can pay benefits at the level the PBGC guarantees.

The multiemployer guarantee is not indexed for inflation — so the payout to retirees remains the same year to year. It does not vary based on the retiree's age. It will vary based on the retiree's length of service. The guarantee is based on a complex formula prescribed by federal law.

The PBGC is projecting that its insurance program that offers some relief for those covered by insolvent multemployer plans will itself be insolvent by 2024 or 2025. The likelihood the PBGC program for those plans will have enough money after fiscal year 2026 is now less than 1 percent, according to a PBGC report in May.

"If the PBGC multiemployer program is allowed to become insolvent, the only money available to provide guaranteed benefits will be incoming premiums. Only a small fraction of the current, very modest guarantee will then be funded," said W. Thomas Reeder, director of the PBGC at a House committee hearing last November.

He said the result would be catastrophic for retirees, their families and current and former workers.