Iron Workers

Workers atop what was to become the Sohio headquarters, later BP Tower, in downtown Cleveland. In a vote pitting current workers against retirees, their union has agreed to cut pension payments.

(Chris Stephens, The Plain Dealer)

WASHINGTON -- In a vote pitting current workers against retirees, the retirees in the Iron Workers Local 17 union in Cleveland lost.

Starting next week, their pension payments will shrink, some by half or more.

The Iron Workers Local 17 fund is the first pension fund to get Treasury Department approval for these kinds of cuts under congressional authority. Treasury rejected a similar request for a vote from a much larger fund, the Central States Pension Fund, after concluding its plan for post-voting survival was still risky.

The Iron Workers erected the steel on the BP Tower and at Cleveland Hopkins International Airport, at heights few office workers would care to brave. Their jobs were physically demanding, and they made about $50,000 a year during the construction-heavy years of the 1980s, when Cleveland saw a building boom. Many assumed they could retire with a middle-class lifestyle.

But when a number of pension funds like theirs ran into deep financial trouble, Congress worried about having to pay for a bailout. The federal Pension Benefit Guarantee Corp. could be swamped if it took on the obligations of multiple union pensions. So Congress in late 2014 allowed something rarely done before, and then only when a pension plan was, in fact, broke.

Congress allowed these kinds of pensions -- called multi-employer plans because they covered tradesmen who moved from employer to employer -- to cut monthly payments to current retirees for the sake of preventing the fund's bankruptcy later. But first, anyone entitled to getting a pension, whether now or later, would get to vote, in a process overseen by Treasury.

The result of the Iron Workers vote, taken Dec. 20, was announced today: 616 in favor of the cuts and 320 against. Many more current and former workers in the fund -- more than 1,000 -- didn't vote, but under the rules that just meant they would be counted as approving the cuts anyway.

As characterized in a statement on the union website today, a "majority of the participants in the Pension Fund voted to save themselves by implementing benefit cuts now to avoid the projected insolvency in 2024." Members agreed that reducing pensions now "is a better alternative than letting the Pension Fund become insolvent."

The size of the cuts depends on each worker. While the fund has said average cuts are about 20 percent, that includes those for workers who won't retire for years, when the fund is expected to be in better shape. As for current retirees, there are 336 who will see cuts of 30 percent to 60 percent, according to the Pension Rights Center, an advocacy group.

"These cuts are particularly unfair and cruel to 336 of the fund's retirees who labored for decades constructing Cleveland's skyscrapers," said Karen Ferguson, director of the Pension Rights Center.

More union pension funds have applied for similar cuts. They have suffered from declining membership, financial losses during the recession and, some union members say, mismanagement by trustees. That's why the Local 17 vote has garnered attention beyond Cleveland, despite the local union's relatively small size.

Some in Congress, including Sens. Sherrod Brown and Rob Portman of Ohio, say they want to find a way to avoid these kinds of cuts. But Congress has yet to agree on a way.