Update: On Friday, The U.S. Treasury Department notched a victory for more than 200,000 retired Teamsters across the country, who had been promised a comfortable pension. The Department rejected a plan from Central States Pension Fund that would have cut pensions by more than 50 percent in many cases.
Central States argued it had been hit hard by the Great Recession. The ruling impacts about 15,000 retired truck drivers and dock workers in Wisconsin, who belong to the Teamsters union.
Original story from Tuesday, May 3: Thousands of pensioners throughout the Midwest could soon see their benefits slashed. The U.S. Treasury will decide by the end of this week whether Central States Pension Fund can cut retirees’ benefits by up to 70 percent. The possibility could cause a lot more people to worry about their pensions.
Most people never imagine that they might end up working through retirement age.
“I’m 63 and I’m in pretty good shape so I’m sure I could find a part time job, but I really don’t want to have to go back to work either. That’s not why I worked 40 years in the trucking industry,” Bernie Anderson says.
The Franklin resident retired about a year and half ago, and says since then, he’s been fighting to keep all of his pension. He’s one of thousands of retirees across the Midwest who could find Central States Pension Fund cutting his pension. It’s a plan that multiple employers contribute to under various collective bargaining agreements.
“Through the years, I purchased 20 acres of land up north that I wanted to put a trailer on, and I don’t know if we’d even be able to get that,” Anderson says.
Still, Anderson considers himself one of the lucky ones. He says that because his former employer is still around and contributing to the fund, he falls into a special category and would only lose about 30 percent or $11,000 a year. Anderson says he’s more concerned about others.
“If you’re going from $2,600 or $2,700 down to $1,100 and you’re the only one that’s bringing in the money, (be)cause your wife is either sick or ill…don’t forget, everybody’s either 65 or 75, it was the worst group you could have picked on,” Anderson says.
Central States Pension Fund is a plan that about 1500 employers have contributed to under various collective bargaining agreements. Among its ranks are office workers, dock workers and truck drivers such as Anderson. The Great Recession hit the fund hard. Back in 2014, Congress passed the Kline-Miller Multiemployer Pension Reform Act. It, for the first time, allows such plans to slash payments to people already retired by up to 60 percent.
This case will be the first test of that law.
“So this is sort of the beginning of a much bigger national crisis,” Karen Freidman says. She is executive vice president of the Pension Rights Center based in Washington D.C.
The crisis, Freidman says, includes the fact that four other multiemployer funds are exploring the option of cutting their pension payouts. She says the impact will spread well beyond the people directly affected.
“They’re folks that are spending that pension money in local economies. That’s going to have an impact not just on the individual, but it’s going to have an impact on their spouses, their kids, their grandkids and the communities in which they live,” Friedman says.
Freidman says people are scared and the presidential race has pointed a spotlight on that fear.
“The most dominant theme in this election is how much people are just petrified of what’s happening to them, that they can’t rely on things, that promises are broken to them that they can’t…they’re afraid that they can’t find good jobs, that they can’t rely on pension promises,” Freidman says.
Freidman says that in the richest country in the world, there has to be another way. One strategy, according to Mike Arnow, is for workers not to rely on pension promises. Arnow is a CPA and an owner of Sattell, Johnson, Appel & Company.
“You have situations where there can be mismanagement of pension funds, either intentional or because the markets have collapsed at a point where you’re just about to retire. You definitely do not want to depend on any one source of income and you’d want to build as many safety nets as possible,” Arnow says.
Arnow says, no matter where you fall on the financial spectrum, if you can, save as though you will only have yourself to depend on in your later years.