With Teamster Central Fund union pensions in jeopardy, IBT Ohio members plead with Congress and the feds "critics say the government gave financial decision-making power to Wall Street banks that milked the fund for investment fees."

With Teamster Central Fund union pensions in jeopardy, IBT Ohio members plead with Congress and the feds "critics say the government gave financial decision-making power to Wall Street banks that milked the fund for investment fees."
Lawmakers brokering the deal, including California U.S. Rep. George Miller, a pro-labor Democrat, characterized the pension provisions as a decent collective compromise to assure that retirees at least got something and the PBGC stayed afloat. Only pension plans that project they won't be able to pay 100 percent of benefits within 10 to 20 years could qualify.
http://www.cleveland.com/open/index.ssf/2015/09/with_union_pensions_in_j...

Semi-truck drivers often get their pensions from multi-employer plans, but some of those plans face financial trouble. Congress last year passed a law to help the plans cut their pensions while shielding the government from bailout costs -- to the chagrin of retirees and workers. (Chuck Crow / The Plain Dealer)
By Stephen Koff, Northeast Ohio Media Group Washington Bureau Chief

WASHINGTON, D.C. -- Alex Adams lifted his shirt so the panelists and audience could see the bandages and feeding tube.

"This is how I eat," he said in a halting voice.

The crowd, rapt in silence, moved to its feet to applaud when he was done. Adams, 73, a former truck driver, former president of Teamsters Local 407 and a current city council member from Maple Heights, Ohio, didn't want pity as he told a group of federal officials about his circumstances, including bouts with larynx and tonsil cancer.

But he wanted to explain why he needs his pension -- all of it, even though Congress has not only allowed it to be cut but, as he and others see it, facilitated the cut. Some pensions similar to his could be cut by more than 60 percent. Nearly 50,000 pensions in Ohio could be affected.

Adams is both a beneficiary and, some say, a victim of the Teamsters' Central States Fund, a multiemployer pension plan to which he contributed for 37 years. Multiemployer plans are administered on behalf of employers and unions in industries where workers might move from company to company but the work itself -- trucking, warehousing, machine operations, construction -- stays fairly constant.

The last recession clobbered financial returns on all kinds of investments, including those held by pension funds. Some multiemployer plans warned that they were not only deeply underfunded but also had few prospects for recovery. This prompted some members of Congress to worry that the pension obligations for up to 1.5 million workers could get dumped on the federal government.

The government's Pension Benefit Guaranty Corp., or PBGC, typically agrees to pay a share of pensions that go bust. But considering the financial state of many multiemployer plans, this could threaten the very solvency of the PBGC's multiemployer pool.

So last December, as Congress finished a last-minute government funding bill to avoid a federal shutdown, lawmakers threw in pension provisions. They attached a bill that had received little public attention, the Multiemployer Pension Reform Act of 2014, to the omnibus spending bill.

The bill allowed troubled multiemployer pension plans, like the one Adams paid into all his working life, to cut benefits. Although the Teamsters' Central States Fund, with about 400,000 members, has $18 billion in assets, it has $35 billion in liabilities, with annual payouts eclipsing contributions. The fund has said already that it plans to utilize the deal that lawmakers brokered in December. So that's why Adams and hundreds more union members came by the busload Thursday to Washington -- to urge federal officials and members of Congress to save their pensions.

"I have already cut the newspaper," Adams said, explaining his need to eliminate frills amid ongoing medical and pharmacy bills from his medical issues and his wife's recent episode with cancer. "Cable," he continued, ticking off other things he decided to do without. "We'll cut the landline in January for our telephone. All of our luxuries will be gone.

"We thought his stage of our lives would be comfortable. But this is devastating. And not just for me, but to so many others out there -- the men and women who banked on the American Dream."

They want changes

Lawmakers brokering the deal, including California U.S. Rep. George Miller, a pro-labor Democrat, characterized the pension provisions as a decent collective compromise to assure that retirees at least got something and the PBGC stayed afloat. Only pension plans that project they won't be able to pay 100 percent of benefits within 10 to 20 years could qualify.

The bill broke precedent by allowing cuts to current retirees' pensions. But workers ages 75-79 would see smaller cuts, and those 80 or older or on disability pensions would avoid all cuts.

Kroger, the Cincinnati-based grocery chain, called the deal "absolutely essential" to resolving "the multiemployer pension crisis without government involvement." Even some unions endorsed the bill, although with misgivings. The Service Employees International Union said that while it was imperfect, it would "help preserve and protect the multiemployer defined benefit pension system for our members and all of the system's participants for years to come."

But AFL-CIO affiliates were split, union members say. President Barack Obama signed the bill, making it law, but the mechanics of how it will work -- how active and retired union members will be able to vote on their plans' changes, how they must be notified -- still must be resolved. That's what brought Adams and hundreds more union members to Washington on Thursday.

The government held a hearing in the morning, led by Kenneth Feinberg, an attorney overseeing the pension-reduction program, to get opinions on proposed rules and procedures. Feinberg, picked for this role by the Treasury Department, became well-known serving in a similar role for boards overseeing 9/11 victim compensation and claims from the BP oil spill in the Gulf of Mexico. He has the manner of a wise, trustworthy uncle, and spoke with empathy to the men and women hoping to save their pensions.

But as he sat on the stage alongside representatives from Treasury, the PBGC, the IRS and the Labor Department, Feinberg said, "Please remember, we are implementing a law passed by Congress. We cannot change it. ... We have no choice."

Most of those addressing the panel through Thursday morning wanted changes, nevertheless. And in the afternoon, many made their way from the auditorium in the federal Ronald Reagan Building to Capitol Hill, joining a rally and news conference sponsored by U.S. Sen. Bernie Sanders, the Vermont independent running for the Democratic presidential nomination, and Rep. Marcy Kaptur, a Toledo Democrat.

The lawmakers have a bill to guarantee full pension payments. They say the PBGC could pick up the difference with no harm to the federal government if Congress gives it the revenue by ending two tax benefits enjoyed by a small number of millionaires.

One break protects taxation of certain high-end real estate sales that are characterized as property "exchanges," with some taxes now put off indefinitely. The other concerns tax avoidance on estates with valuable holdings such as artwork.

"If Congress can bail out Wall Street and foreign banks throughout the world, we should be able to protect the pension benefits of American workers," Sanders said.

Co-sponsors of the Sanders-Kaptur bill include Ohio's Sherrod Brown in the Senate, and Tim Ryan of Niles and Joyce Beatty of Columbus in the House of Representatives. They and the others involved so far are Democrats. That could make passage hard, especially for any bill that raises taxes, even on multi-millionaires. Republicans have said that any tax changes should be handled through a comprehensive tax-reform bill rather than piecemeal, and it is unlikely such a bill could get through an already contentious Congress before the 2016 presidential election.

Several Republican lawmakers say they, too, sympathize with the retirees and are working on their own solutions. Sen. Rob Portman, an Ohio Republican, is one of them, although it is unclear what Portman will ultimately propose.

"There are 48,000 union workers across Ohio who are at risk of not getting the full pensions they've worked hard for and were promised," Portman's office said in a statement. "We have been in close touch with them to find a solution."

Union members likewise have reached out to Jim Renacci, a House of Representatives Republican from Wadsworth. But Renacci doesn't appear to have a legislative proposal.

"Jim thinks that providing plan trustees with new tools and flexibility, shielding taxpayers, and granting protections to beneficiaries should all be part of the conversation going forward," his spokeswoman, Elizabeth Litzow, said.

Not supposed to be this way

The union members Thursday said they were open to most ideas -- just not the one that Congress passed in December. They said the bill they so dislike got through Congress without any public hearings, appended to a must-pass spending bill.

"As a Vietnam veteran, I've not been in an ambush like this one since Vietnam," Michael Walden, 66, a retired truck driver from Cuyahoga Falls, told Feinberg and others from the federal government.

"This is not the way the democratic process is supposed to work," Karen Ferguson, director of the Pension Rights Center, a group working to undo the law, told the officials.

At the hearing and in interviews, union members and retirees stressed that they paid into their pension plans religiously, sometimes forgoing wage hikes so they could bolster their pensions and eventually enjoy a modicum of retirement comfort.

They are not rich. Walden said his pension comes to $36,000 a year.

He said it could be cut to $14,000 under the current law, depending on what the financially shaky Central States fund requests.

Pension plan administrators blame two recessions and a changing workforce for the financial problems. As more workers retired or changed companies, employers downsized and did not maintain big enough workforces to sustain the steady contributions needed to keep pension plans solvent.

Randy DeFrehn, executive director of the National Coordinating Committee for Multiemployer Plans, said that multiemployer plans and lawmakers worked for 18 months on the legislation. They made sure that even in the worst cases, a worker with at least 30 years of service could get slightly more than the $12,870 he or she would otherwise be guaranteed at retirement had their plans been simply dumped on the PBGC. DeFrehn's group represents employers and unions in multi-employer plans.

But that slightly higher payment -- 110 percent of the PBGC guarantee -- is still a lot lower than the workers assumed they'd get. For current retirees, it represents an abrupt and unprecedented change from what they now get, with no time to plan other strategies to make it up. The retirees said they followed every single rule.

Many blamed poor pension fund management and foolish investments made by large banks and financial institutions, which earned big fees advising pension trustees even as they lost money. The Teamsters' Central States fund was supposed to have oversight by the Labor Department after a 1982 federal decree, which followed allegations that the fund was used for improper loans to people linked to organized crime. But critics say the government gave financial decision-making power to Wall Street banks that milked the fund for investment fees.

Those decisions cost the Central States fund a bigger share of losses in 2008 -- a drop of more than 29 percent -- than the pension industry median, according to the International Business Times. Rather than deal with the culprit in this case, pension fund members say, Congress simply shifted the burden.

"The way this bill was passed was a dirty trick," Jack Palush, 65, a retired truck driver from North Royalton, said in an interview outside the auditorium. "We would like to see it get back to the Senate floor and have a discussion."

Palush said he realizes it could be tough to avoid any cuts whatsoever. But that discussion needs to occur in the open, he said, because "people need to realize what's going on in this country."

"All we're asking for is to have a fair shake in this country," Ben Sizemore, a semi driver from Oakwood Village, added. Sizemore, 64, has been driving a truck for 38 years and says he "can't afford to retire."

Partly, he said, that's because "I don't know how much I'll get in my retirement."