Ken Petersen spent 30 years as a Teamster trucker, loading and hauling utility poles, fertilizer and other freight. All those years his employers socked money away for the monthly pension check Petersen has received since he retired from trucking in 2003.

Now, to save the Teamsters Central States Pension Fund from collapse, its trustees want to slash the pensions of 272,600 fund members, nearly 15,000 of whom are Minnesotan. Thousands are already retired and living on the pensions.

Petersen, 65, and working in a South St. Paul elementary school to make ends meet, said his monthly pretax retirement check would be chopped from $2,550 to $1,274.

"The best word we could come up with is 'betrayal,' " he said.

The $17 billion Central States fund is the first to seek cutbacks under the 2014 Multiemployer Pension Reform Act. The controversial law, affixed by parliamentary maneuver to a budget bill by Republican Rep. John Kline of Minnesota and former Democratic Rep. George Miller of California, allows certain financially stressed plans to cut benefits already being paid to retirees.

It's a radical shift from long-standing federal laws safeguarding private pensions, which prohibit ongoing plans from cutting benefits that have already accrued. The new law creates an exception.

The cuts must be approved by the U.S. Treasury Department, but the agency is required to do so if the pension fund trustees meet certain requirements. The Teamsters get to vote on the deal, but if the requirements are met, Treasury has to approve the cuts regardless of the vote's outcome.

Some worry that approval will lead to a wave of actions by other pension funds, jeopardizing the retirements of hundreds of thousands of people in multiemployer plans and setting the stage for additional legislation that extends to single-employer pensions.

"This is the worst challenge we have seen in our entire existence," said Karen Friedman of the Pension Rights Center, an advocacy group for retired workers.

Many of the 272,600 affected Central ​States fund members are, like Petersen, former truckers. (People over 80 and those who retired with a Central States disability pension are shielded from reductions.) More than a third of those affected already are retired and living on their pensions. The average cut nationally is 34 percent, although some cuts top 60 percent or more.

Retired Teamsters argue that the current solution unfairly shifts the burden of a bailout onto them. They have a right to what they have earned, they say.

"If they're 70, who's going to hire them?" asked former dockman Dave Erickson, who helped found the Minnesota Committee to Protect Pensions.

Kline said the pension cuts bill "was supported by both business and labor because it's the only realistic option … for saving these troubled pension plans before the plans go bankrupt. Those who are trying to undermine these reforms are promising nothing but greater pain for millions of Americans."

Still, the proposed cuts are so unsettling that they have led to bills from Democrats and Republicans to reform the reform.

Would-be Democratic presidential nominee Sen. Bernie Sanders wants to repeal the cuts allowed by the Kline-Miller bill. Democratic Sen. Al Franken of Minnesota is a cosponsor.

"I've heard from hundreds of Minnesotans who are concerned they will need to go back to work, won't be able afford groceries, or could even lose their homes," Franken said.

Democratic Sen. Amy Klobuchar said workers "depend on the pension they earned through a lifetime of work to provide them with security and dignity in retirement." Democratic Rep. Rick Nolan sent a letter to Treasury last week urging them to refuse the Central States cuts.

Ohio Republican Sen. Rob Portman has a bill that ensures workers' and retirees' votes determine any pension reductions.

Trustees of the Teamsters' Rosemount, Ill.-based Central States Pension Fund say they had no choice but to trim benefits.

Trucking deregulation, declining union membership and recessions destroyed the pension math, they say. Bad investment decisions the fund made before the 2008 financial crash also didn't help.

The Central States fund is one of the nation's largest multiemployer, defined benefit pension plans. These are typically union pensions that several employers pay into and, unlike 401(k) plans, promise a set monthly payment.

But where there once were four Teamsters working for every retiree, there are now five retirees for every worker. The fund pays out $2 billion more than it takes in each year from employers.

The Pension Benefit Guaranty Corporation, the federal insurance agency that is supposed to pay retirees whose pension plans default, is running huge deficits itself. It cannot afford to offset the Central States fund losses.

Petersen and his wife call the steep cutback "devastating," given their big medical bills and mortgage. Petersen has heart disease and his wife, Marcia, suffers from severe arthritis.

While the Veterans Affairs covers Petersen's heart medications, and their Medicare coverage and Social Security checks help, it's not enough for them to retire on.

To make ends meet, Petersen mops floors and supervises the lunchroom at Lincoln Center Elementary School in South St. Paul.

Like other retirees, the Petersens hope momentum builds to repeal the cutback provisions.

Speaking at a recent Teamsters meeting in St. Paul, Friedman, from the Pension Rights Center, said that if Treasury approves the Central States fund reductions, trustees at other plans will do the same.

"This is going to open the floodgates," Friedman said.

Other plans threatened

There are 100 other "critical and declining" multiemployer pension plans that would be eligible to seek cuts under the new law, according to the Center for Retirement Research at Boston College.

David Certner, legislative counsel at AARP, said policymakers are increasingly looking to slash benefits that retirees already are receiving as a solution to shortfalls.

"The more it's permitted to happen, it encourages people to look at it as a norm and not as an outlier," Certner said.

Jean-Pierre Aubry of the Center for Retirement Research said the Central States fund's issues are unique and would not have much influence beyond the world of multiemployer pensions.

That's little comfort to Tom Olson.

The Ham Lake retiree said he may be forced to sell the mobile home he lives in and move Up North to save money if the Treasury Department OKs the Central States cuts. His pretax monthly benefit is projected to drop from $2,500 to $1,500. He could pay his mortgage with that, but not much else, and feels he'd "be living on the edge."

Olson, 66, said he worked 28 years as a trailer mechanic for Lakeville Motor Express until he ruined his lower back bending over to screw in scuff liners.

What bothers him, he said, is that he and his former co-workers accepted little in the way of raises because they were promised a solid retirement. He started out in 1983 getting paid $13.78 per hour, he said. He ended in 2009 at just over $19.

Those sacrifices rankle Perry Martin, too. Martin, 67, of New Brighton, retired five years ago after driving 30 years for Aggregate Industries hauling ready-mix concrete. Martin said he "stuck to the grindstone," working 60 hours a week to pay off the house and put his children through college.

A 40 percent cut to his pension check wouldn't put him in the poorhouse, but he and his wife would have to tighten their budget and shelve some travel plans.

"I thought maybe we could eat out a couple of times a week," Martin said. "I have never been to the Black Hills, that's been kind of a dream to get there."

Petersen calls his "retirement" a big question mark.

As he supervises the noontime chaos, he snatches wet mittens off the floor and opens containers of apple sauce. He's worked three jobs in the past, he says.

"If I have to, I can go out and get another job."


jennifer.bjorhus@startribune.com 612-673-4683 jim.spencer@startribune.com 202-383-6123