An estimated 700 people packed Coffman Memorial Union at the University of Minnesota Tuesday to oppose draconian retirement cuts proposed by the Teamsters’ Central States Pension Plan.
One by one the Teamsters, many of them retired, stepped to the microphone to ask the U.S. Treasury to reject the cuts and find a different solution to the sea of red ink threatening to swallow the giant retirement fund.
“We worked hard for our money,” said Teamster Dennis Henderson, of North St. Paul.
Others angrily described the proposed cuts as unfair and devastating. Kenneth Feinberg, the Treasury appointee who hosted the session, said he was determined to make sure retirees were heard. It’s the seventh feedback session on the cuts he’s held around the country. There was a similar turnout for a session in Detroit Monday.
Key objections are the same, Feinberg said: The cuts won’t save the plan, the cuts weren’t equitable and when Teamsters get to vote on the deal, unreturned ballots will be counted as “yes” votes.
Even Teamsters leadership has called on Treasury to reject the rescue plan, which was crafted by trustees of the Central States fund to rescue the giant fund from insolvency.
Treasury has a May 7 deadline for a decision.
The cuts would affect 272,600 members of the plan, nearly 15,000 of them in Minnesota.
While the proposed reductions in Minnesota average 34 percent, cuts range to 50 percent or more and affect thousands of people who have already retired and depend on the checks.
Gregory Hammer, 60, of Blaine, said his pension check would be cut more than 50 percent. After 31 years as a Teamster trucker and dock worker, he’s now picking up trash and recycling for the city of Minneapolis to pay the bills and mortgage. “I don’t know how much longer I can do it,” Hammer told Feinberg.
If the cuts go through he would probably have to sell his house, Hammer said later.
Feinberg is a well-known mediation and compensation fund expert overseeing implementation of the Kline-Miller Multiemployer Pension Reform Act of 2014.
The controversial act created an exception to long-standing federal rules that prohibit reducing retirement benefits already earned by workers.
It was tacked onto a federal spending bill at the 11th hour — through a parliamentary maneuver by Republican Rep. John Kline of Minnesota and former Democratic Rep. George Miller of California — with no public hearings.
The $17 billion Central States, Southeast and Southwest Areas Pension Plan (called the Central States fund), which holds the retirements for Teamsters union members, is one of the country’s largest multiemployer pension plans. It was the first to seek cuts under the new law. Two more retirement plans have followed suit.
Severely underfunded, the Central States plan collects about $1 from employers for every $3.46 it pays out in retirement benefits, for an annual shortfall of $2 billion.
The fund is so large that if it failed, it would swamp the Pension Benefit Guaranty Corp., the federal backstop for broke pension funds that is itself expected to run out of money.
In an opinion piece in the Star Tribune, Thomas Nyhan, head of the Central States fund, called the reductions “a gut-wrenching course of action that we must take.”
The Star Tribune, Nyhan noted, is among the more than 10,000 employers that pulled out of Central States, adding to the fund’s financial problems.
The Star Tribune exited the fund during the paper’s 2009 bankruptcy.
Since September, when the Central States fund filed with Treasury, opposition to the rescue plan has grown louder.
A bipartisan group of 26 senators, including Minnesota Senators Amy Klobuchar and Al Franken, have asked Treasury to reject the cuts. If approved, the senators wrote in a Feb. 2 letter, they’ll “set a dangerous precedent for other pension plans around the nation.”
Also last week, Sen. Charles Grassley, R-Iowa, asked the Government Accountability Office to investigate the Department of Labor’s oversight of the Central States fund, which has slid toward insolvency even though it has been monitored by a federal court and the department for more than three decades under a consent decree.
Grassley said he wants to know whether the fund’s investments were similar in nature to those of pension plans that have remained solvent.
“Has DOL been appropriately engaged in reviewing Central States decisions regarding changes in investment managers and investment strategies?” Grassley wrote.
Local Teamsters are circulating petitions. One asks Congress to investigate the Labor Department and Justice in their oversight of the Central States fund. The other is a resolution of no confidence in the fund’s board of trustees.