With the retirements of 407,000 people on the line, the Teamsters' Central States Pension Fund is appealing to Congress to help solve its dire financial predicament.
The $16.1 billion fund holds retirement money for trucking industry workers and retirees across the country, including 22,000 in Minnesota.
After the U.S. Treasury on Friday rejected the pension's plan to cut retirement benefits, the head of the Central States fund said trustees haven't decided whether to file another rescue proposal. If they do, it would require far deeper pension cuts than those originally proposed, Central States executive director Thomas Nyhan said Monday.
"I clearly hope that there's been a heightened awareness of this problem in Congress and that the folks who have urged rejection of the rescue plan feel some responsibility to come forward now and provide a solution to the problem," he said.
The Treasury's rejection on Friday was the first major test of the 2014 Multiemployer Pension Reform Act, which gave broader authority to troubled pensions to cut already-earned benefits.
Nyhan said he supports the Keep Our Pension Promises Act, which he said is the only legislative action he's aware of that offers a meaningful solution. Nyhan said he would consider legislation combining pension cuts with direct aid to Central States.
But he also acknowledged that legislative action in this election year is not likely. He expressed hope that in 2017, Central States, union members, the Treasury Department and the U.S. House and Senate can "all get to work."
The Keep Our Pension Promises Act, introduced by Democratic presidential hopeful Sen. Bernie Sanders and co-sponsored by Minnesota Democratic Sens. Al Franken and Amy Klobuchar, would pay for pension fund shortfalls by eliminating tax loopholes. It has lain dormant in the Senate Finance Committee since last June.
Central States has told Congress that it needs $11 billion to prevent insolvency and meet long-term obligations.
The fund, based in Rosemont, Ill., is projected to go broke in a decade, threatening the retirements of 407,000 trucking industry workers and retirees, including 22,000 in Minnesota. It's a private union fund, the largest of the severely underfunded multi-employer defined-benefit pension plans around the country.
Unlike 401(k) plans, which put investment risk on the worker, defined-benefit plans promise a certain monthly retirement income.
Nyhan disputed the Treasury's reasons for turning down the benefit cuts. He said the pension fund correctly calculated future returns on investments, distributed the cuts equitably, and clearly explained its rescue plan to members.
Nyhan also blamed the Treasury for issuing last-minute final regulations that differed significantly from the ones that Central States used in devising its rescue plan.
Joshua Gotbaum, former head of the Pension Benefit Guaranty Corp. and a guest scholar at the Brookings Institution, called the Treasury's decision on Friday "an act of political cowardice."
"The Treasury seems to be passing the hot potato back to Congress," Gotbaum said in an interview.
Nyhan said Monday it's time for naysayers in Congress to pony up alternatives.
In a statement, Franken said it is "important that Congress have an open dialogue about how to fix things." He said he would keep pushing the Keep Our Pension Promises Act, but wanted to "make sure that any solution that comes before Congress is fair to Minnesota retirees."
A spokeswoman for Klobuchar reiterated her position that there is still time for a fix. "Treasury's action will give time to find an alternative that could provide a more secure retirement for the workers," the spokeswoman said.
Contacted Monday, Republican Rep. John Kline of Minnesota, co-author of pension reform law aimed at saving ailing pension plans, referred to his statement on Friday that called on fund trustees, workers, retirees and the union to put their heads together.
"In the meantime, Congress will continue its efforts to strengthen the multi-employer pension system," he said.