As Obama’s Preacher Wright of 20 years stated, “THE CHICKENS HAVE COME HOME TO ROOST.” Did some of these government officials in this administration dip into the retirement funds by mistake or was it intentional?  Who stole it?

Workers protest against the cutting of their pension benefits in Detroit, Michigan.

Fund plans to cut retiree benefits  Large pension fund files plan to cut retiree benefits under new law!

The Washington Post

Michael A. Fletcher

The huge Central States Pension Fund, which administers retirement benefits for some former and current Teamster truckers, said the reductions are the only way to save the plan from insolvency.

“A realistic rescue plan is needed now,” said Thomas C. Nyhan, executive director of the Central States Pension Fund. “The longer we wait to act, the larger the benefit reductions will have to be.”

Under the proposal, pensions for Central States’ 407,000 participants would be cut by an average of nearly 23 percent. But the pain would be distributed unevenly. Some participants, including the disabled, would not be subject to reductions. Older retirees would generally receive smaller cuts, while those who worked for defunct companies that did not keep pace with their pension funding obligations would face steeper reductions.

Workers protest against the cutting of their pension benefits in Detroit, Michigan.

The proposed cuts were detailed in a plan submitted to the Treasury Department late last month. In it, Central States said the reduced number and increased age of its participants have left it paying out $3.46 for every dollar it takes in. The result is that the plan is disbursing $2 billion more in benefits than it takes in through employer contributions each year.

Officials say the pension plan was hurt by significant membership losses after the trucking industry was deregulated in the 1980s. Central States also suffered catastrophic investment losses during the stock market crash that accompanied the Great Recession. Since then, its investments have returned about 13 percent a year, but that has not been enough to return it to sound footing. Without changes in its benefit formula, the pension plan is on course to be insolvent by 2026, Nyhan said.

A Treasury official said Central States is the first to file a proposal with the federal government to reduce benefits under a law that was passed late last year. The measure for the first time allows the benefits of current retirees to be cut in order to address the fiscal distress confronting some of the nation’s multi-employer pension plans.

An estimated 1 million people, including many retirees, are in multi-employer pension plans that federal officials say are in danger of running out of money in the near future. Multi-employer plans are formed by businesses and unions that join forces to provide pension coverage for working-class Americans, including truck drivers, grocery store clerks and construction workers.

If some of the larger multi-employer plans are allowed to collapse, the federal insurance fund that protects them could also collapse. Given that, a coalition of plan trustees and unions said the only way to salvage the most distressed pension plans is to allow them to cut retirement benefits before they run out of money.

The law was enacted in the face of strident opposition from some unions and pension advocates, who argued that allowing plans to cut retiree benefits violates the core promise of traditional pensions: that they would provide a defined benefit for life.

Now that the first pension plan is moving to make cuts, opponents’ anger has been rekindled.

“Pension fund participants and beneficiaries did not cause the problem of underfunding,” James P. Hoffa, general president of the International Brotherhood of Teamsters, wrote in a letter to Central States. “They worked day in and day out to earn their pension credits. It is monstrously unfair that they will end up holding the short end of the stick.”

Some union leaders and their supporters, including Democratic presidential candidate Bernie Sanders, say the government should step in to shore up the pension funds. Sanders, an independent senator from Vermont, has introduced a bill that would repeal the measure allowing pensions to be cut.

Nyhan said Central States would embrace that solution as well. The problem, he said, is that it appears to be a political impossibility.

Treasury has 225 days to evaluate Central States’ plan to trim pensions. If officials approve the reductions, the cuts would then be voted on by plan participants. But even if participants vote the plan down, the law says it could still be imposed for the sake of protecting the broader pension guarantee system.

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NEW LAW TO CUT PENSIONS:

Congressional leaders hammer out deal to allow pension plans to cut retiree benefits

The measure would alter 40 years of federal law and could affect millions of workers.

By Michael A. Fletcher

December 9, 2014

A measure that would for the first time allow the benefits of current retirees to be severely cut is set to be attached to a massive spending bill, part of an effort to save some of the nation’s most distressed pension plans.

The rule would alter 40 years of federal law and could affect millions of workers, many of them part of a shrinking corps of middle-income employees in businesses such as trucking, construction and supermarkets.

The measure is now before the House Rules Committee and is likely to be moved as an amendment to a massive $1.01 trillion spending bill, perhaps by late Wednesday. It is expected to pass the Senate by Thursday.

If passed, the change would apply to multi-employer pensions, where a group of businesses in the same industry join forces with unions to provide pension coverage for employees. The plans cover some 10 million U.S. workers.

Overall, there are about 1,400 multi-employer plans, many of which remain in good fiscal health and would be untouched by the deal. But several dozen have failed, and several other large ones are staggering toward insolvency.

A look inside the $1 trillion spending bill:

A $1 trillion spending bill unveiled Tuesday keeps most of the federal government-funded through September. Here, the Post’s Ed O’Keefe points out a few of the most notable components of the legislation. (Davin Coburn/The Washington Post)

As many as 200 multi-employer plans covering 1.5 million workers are in danger of running out of money over the next two decades. Half of those are thought to be in such bad shape that they could seek pension reductions for retirees in the near future.

“We have to do something to allow these plans to make the corrections and adjustments they need to keep these plans viable,” said Rep. George Miller (D-Calif.), who along with Rep. John Kline (R-Minn.) led efforts to hammer out a deal.

But the measure in Congress is also outraging retirement security advocates, who argue that allowing cuts to plans paves the way to trims for other retirees later.

“After a lifetime of hard work to earn their pensions, retirees don’t deserve to receive a bad deal, in which they have had no say, cut behind closed doors and excluding the very people who would be impacted the most,” said Joyce Rogers, a senior vice president for AARP, the lobbying giant lobbying group for older Americans in a statement.
The idea of cutting benefits is reluctantly supported by some unions and retirement fund managers who see it as the only way to salvage pensions in plans that are in imminent danger of running out of money.

“This bipartisan agreement gives pension trustees the tools they need to maintain plan solvency, preserves benefits for the long haul, and protects the 10.5 million multiemployer participants,” Randy G. DeFrehne, executive director of the National Coordinating Committee for Multiemployer Plans said in a statement. “With time running out on the retirement security of millions of Americans, moving this bipartisan proposal forward now is not only timely, but necessary.”

But it also has stirred strong opposition from retirees who could face deep pension cuts and from advocates eager to keep retiree pensions sacrosanct, even in cases when funds are in a deep financial hole.
“We thought our pension was secure,” said Whitlow Wyatt, a retired trucker who lives in Washington Court House, a small city in central Ohio. “That was always the word. Now they are changing that.”

Wyatt, 70, retired with a $3,300-a-month pension in 2000 after working more than 33 years as a long-haul driver. He could face pension reductions of 30 percent or more if Congress permits trustees of the hard-pressed pension fund to slash benefits.

The deal is aimed at helping plans such as the Teamsters’ Central States fund.

The pensions earned by truckers in the fund are among the best enjoyed by working-class people anywhere: After 30 years on the road, many of its participants are entitled to upward of $3,000 a month for the rest of their lives.

But now the fund, rocked by steep membership declines, an aging workforce and downturns in the stock market, is in dire financial straits, putting the retirement benefits of 400,000 participants in jeopardy.

In its annual report last month, the Pension Benefit Guaranty Corp., the federal insurance program that backs private-sector pensions, warned that the problems facing multi-employer pensions could cause the safety net that secures them to collapse within the next decade.

If that happens, retirees depending on multi-employer plans for their pensions would receive nothing if their plans failed. (A separate PBGC insurance fund covering single-employer private pensions is in much better financial shape.) Even if the insurance fund survives, maximum coverage for people in multi-employer plans is minimal — about $13,000 a year.

Although it has issued similar alerts in the past, the PBGC’s latest warning seems to have pushed Congress to move from studying a policy change to actively negotiating for one in recent weeks.

The abrupt action has alarmed some pension rights advocates, who are concerned about a decline in retirement security for all Americans. They also worry about a creeping trend toward trimming pensions, citing retirement benefit cuts for government employees in Detroit and elsewhere.

But managers of deeply troubled funds say that absent a federal bailout, which they call politically infeasible, cutting benefits is the only way to save them. Last week, more than 1,300 employers sent letters to members of Congress urging lawmakers to back the proposal to allow benefit cuts.

“The longer we wait to take action, the more severe the impact on retirees and workers in the plans in the worst financial shape will become,” business leaders wrote. “The longer we wait, the heavier the burden will become on employers struggling to fund and extend these pension plans.”

That is the situation confronting the Central States plan, which was notorious in the 1960s and ’70s for being used as a slush fund for organized crime. Since then it has operated under federal court supervision and with the help of professional fund managers. Yet that has not been enough to overcome demographic and other trends that have weakened its finances.

In 1980, the Central States fund had four active participants for every retiree. Now, there are nearly five retirees or inactive members for every worker, because many unionized trucking firms have gone out of business in the decades since deregulation, Thomas C. Nyhan, executive director of Central States, told Congress earlier this year.

The fund has about $18 billion in assets and pays out annual benefits of $2.8 billion to retirees. But it receives just $700 million each year from employers. Even given the strong stock market returns of recent years, that puts the plan on course to run out of money within the next 10 to 15 years, Nyhan has said.
The fund ran into trouble during the dot-com crash of the early 2000s. Also, United Parcel Service, once the largest firm in Central States, paid more than $6 billion to drop out of the fund in 2007. Much of that money was lost when the market tanked in 2008, leaving the fund in perilous condition.

Some see cutting benefits preemptively as the only way to keep troubled plans such as Central States afloat. Under the agreement reached by congressional negotiators, retirees over age 75 as well as those who are disabled would be shielded from any reductions. Also, any benefit cuts would be subject to a vote of plan participants.

Nonetheless, many retirees feel betrayed. “I never dreamed they would pull the rug out from under us,” said Greg Smith, 66, a retired shipping clerk who retired in 2011 with a $3,000-a-month pension after 42 years on the job. “I actually retired because I was worried about them cutting pensions. I thought I would be grandfathered in with protections. But I guess not.”

Where is the Democratic Party – why aren’t they standing up for these Union-backed people?  These people put them in office and now they are abandoning them.

kommonsentsjane