Some Pension "Reform" Is Dead

    We've been talking a lot here about the demise of the private defined benefit pension system--the system that actually gives a worker, who has labored away for 20 plus years at a company, a regular amount of money she or he can count each month, as opposed to worrying about making it in the casino...that would be the stock market.

    Another part of the crumbling has to do with "multi-employer" plans. These plans exist at unionized companies--a group of companies in a particular industry, like trucking, all contribute to a joint plan. Part of the idea is: spread out the risk and costs of pension liabilities.

     Well, some of these funds have been in very bad shape. It's been a huge issue for the Teamsters. There was an attempt--controversial in some quarters--to fix the huge shortfalls in the multi-employer plans by helping employers meet their obligations, partly by reducing the percentage funding requirements.

    But, now the legislation seems dead--The Teamsters has pulled it support of the current bills. Below is a statement that I just picked up from Teamsters president James Hoffa:

Earlier this year, the Teamsters began working with the Multiemployer Pension Protection Coalition to pass legislation that would help multiemployer pension funds recover from the drastic stock market slump of 2000-2002.  As pension bills have moved through the House and the Senate, the Teamsters have withheld support because each of them has included provisions that could harm multiemployer pension funds.

Some proposals moving through Congress contain language—known as the "red zone" provision—that would allow for a reduction in vested benefits.  Our members work hard and are entitled to receive the pension that they earned.  The Teamsters oppose any effort in Congress that would allow for a reduction in vested benefits.

In hopes that these problems would be resolved and result in a bill that would strengthen our Union's pension plans and protect our members' vested benefits, the Teamsters supported the process moving forward.  Unfortunately, after months of work these harmful provisions remain in current versions of the legislation.

At this late date the prospects are slim that Congress can pass legislation that will provide meaningful relief for multiemployer plans while protecting Teamsters' vested benefits.  The final weeks of a legislative session are typically marked by backroom deals and limited transparency, increasing the prospect that any pension bill passed at this point would actually make the situation worse.

Given this reality, the Teamsters Union believes it is no longer in the best interests of its members to actively support efforts to pass pension legislation in this session of Congress.  The Teamsters will continue to monitor the process and will reengage if a final pension bill requires the active support or opposition of the Union.