Bill Knight column for Thursday, Friday or Saturday, May 19, 20 or 21
“It is great news,” said the Pekin resident, who’s drawing a 25-year pension after retiring almost eight years ago following 34 years of working for area contractors and over-the-road companies including Maytag and Bosch.
“But the fight isn't over,” he continued. We “still have to get the Kline-Miller Act changed or repealed. Way too many factors are still up in the air.”
Despite scant media attention, the decision was momentous.
In September, the Central States, Southeast and Southwest Areas Pension Plan applied to Treasury to drastically cut promised pensions in a “rescue plan” under the Kline-Miller Multiemployer Pension Reform Act of 2014 to restore solvency to the troubled fund. Hundreds of thousands of retired truck drivers, construction workers and other service personnel were notified of cuts the fund wanted to take effect July 1, and although the plan claimed the average cut would have been about 23 percent of what had been promised, many faced cuts of almost 60 percent and a few were looking at financially catastrophic reductions of 90 percent.
That’s been headed off, for the moment.
“Thousands of Illinoisans earned their pensions through years of hard work and I’m thrilled that the Treasury Department recognized the importance of protecting the benefits they earned,” said U.S. Rep. Cheri Bustos (D-Moline).
The decision by Treasury attorney Kenneth Feinberg – who supervised the Troubled Asset Relief Program (TARP) and the program compensating families of 9/11 victims – derailed the reductions, a victory for labor unions and retirees.
Central States isn’t controlled by the union. Four trustees are appointed by the Teamsters International but four are named by participating employers.
The administrator appointed to implement Kline-Miller, Feinberg said that he rejected the rescue plan because it unfairly imposed uneven cuts among retirees, sent notifications to participants that were too technical to be understood, and was based on unrealistic assumptions about investment returns.
“We at Treasury do not believe that the plan as submitted will reasonably avoid insolvency," he said. “The investment return assumptions are not reasonable.”
The decision had been anxiously anticipated not just because Central States is large, but because the government oversight was a test case for cutting already-earned benefits.
The $16.1 billion Central States plan, based in Rosemont, Ill., holds retirement money for more than 400,000 trucking industry workers and retirees across the country, many in the Midwest. Fund officials say it faces insolvency in 10 years.
Weeks ago, thousands of Teamsters and supporters protested outside the U.S. Capitol in opposition to slashing their pension. Months earlier, town hall meetings from coast to coast included a two-hour session in Peoria, where Hill was one of dozens of people Feinberg heard.
The independent Pension Rights Center had objections, too.
“The application fails to demonstrate that the plan took all reasonable steps to avoid insolvency,” commented PRC’s Norman Stein.
It’s unclear whether Congress will act, but there are bills to deal with the problem. Republican Sen. Rob Portman of Ohio introduced the Pension Accountability Act, which could guarantee thousands of retirees and workers threatened by pension cuts a voice in their future, without government overriding their choice. Another, Keep Our Pension Promises, was introduced by U.S. Sen. Bernie Sanders (I-Vt.) and could underwrite a new Legacy Fund within the Pension Benefit Guaranty Corp. to make yearly payments to financially-troubled multiemployer pension plans, funded by closing two tax loopholes that mainly benefit wealthy individuals and their estates.
Meanwhile, thousands of retirees at least temporarily have a little breathing room.
[PICTURED: Ron Hill speaking at Treasury's town-hall meeting in Peoria (top), and Kenneth Feinberg listening to two hours of concerns from retirees and workers there.]