Central States Rescue Plan: Gut-Wrenching Decisions for All

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By David B. Brandolph and Sean Forbes

Oct. 16 — Central States Pension Fund leaders continue to defend the multiemployer fund's decision to seek government approval for controversial benefit cuts aimed at ensuring the long-term solvency of the fund.

Central States' rescue proposal is a “gut-wrenching effort by the fund's trustees” to stabilize the fund while being the “most fair” to participants and retirees, Thomas C. Nyhan, executive director and general counsel of the fund, said during an Oct. 15 electronic town hall meeting for active and retired plan participants.

The event was held as the rescue proposal—and the new law that would allow the cuts—have come under impassioned criticism from retirees and retiree advocates. In recent interviews with Bloomberg BNA, retiree representatives say the cuts could amount to life or death for some.

Nyhan sought to reassure retirees that the cuts proposed to the Treasury Department are merely benefit suspensions and aren't intended to be permanent cuts. Once the rescue plan is approved, the fund's trustees will be required each year to determine whether the cuts are still needed, he said.

He said it was “impossible for me to see a path” for legislation with Republicans in control of Congress “to appropriate taxpayer dollars to support union pension plans,” but that “should something like this ever materialize, I guarantee you that we will be the first” in line “to try to take advantage of it.”

Retirees' Views

Even if legislative action was realistic, it would likely be too late when viewed from the retirees' perspective.

There is speculation that at least one suicide can be attributed to the impending benefit cuts. Bob Amsden, chairman of the Wisconsin Committee to Protect Pensions, told Bloomberg BNA that one of the members of his panel killed himself in August under the stress of being unable to find enough money to pay his bills if Central States went ahead with its plan to cut benefits.

That member, Jim Miller, a Teamster in Local Union No. 682 in Missouri, “couldn’t figure out how he was going to do it,” Amsden said. “He’s got a wife and four kids, and he just couldn’t handle it no more.”

The cuts won't take effect until July 1, 2016, if the proposal is approved by both Treasury and a subsequent vote of the plan participants, Central States said on a website to provide information for retirees, but others are also already seeing the impact of the impending pension reductions on members.

“When you lose $18,000 or $20,000 a year or more, you’re done,” Mike Walden, chairman of the Northeast Ohio Committee to Protect Pensions, in Cuyahoga Falls, Ohio, told Bloomberg BNA.

Trying to pay the bills is stressing some members to their breaking point, said Walden, a member of Teamsters Local No. 24. “We’ve had some people tell us they won’t have any reason to live any more. That's how bad this law is,” he said.

Walden has helped establish the more than two dozen committees of Teamsters retirees around the nation that are fighting to preserve their pensions.

Not Just a ‘Haircut.'

One of the goals of the law that allows the benefit cuts, the Multiemployer Pension Reform Act, enacted at the end of 2014, was to prevent plans from becoming insolvent and then dumping their participants on the Pension Benefit Guaranty Corporation, which faces large deficits in its multiemployer program and provides much lower levels of maximum guaranteed benefits for multiemployer plan participants than for those in single-employer plans.

The MPRA's reduction provisions have been described as a “haircut” by proponents of a 2013 proposal by the National Coordinating Committee for Multiemployer Plans, laid out in the report “Solutions Not Bailouts,” to strengthen the multiemployer plan system and assist plans on the brink of insolvency. That proposal formed the basis for the law.

Amsden likens them to something far worse.

The rescue plan is going to “whack the retirees,” said Amsden, a member of Teamster Local Union No. 200 in Milwaukee. “That’s the simplest and easiest solution. Not helping us, killing us.”


Retirees facing cuts to their pensions might look to re-enter the workforce, but doing so could lead to an even deeper hit on their pockets. That's because the Central States plan, like many multiemployer plans, contains a rule that gives the fund permission to suspend benefit payments of anyone who retires, draws a pension and then returns to work in the same industry.

Amsden said that because of these tight rules on re-employment, few members are likely to go back to work.

“You can’t do anything in your core industry, or in the Teamster industry, you can’t even be a parts delivery guy at an auto dealership. You can’t be an usher at a stadium. They’ve got restrictions that are so antiquated, it’s crazy,” he said.

Walden also said health problems will prevent many retirees from going back to work. “They couldn't pass a physical to get back in a truck or a dock if they wanted to,” he said.

During the town hall with retirees, Nyhan tried to ease the mind of retirees who may be considering returning to work, discussing changes to the re-employment rules if the rescue plan goes through.

According to a Central States guide to the rescue plan, the proposal would remove all re-employment restrictions for participants who retired on or before Oct. 1, 2015, whose benefits are reduced. For participants who retired after that date while they were between age 62 and 65, they could return to work, but with some restrictions, while there would be no restrictions once retirees reached age 65, the guide says.

To contact the reporter on this story: David B. Brandolph in Washington at dbrandol@bna.com and Sean Forbes in Washington at sforbes@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

A recording of the Central States town hall meeting and other materials on the rescue plan are at http://www.cspensionrescue.com/resources-for-plan-participants/#townhall2. The Central States rescue plan website is at http://www.cspensionrescue.com/. The website with links to the committees to protect pensions is at http://www.mycspensionhandsoff.com/.


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