Pension & Benefits Daily™ covers all major legislative, regulatory, legal, and industry developments in the area of employee benefits every business day, focusing on actions by Congress,...
Nov. 6 — With many Central States Pension Fund retirees facing severe cuts to their retirement benefits, the person appointed to represent them as part of the process for the fund's rescue proposal has drawn bitter criticism from some of the fund's participants.
Critics allege that the retiree representative, Susan Mauren, is aligned more with the leadership of the International Brotherhood of Teamsters than with fund participants and, consequently, has failed to adequately advocate on behalf of the Central States, Southeast and Southwest Areas Pension Fund participants she has pledged to represent.
Mauren responded in an interview with Bloomberg BNA on Nov. 6 that she is angry that some of the criticism against her seems to stem from an attempt to score political points. She said that she has conveyed participants' concerns to the fund's trustees and convinced the trustees to expand retiree reemployment rights, cap benefit cuts and ensure that active fund participants share in the cuts.
The controversy highlights some of the issues other financially troubled multiemployer plans may face as they seek to use provisions in a law passed in late 2014 allowing them to suspend benefits.
The criticism and distrust directed at Mauren comes as the fund has filed an application for suspension of benefits with the Treasury Department. Under the rescue plan, which could go into effect no sooner than July 1, 2016, benefit cuts could be as much as 50 percent for many workers, and to 110 percent of the Pension Benefit Guaranty Corporation maximum guarantee for workers whose employers leave without paying withdrawal liability, the application said.
Central States derived its authority for the rescue plan from the Multiemployer Pension Reform Act, passed as part of a federal appropriations bill in December 2014. The MPRA—also known as the Kline-Miller Act—gives financially distressed multiemployer pension plans the option to reduce retiree benefits. Prior to the law's enactment, pension benefit cutbacks were prohibited under the Employee Retirement Income Security Act.
The fund's rescue plan, as well as the law's provisions allowing the benefit suspensions, have drawn impassioned criticism that such cuts are unfair and deeply harmful to many retirees who depend on the pension benefits.
Supporters of the benefit suspension provisions in the law say they're necessary to save troubled plans and protect plan participants from even worse benefit cuts. Central States fund leaders have made similar defenses of their rescue plan.
Much of the criticism directed at Mauren comes from the Teamsters for Democratic Union, a Teamsters reform group that posted articles on its website questioning whether Mauren was aligned with Teamsters leadership rather than with fund participants and whether she had purposely restrained the actuary she hired to evaluate the fund's financial reports from engaging in a meaningful analysis.
Ken Paff, national organizer for TDU in Detroit, told Bloomberg BNA on Nov. 4 that Mauren didn't “fairly represent” the fund's participants—that she “did the minimum” and ultimately “failed to be a watchdog for them.”
He said she never responded to requests from participants that she meet with them in public forums, even in her home city. In addition, he said, the report filed by the actuary she hired to assist her said the actuary lacked time to conduct a report with the “skepticism of a forensic audit.”
Paff suggested that the actuary would have had time to do such a report if that was a priority for Mauren, given that she was appointed to her role by the fund's trustees in January, about eight months before the fund filed its rescue plan application in September.
Paff said that a “true advocate” for participants would have been doing a lot more to help pass pending legislation that could resolve the fund's financial issues without the need for a rescue plan. Even if she believed that the legislation had no chance to pass the Republican-controlled Congress, Paff said Mauren's mandate was to “advocate for the participants.”
Mauren, a 34-year member of the Teamsters who is retired and faces benefit cuts herself, said that she and the law firm she hired to assist her in her representation work, Leonard, O'Brien, Spencer, Gale & Sayre Ltd. in Minneapolis, determined early on that the best way to communicate with some 400,000 participants living in 50 states was to provide them with a way to contact her through e-mail and regular mail.
She said she has received thousands of e-mails from participants and recalls receiving only "one or two" invitations to meet with participant groups, but that she "may have missed some others." Although she wasn't available on the days she was invited to these meetings, she said that she and her law firm decided, in any event, that it would be unfair to meet with a select group of participants when she "couldn't give that opportunity to everyone else."
On the actuarial work, Mauren said that based on what she heard from participants, she determined that the Central States fund actuary's findings that the fund was a fragile plan that was going to go insolvent if left alone needed to be evaluated. In addition, she said, she asked her actuary to determine whether “time was of the essence” in devising a solution. She said her actuary confirmed both that the fund was fragile and that, because it was hemorrhaging $2 billion a year, a timely fix was required.
Pamela H. Nissen, an attorney with Leonard O'Brien, said during the interview with Mauren that “what critics of the actuary don't realize” is that it “wasn't practical” for the actuary to create an “entirely new analysis out of whole cloth.” Such an analysis would have taken the actuary somewhere between nine and 12 months to complete at a cost of at least hundreds of thousands of dollars. Under the statute, the retiree representative is entitled to reimbursement from the fund of “reasonable expenses” only, and there wasn't any assurance that such expenses were reasonable, Nissen said.
In addition, Nissen said, the actuary analyzed thousands of pages of fund documents in confirming that the fund's actuary report was based on good and complete data. “Just because he didn't do a forensic analysis doesn't mean he didn't do a great deal of work,” she said.
Mauren said that the fact that the fund is monitored by a retired federal judge as part of a consent decree and is regularly audited by the Department of Labor and other federal agencies, and yet has never had its actuarial reports called into question, seems to indicate that “spending an additional $1 million to verify the report” didn't make sense.
Mauren said she fully supported legislation introduced by Sen. Bernie Sanders (I-Vt.) seeking to bail out troubled multiemployer funds. However, she rejected the notion that she should be the lead lobbyist on its behalf given that, as retiree representative, she was an “unpaid volunteer, working from her kitchen table, without a staff or budget.” She said the best chance for the bill to pass would be to elect a Congress more favorable to it, and that she would “gladly be on the phone banks before the election” trying to achieve that outcome.
Mauren said it was “unconscionable” that some would use her role as a “political football” to score points, referring to accusations that she was aligned with Teamsters leadership against the interests of fund participants. She said she was dedicated to the fund's retirees and never once discussed her role as representative with any Teamsters officials.
Instead, she said, she communicated many issues to the trustees during the meetings she attended, convincing them to make a number of changes that are documented in her progress report.
To contact the reporter on this story: David B. Brandolph in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Phil Kushin at email@example.com
The retiree representative's progress report is at http://www.losgs.com/Resources/Progress%20Report%20for%20Retiree%20Representative%20(PDF)%20(00316213)1.pdf. The report of the retiree representative's actuary is at http://www.losgs.com/Resources/9-25-15Report.pdf.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)