New York Teamster Retirees ‘on the Edge of Financial Disaster’
As a consequence of the February insolvency of the Hempstead, N.Y.-based pension fund of Local 707 of the International Brotherhood of Teamsters, the full promised benefits for roughly 4000 current retirees have plummeted.
Payments for retirees and beneficiaries previously averaging $1313 a month are now down to just $570 a month.
And more than one million participants in other insolvent, Big Labor-operated “multiemployer” pension plans could face even steeper cuts in their retirement benefits over the next few years, according to W. Thomas Reeder, the director of the Pension Benefit Guaranty Corporation (PBGC).
As Mr. Reeder explained in March to Hazel Bradford of the publication Pensions & Investments, the “707 is the harbinger of what is to come.”
‘It Will Come Down to Pennies On the Dollar, and Nobody Wants to See That Happen’
“It’s not the same order of magnitude of those plans that will be coming in,” Mr. Reeder continued. “It will come down to pennies on the dollar, and nobody wants to see that happen.”
It’s not hard to see that multiemployer pension funds, which are typically overseen by Teamster, building trades, retail, or mining union bosses and their designates, are on the road to “catastrophe,” as Ms. Bradford put it.
Collectively, according to PBGC officials, they now have $60 billion in liabilities, but just $2 billion in assets. That means they are only 3% funded.
Union-Free Trucking Jobs Level Since 1995-96, Even as Unionized Jobs Fell by 64%
Over the next eight to 10 years, the cost of furnishing reduced benefits to retired members of failed Big Labor multiemployer plans is expected to rise so dramatically that the PBGC itself, which Congress set up in 1974 to limit the damage wrought by pension failures, is likely to go broke.
Why are so many union boss-dominated multiemployer pension plans in terrible shape? One key reason is that Big Labor-impaired firms have for decades been unable to compete effectively with their union-free counterparts. Virtually all of this competition has occurred, of course, inside the domestic market.
Take, for example, the trucking sector in which Teamster-controlled companies were once dominant.
From 1995-96 to 2015, according to data collected and published by the Bureau of National Affairs, nationwide union-free trucking industry employment held virtually steady at roughly 1.4 million. Meanwhile, the number of unionized trucking jobs plummeted by 64%, from more than 440,000 in 1995-96 to roughly 160,000 in 2015.
National Right to Work Committee President Mark Mix commented:
“Because so many Teamster-controlled businesses have gone broke or shrunk dramatically, employer contributions to Teamster retiree funds have also fallen.”
He added that a second reason Teamster and other Big Labor-dominated plans are frequently underfunded is that union officials never even try to get a sufficiently high share of employees’ compensation packages set aside for pensions to make the promised benefits a reality.
‘Everyone Told Us, “Don’t Worry, You Have a Union Job, Your Pension Is Guaranteed”’
In a February 26 New York Daily News article, reporter Ginger Adams Otis examined the human impact of the Local 707 pension fund fiasco.
She quoted 71-year-old ex-trucker Tim Chmil, who told her: “I had a union job for 30 years. We had collectively bargained contracts that promised us a pension. I paid into it with every paycheck. Everyone told us, ‘Don’t worry, you have a union job, your pension is guaranteed.’ Well, so much for that.”
Mr. Mix observed: “Countless unionized employees like Tim Chmil were forced throughout their careers to pay dues to Big Labor bosses to keep their jobs, whether they wanted to or not.
“And one of the handful of tasks that Teamster, iron workers, plumbers, and other union bosses are supposed to accomplish in exchange for the vast sums of conscripted money they take in is to ensure that the pensions workers are promised are there when workers need them.
“Now, as Ginger Adams Otis has shown, thousands of retired New York Teamsters are ‘on the edge of financial disaster,’ trying to figure out how they will get by on dramatically reduced pensions.
“As her reporting confirms, union bigwigs and their handpicked agents have failed again and again to fulfill their pension obligations toward employees.
“This is another distressing illustration of just how little union bosses deserve their forced-dues privileges.”