One really does feel for the retirees here. They are getting screwed.
The fund, which has $17.3 billion in net assets, says it pays pension benefits to more than 220,000 retirees nationwide. About 115,500 of those retirees across the U.S. are now facing reductions.
The cuts would impact a majority of Wisconsin’s estimated 40,000 retired Teamsters, including thousands in Sheboygan and Manitowoc counties. In some cases, retirees could see their pensions slashed by 50 percent or more.
For years, Central States had been the pension of choice for unionized truck drivers. But as union operations closed as a result of deregulation in the trucking industry in the 1980s, more than 10,000 employers that had contributed to the fund were lost, Central States officials said in a plan overview statement.
Over the years, whenever a company has closed without meeting its pension obligations, Central States has had to make up the difference. Currently, about half of the fund’s benefit payments go to these so-called “orphaned” employees, according to information provided by Central States.
As a result, the Central States fund currently pays out $3.46 for every $1 taken in. That means the fund is paying out $2 billion more than it takes in every year through employer contributions.
“That math simply doesn’t work,” Central States officials wrote in its plan overview.
Proposed legislation in 2010 to save the fund never gained traction as there was little support for a taxpayer-funded bailout.
While the union pension seemed like a great deal at the time, there is always a risk in putting your financial future in someone else’s hands – just ask the clients of Bernie Madoff.