It’s Just Not Right!

Why do we need pension reform? Here is another example of action being taken by a pension system as it tries to protect what little is left in the pot. The Teamsters’ Building Material Drivers Local 436 Pension Fund of Valley View, Ohio, has applied to the Treasury Department for a reduction in benefits under the Multiemployer Pension Reform Act of 2014 (MPRA). Without these cuts, the plan is expected to deplete the fund’s assets by 2023.

Under the board of trustees’ proposed reduction plan, the benefits of plan participants would be reduced to 110% of the Pension Benefit Guaranty Corporation (PBGC) guarantee, which is the maximum reduction in benefits allowable by law (aren’t they so generous). Remember, this is a multiemployer plan, and not a single employer plan that has the PBGC protecting benefits to as much as $67,295/year for a 65-year-old. No, the benefits are protected at just $12,875 for a 30-year veteran at age 65. Shocking? Absolutely!

There are some minor exceptions to how much the benefits can be cut. For instance, excluded in the benefits reduction under federal law are disabled participants and their beneficiaries, and participants who are at least 80 years old on May 31, 2021. The benefits of participants who are at least 75 years old as of that date, and their beneficiaries, are partially protected, and the older the person is, the less the benefits can be reduced. How magnanimous!

Can you imagine investing more than 30 years in a career only to be told that your promised benefits are to be reduced despite the fact that the participant likely contributed to the plan, while also deferring salary increases? Worse, the US government is sanctioning this activity. Just how bad is the impact? Well, a member who has 32 years of credited service who will be 70 years and 5 months old as of May 31, 2021 would see their $2,148.24 monthly benefit reduced (slashed, gashed, hacked) to $1,258.40 beginning on May 1, 2021, under the proposed reduction plan.  Can you believe that a 70-year-old, who has likely been retired for years, is going to be whacked with a nearly $900/month cut. How are they to make up for that loss?

Please don’t think that this is an isolated event. As we’ve been reporting for years, there are more than 130 plans and nearly 1.5 million American workers who are on the verge of receiving draconian cuts to their promised benefits. The impact of these cuts won’t just be felt by the individual participants and their beneficiaries, but also the communities that they live in that depend on their spending to support local businesses.

Action to sure up our pension system is long overdue. A further delay is not acceptable.

2 thoughts on “It’s Just Not Right!

  1. I can certainly feel for them because my husband of Local 707, Hempstead, NY, lost 70% of his retirement almost five years ago due to insolvency and is now under PBGC. He lost over 1600 a month just like that and for nearly five years now nothing has been done. A travesity to say the least and more and more retirees are having the same thing done to them. What is happening in this country where we are helping the unemployed, and so many others but not our own retirees who worked for years as essential employees????

    • Good morning, Nancy, and thank you for sharing this with me. I am so sorry for you and your husband. It is a travesty! I have never been part of a DB plan but can certainly appreciate the importance of having one, which is why I am trying my best to support you, your husband, and ALL workers who have seen OUR government sanction the reduction in benefits that were earned during a career. I find it outrageous. They talk about the fact that the “rescue” will come on the backs of the taxpayer but obviously neglect to consider that you’ve been paying taxes since the day you began working. Would you mind if I quoted your story in another blog post? We need to get these into the marketplace so people in my industry truly understand that when WE fail there are real consequences. Thank you, and have a good day. Russ

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