Pensioner protests cuts in Peoria – Labor Notes photo
PEORIA – Who in Illinois hasn't heard the threats of state lawmakers, the governor and even the state comptroller that Illinois' mounting unpaid pension obligations could someday collapse and bring the entire state's budget and retired employees down in a financial avalanche?
For the 180,000 retired Teamsters and 30,000 surviving spouses in the Central State Pension Fund, the day of reckoning is scheduled to begin July 1st of this year. Their pension checks, they were told via letter from the union last fall, will be cut 50 to 60 percent.
Last Tuesday, retirees – many of whom worked over 30 years for their benefits – shared at a town hall meeting in Kansas City the financial ruin they would suffer if their pension payments were slashed so drastically.
The Teamsters' Central States Pension Fund told members last fall that for every $3.46 they pay out, they take in $1.00. At that rate, the badly underfunded plan would go broke in 10 years.
But a little known law that passed Congress in 2014 is now allowing pensions to propose cuts, many of them by half or more, as a way to save the fund, the Kansas City Star wrote.
A similar hearing of those affected by the Central State Pension Fund proposed cuts was held in January in Peoria, Illinois. That meeting was also overseen by U.S. Treasury official Kenneth Feinberg – the attorney who supervised the Troubled Asset Relief Program (TARP) and the program compensating families of 9/11 victims.
Feinberg told the downstate Illinois meeting that he’s heard three main responses from the public: Kill the proposal, the planned cuts are inequitable, and the procedure to permit participants to vote on the measure are unfair, the Canton Daily Ledger reported.
Under the Kline-Miller Multiemployer Pension Reform Act of 2014, a multiemployer pension plan sponsor that believes benefit reductions are needed must submit an application to the Treasury Department showing that reductions are necessary to keep the plan from running out of money. The law requires the Treasury Department to approve an application if it meets the conditions established by Kline-Miller.
“What’s happening to us is a microcosm of what’s going to happen to the rest of the pensions in the United States,” Jay Perry, a longtime Teamsters member, told the Star.
Among the unions that lobbied for the Kline-Miller reform were the two million-member Service Employees International Union and the 1.3 million-member United Food and Commercial Workers.
However, the Teamsters are the first to attempt to slash its members' pension funds. The Treasury Department has until May to determine whether the cuts will be allowed.
