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Latest News - April 2013

April 4, 2013
Fears on Teamsters Pension
Source: Wall Street Journal
By: Michael Corkery

Some companies are pushing to withdraw their workers from a giant Teamsters pension plan that faces a deep funding shortfall and questions about its long-term viability.
Investment losses during the financial crisis and hard times for trucking companies that pay into the Teamsters' Central States Funds have sapped the fund of money it uses to pay promised benefits.

Republic Services workers picket in January in Memphis, Tenn. The company has pulled some employees from a Teamsters pension plan over solvency fears.

With just 60 cents of assets for every $1 in obligations, the Teamsters pension fund is considered in "critical" status by the Pension Benefit Guaranty Corp., the federal agency that backstops failed pensions.
Central States has about $18 billion in assets, ranking it the nation's second-largest multiemployer pension plan. Such funds get contributions from numerous companies.
The Teamsters pension fund pools money from about 1,900 companies, and its investments have been overseen by advisers jointly approved by representatives for union and management.
Recent efforts by Republic Services Inc. to pull out about 800 sanitation workers from Central States show the uphill battle facing a pension plan founded by the late Teamsters President Jimmy Hoffa.
Last week, Republic Services finalized deals with three local Teamster unions in Michigan to move out of Central States to a better-funded Teamster-run plan. Food service distributor Sysco Corp. removed its last Teamster unit from Central States in January.
"There is a reasonable possibility that this plan could run out of money in about a dozen years," Central States Executive Director Thomas Nyhan said in an interview.
More companies leaving the fund "accelerates insolvency," Mr. Nyhan said.
Central States illustrates a potential nightmare scenario for workers across the U.S.: a pension plan that is at risk of running out of money, leading to possible benefit cuts and putting strain on the federal agency that would assume the pension's liabilities.
"Our employees who participate in this failing pension fund and our Company deserve better," Catharine Ellingsen, senior vice president of human resources at Republic, said in a statement. "We intend to use all legal means at our disposal to exit Central States."
Union spokeswoman Leigh Strope said Republic is using the pension fund as a "smokescreen" to obscure what the union sees as separate problems at Republic.
She declined to comment on the financial condition of Central States, which is run independently of the union.
For decades, U.S. companies have shut down their traditional pension plans and moved workers to less generous 401(k) retirement accounts. In some cities, Republic has proposed replacing traditional pensions provided by Central States with 401(k) accounts.

 

 


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