The underfunded pension for a NY Teamsters union has just gone belly up. It’s the first of many that will go under and it’s depleting the funds of the insurance company that backs the pension plans for multi-employers.
The Pension Benefit Guaranty Corp. (PBGC), which insures private pensions of multi-employer plans, is dealing with a decades-long problem. A fund that was only to be used in emergencies has become the pension fund for these pension plans. PBGC is going bankrupt because too many multi-employer pension plans are going rely on them to pay their pensions.
The first union fund to go down is a New York Teamsters union, Local 707.
As a sidenote, all of New York state’s pension funds are underfunded. That is a reality being played out throughout the country. Read about it on this link.
If the union funds and the PBGC go down, it will rob 10 million people of their pensions.
The media will tell you its’ because of stock market crashes and companies going out of business which has been a part of the problem, however, these plans have been underfunded for decades and the workers were lied to about their solvency.
Some say unions shouldn’t be relying on gambling on the stock market.
Now the funds want the federal taxpayers to fund them or they want to increase premiums, which they needed to do decades ago.
The promises made by union leaders and supported by Democrat politicians with whom they are in bed have been vapid and the funds are insolvent. No one cared but they might care now as promises made are abandoned and these workers who operated in good faith lose their pensions.
There are 71 penniless union pension funds that rely on a federal insurance company to support their retirees. The agency is running out of cash, its director said Wednesday.
The Pension Benefit Guaranty Corporation’s limited liquidity is part of the spiraling U.S. pension crisis that threatens to wipe out the retirement savings of more than a million Americans with the potential of 10 million.
Local 707 is out of cash. The payout to them alone is $1.7 million monthly. The New York union’s pension fund covers 4,000 retired truckers across the city and Long Island. The end hit in February and was reported by Zerohedge.
The PBGC reported the distressing facts Wednesday. They stepped in with this union and 70 others. It only has ten years of cash left.
“This is a big issue for us. It’s a big issue for Local 707 and it’s a big issue for others in the same situation across the country,” director Tom Reeder warned.
“We’re projected to run out of money in eight to 10 years. Many union pension plans are projected to run out in 20 years,” he explained.
“There are going to be people in plans who run out of money after we do, and there will be no water in the well.”
Right now, PBGC has $2 billion in assets built up over 42 years, Reeder said.
The money comes from premiums to workers in these funds.
The PBGC keeps afloat by cutting pensions to about one-third of what the worker is due..
Ray Narvaez, 77, retired in 2003 told the New York Daily News that after more than 30 years as a Teamster with a $3,400 monthly pension.
Now his monthly take home is $1,100 before taxes.
He’s actually lucky. Since the fund is broke and dependent on PBGC’s insurance payouts, the average monthly take home is $570, agency officials said.
If the PBGC goes under, the pensions will be cut by 80%, less than one-eighth of the $570 average check the PBGC gives out to Local 707 now.
Larger Teamster pension funds are ready to hit rock bottom.
The Ponzi scheme doesn’t work. Unions and politicians have been lying to these workers.
The downfall from underfunded unions will hit construction, mining and retail and service industries.
The economy has hit them hard but these funds have been underfunded and that fact has been glossed over by Democrat politicians and unions.
The Central States Pension Fund and the New York State Teamsters Pension Fund in the Albany region that cover Teamsters are about to go under.
It’s a minority of unions in trouble for now but they could swamp PBGC and put them under.
The PBGC wants Congress to allow them to increase in premiums it can charge union funds. That would be the best way to go.
Some also suggest the taxpayers pay for this folly.
PBGC has $2 billion in assets and The Central States union fund alone pays about $2.8 billion in benefits each year. It’s the largest of the multi-employer funds about to go under.
“At this time, only government funding, either directly to our Pension Fund or through the PBGC, will prevent Central States participants from losing their benefits entirely,” wrote Thomas Nyhan, the executive director of the fund, in a letter on why he thinks the fund cannot come up with another rescue plan.
They should have fixed this decades ago but spineless politicians and union leaders wouldn’t do it and they wouldn’t admit they couldn’t pay for the promises they made. They left it for future generations to deal with, kicking the can down the road. The promises got them support and helped them win elections.
On June 18, 2015, Senator Bernie Sanders (I-Vt.) and Marcy Kaptur (D-Ohio) introduced the Keep Our Pension Promises Act (KOPPA) of 2015 into the U.S. Congress to stop benefit cutbacks for retirees in certain underfunded multiemployer plans. These cuts were authorized by the Multiemployer Pension Reform Act of 2014.
They do need to stop cutting pensions but they need to get the money from the unions who made the promises.