Eleven pension plans seek to cut retiree benefits because the plans are underfunded. If all eleven cut requests are approved, about 27,000 active workers and retirees could see a dip in their pension benefits by as much as 50%.
The pending requests are from:
- Ironworkers Local 16 Pension Fund
- Ironworkers Local 805 Pension & Retirement Plan;
- Local 807 Labor Management Pension Fund;
- Mid-Jersey Trucking Industry and Local 701 Pension Fund;
- Plasterers & Cement Masons Local 94 & Pension Fund;
- Plasterers Local 82 Pension Plan;
- Pressroom Unions Pension Trust Fund;
- Sheet Metal Workers Local Pension Fund (Ohio);
- Southwest Ohio Regional Council of Carpenters;
- Toledo Roofers Local No. 134 Pension Plan; and
- Western States Office & Professional Employees Pension Fund.
The Treasury has approved only five requests for benefits cuts since 2016, including one this year.
The PBGC is a federal pension insurer. If a plan becomes insolvent, PBGC is responsible for paying members’ benefits. The insurer, however, is slated to run out of money, itself, by 2025.
Plans like the Southwest Ohio Regional Council of Carpenters Pension Plan have proposed a decrease of all its members benefits by eight percent. The cuts are slated for March 2019, if approved. This plan has 5,501 participants, and will be insolvent by 2036 if cuts are not made.
Benefit cuts won’t be restored because pension plans are losing employees and there are more retirees than active workers. This happened to the New York State Teamsters Pension Fund in 2017, when nearly 10,000 participants voted against benefit cuts and 4,000 voted for them, out of 35,000 who received a ballot. Unreturned ballots were considered yes votes. The Treasury, however, has not used its power to overturn a participant vote. The reductions still went into effect because it would’ve cost the PBGC more than $1 billion in liability. Members of that fund recently filed a lawsuit against Treasury, contending that the benefit cuts violated the United States Constitution.
For more information about underfunded pension plans, click here.
Matt Austin owns Austin Legal, LLC, a boutique law firm based in Ohio that limits its representation to employers dealing with labor, employment, and OSHA matters. You can reach Matt by calling him at (614) 843-3041 or emailing him at Matt@MattAustinLaborLaw.com.