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Union retirees fear dramatic pension cuts under new federal law

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Posted at 12:20 PM, Feb 20, 2015
and last updated 2015-02-20 14:24:38-05

Bill Hendershot and his wife live on his union pension and Social Security. Hendershot, a retired long-distance truck driver, gets around now in a 12-year-old Toyota Corolla. The couple still pay a mortgage on their home.

And he's among a huge group of union retirees nationwide who could see their monthly private pension payments cut as much as 60 percent under a national reform measure signed into law in December by President Barack Obama.

"I could lose two-thirds of my pension," Hendershot said. "You ask, how could I live? You talk about drastic reductions. ... We don't live big now."

The new law, the Multiemployer Pension Reform Act of 2014, was a bipartisan effort backed by some unions. It is intended to save severely underfunded, private-sector, multiemployer pensions in which different companies pay money into one pension fund.

For numerous reasons, including bankrupt employers and increasing numbers of retirees, multiemployer funds make up a large percentage of the nation's least financially stable pensions. The act also is aimed at reducing the strain on the Pension Benefit Guaranty Corp., or PBGC, the privately funded federal backstop for pension funds.

But under the new law, keeping the financially troubled multiemployer funds solvent so they at least continue to pay out some money could mean dramatically lower benefit checks for a million or more retirees across the nation, experts say.

That has Hendershot, who retired in 2002 when his former employer went out of business, and others worried about their own well-being. Hendershot's Teamsters pension plan is among the most sickly.
He and others suspect a lot of people don't know about the new law and will be blindsided if their pensions are cut.
Under the law, retirees ages 80 and older would not get their benefits cut. Retirees 75 and older could get smaller cuts. Retirees younger than 75 could get their pensions reduced by the maximum amount, subject to a vote by active and retired workers. Cuts also need plan trustee approval.

Karen Friedman, executive vice president and policy director at the nonprofit Pension Rights Center in Washington, is highly critical of the new law while acknowledging that pension reforms are needed.'

"We are not saying don't fix multiemployer (plans)," Friedman said.

But an act that allows plans to cut retiree pensions is "such a departure from current law," she said. "It's just such a buzz saw on retiree pensions." As many as 150 pension plans nationally may be impacted by the new act, Friedman said. The U.S. Department of Labor keeps a list of "critical status" multiemployer pension plans.

The Pension Rights Center created a Multiemployer Retiree Cutback Calculator for its website, www.pensionrights.org, that allows people to get an idea of how much their pension could be cut under the law.

As many as "1.5 million people are affected by the new law, and a small percent know it has been passed," Friedman said.

The Pension Rights Center is committed to appealing the cutback provisions of the bill, she said.

"We're committed to organizing retirees around the country," she said.

She noted that union workers gave up wages so companies would put money into pension plans.

"There is a question about whether there is a social contract anymore," Friedman said. "You are cutting something that was inviolable. Can anyone trust anything? ... The highest principle is to keep promises to people."

Mike Walden, a retired union worker, heads the Northeast Ohio Committee to Protect Pensions. The group, made up of retired Teamsters in the Akron area, organized to oppose the passage of the Multiemployer Pension Reform Act as it worked its way through Congress.

"We'd been fighting this for a year," he said.

Now members are working to get at least part of the act repealed, Walden said. He has been traveling around the nation to speak to Teamster retirees about the act.

When he speaks to groups, Walden said he tells them, "It's about your pension, your lifestyle, your future."

Walden said one goal is to have a rally in Washington later this year.

The ultimate aim is to either have the act repealed followed by new hearings to draft revised legislation, or to get part of the act repealed that cuts retiree pensions, Walden said. There are other solutions out there that can shore up failing pension plans before taking away retiree money, he said.

"All of this is falling on the shoulders of retirees," he said. "We just want a fair shake."

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