A mediator’s decision means thousands of truck drivers avoided having their pension payments reduced.
The U.S. Department of the Treasury notified the Central States Pension Fund on Friday, May 6, that its proposed pension rescue plan had been denied. Mediator Kenneth Feinberg said the suspension failed to satisfy the statutory criteria for approval of benefit suspensions. If approved, about 270,000 Teamster workers and retirees would have endured cuts by an average of 34 percent.
In a 10-page response, Feinberg said the Central States application failed to satisfy three requirements in the Multiemployer Pension Reform Act of 2014:
- That the proposed benefit suspensions, in the aggregate, be reasonably estimated to achieve, but not materially exceed, the level that is necessary to avoid insolvency, because the investment return and entry age assumptions used for this purpose are not reasonable.
- That the proposed benefit suspensions be equitably distributed across the participant and beneficiary population.
- That the notices of proposed benefit suspensions be written so as to be understood by the average plan participant.
If approved, the cuts would have started in July. Reductions would have varied based on age and other factors. OOIDA Life Member Don Wilkins’ monthly retirement payment would have been cut from $2,600 to $1,600.
According to the Trustees, the Central States Pension Fund will run out of money in 10 years or less if a change is not made.
“Although the decision by our Trustees to file this application under provisions of the Multiemployer Pension Reform Act was gut wrenching, we are disappointed with Treasury’s decision, as we believe the rescue plan provided the only realistic solution to avoiding insolvency,” the Central States Pension Fund website said.
According to the website, the Trustees will carefully consider its next steps.
“Today’s decision means that, absent legislative action or an approved rescue plan, Central States participants could see their pension benefits reduced to virtually nothing,” the website said.
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