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About Northwest labor press. (Portland , Ore.) 1987-current | View Entire Issue (March 3, 2017)
PAGE 12 | March 3, 2017 | NORTHWEST LABOR PRESS ...OPEIU pension proposes cuts in retirees’ benefits From Page 1 Pension, which today has about 7,600 participants, is a perfect example of what went wrong with some union pension plans. Begun in 1960, the plan cen- tered on clerical support work- ers at large trucking firms and also at many local union offices. But an aging workforce and de- clining employment levels made the plan acutely vulnera- ble to losses. The plan’s biggest contributing employer, Consol- idated Freightways, liquidated in a 2002 bankruptcy, and work- ers at another big employer, CNF Services, voted out the union in 2003. Union-sponsored multiem- ployer pension plans are nor- mally very stable. They work by pooling and investing the hourly contributions that unionized em- ployers make on behalf of em- ployees. The combination of employer contributions and in- vestment returns makes it possi- ble to provide retirees a guaran- teed monthly income for life. Even though the Western States OPEIU Pension had lost some large employers, it was healthy until 2008. But in the 2008 financial crash, its invest- ments lost 32 percent of their value. And in the recession that followed, some participating union employers went out of business, and others withdrew because the pension plan had to greatly increase required contri- butions to make up for invest- ment losses. Since 2008, as many as 100 employers have ei- ther withdrawn from the West- ern State OPEIU Pension Fund or ceased to exist. That’s more than a third of the total. During the same period, the number of active participants (current workers whose employers are contributing) fell by 62 percent. By the end of 2015, the West- ern States OPEIU Pension had 914 active participants, 3,742 re- tirees, and 2,936 others entitled to future benefits. Basically the plan is “upside down” — there are eight times as many retirees and inactive vested participants as there are current workers whose employers are contribut- ing to the plan. So even though the plan still has considerable assets — $359 million as of the end of 2015 — it’s sinking fast. The plan is cur- rently paying out about $39 mil- lion in benefits a year while tak- ing in $11.8 million in contribu- tions, and it’s projected to run out of money in 2035. If and when the plan becomes insolvent, a government-spon- sored pension insurance pro- gram known as the Pension Benefit Guaranty Corporation (PBGC) is supposed to step in and pay retiree benefits. But un- der its formula, benefits would be greatly reduced — by as much as half in the case of a typ- ical Western States OPEIU re- tiree. And it’s possible the PBGC itself could run out of money and be unable to pay. To prevent that future insol- vency, Western States pension trustees are proposing that ben- efit cuts of up to 29 percent take place now. Before the cuts can take ef- fect, they must first be approved by the U.S. Treasury Depart- ment. The department has until Sept. 28, 2017, to decide if the proposed cuts are appropriate. If the Treasury Department approves the application, plan participants and beneficiaries will get a chance to vote on the proposal to cut benefits. But un- der the Miller-Kline law, in order to reject the proposed cuts, a ma- jority of all 7,592 plan partici- pants must vote “no,” not just a majority of those who vote. So far, 11 other multiem- ployer pension plans have ap- plied for permission to cut ben- efits since the passage of the Miller-Kline law. The Treasury Department has denied four ap- plications, and four other pen- sions withdrew their applica- tions. Two others are pending a decision. Just one has been ap- proved so far — Ohio-based Iron Workers Local 17 Pension Fund. The Western States OPEIU pension is the only pen- sion based in Oregon and Wash- ington to apply for cuts so far. MORE INFORMATION For more information about the pro- posed benefit cuts to the Western States OPEIU Pension Fund, visit http://www.wspensionrecovery.com UNION PENSION FUNDS THAT HAVE APPLIED TO CUT BENEFITS UNDER THE KLINE-MILLER ACT APPROVED • Iron Workers Local 17 Pension Fund PENDING • Automotive Industries Pension Fund • New York State Teamsters Conference Pension & Retirement Fund DENIED • Teamsters Central States, Southeast And Southwest Areas Pension Plan • Ironworkers Local 16 Pension • FundRoad Carriers Local 707 Pension Fund • Teamsters Local 469 Pension Plan WITHDRAWN • Bricklayers & Allied Craftsmen Local No 7 Pension Plan • Bricklayers And Allied Craftworkers Local 5 Pension Plan • United Furniture Workers Pension Fund A
