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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ther withdrawn from the West-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