Large pension fund files plan to cut retiree benefits under new law

[mfcorey1]

Nearly 300,000 former truckers and their families would suffer significant losses under a proposal that uses a controversial new law to cut once sacrosanct pension benefits.

The huge Central States Pension Fund, which administers retirement benefits for some former and current Teamster truckers, said the reductions are the only way to save the plan from insolvency.

“A realistic rescue plan is needed now,” said Thomas C. Nyhan, executive director of the Central States Pension Fund. “The longer we wait to act, the larger the benefit reductions will have to be.”

Under the proposal, pensions for Central States’ 407,000 participants would be cut by an average of nearly 23 percent. But the pain would be distributed unevenly. Some participants, including the disabled, would not be subject to reductions. Older retirees would generally receive smaller cuts, while those who worked for defunct companies that did not keep pace with their pension funding obligations would face steeper reductions.

The proposed cuts were detailed in a plan submitted to the Treasury Department late last month. In it, Central States said the reduced number and increased age of its participants have left it paying out $3.46 for every dollar it takes in. The result is that the plan is disbursing $2 billion more in benefits than it takes in through employer contributions each year.

http://www.msn.com/en-us/money/retirement/large-pension-fund-files-plan-to-cut-retiree-benefits-under-new-law/ar-AAfbeQN?li=AAa0dzB&ocid=mailsignout

[Recursion]

1. This is why I hate the defined benefit plan

It's not worth the damn risk. Take your money and invest it. Don't trust your employer.

[1939]

2. Not the employer here

This is a union operated plan that for years was a piggy bank for corrupt officials. If the income to the plan had been prudently invested over the years, the plan would be in a lot better shape. Right now, it is relying on current contributions to pay current benefits and, unless the industry is expanding, works out to be a fiscal death spiral.

NOTE: This is a financial analysis and not a comment on the retirees who earned the benefits.

[Recursion]

3. Same criticism applies

Defined benefit means "I trust my retirement to the prudence of others". Not worth it.

[dixiegrrrrl]

5. Have to agree with you.

Did you notice the timing of the 2008 crash? Just when the first of the Baby Boomer generation were gonna need their 401-k money.

When 401-k plan was first introduced into my workplace, I argued against it, esp. the mandatory part.
Did not take a rocket scientist to see that "someone" was gonna have free money for 20 years to play around with.
To top it off, our agency used...get this.... AIG annuities.
You may remember AIG went under Sept. 2008.

[Recursion]

6. Right? (nt)

[Sherman A1]

7. I must disagree

Not everyone is well enough versed in all things financial to make wise investment choices, what are those people to do???

I believe that a defined benefit pension is a good thing and I am looking forward to collecting mine in the not too distant future. In this case and unfortunately too many others, mismanagement has apparently occurred, that however does not mean that it is a bad idea. In a perfect world we would all have our Social Security, A Pension of some sort, our 401k's (which can be subject to similar mismanagement and can be a crap shoot as well) and personal savings/investments upon which to rely in our retirements. None of which should be the only source of income, but together they should provide for a comfortable life.

[Recursion]

8. I do see your point, and I acknowledge that. But...

The fact is I simply don't trust any employer to keep defined benefits funded.

There are actually trustworthy savings products that will do better than most historical defined benefit plans.

[Sherman A1]

9. I understand

the point you have made and concur that trusting an employer to fund these pensions is a difficult proposal. We have both read too many stories of workers finding their benefits cut after they retire or as they approach retirement. I also agree that there exist trustworthy savings options, however in I believe far too many cases individuals are left to their own devices and fail to even understand that a 401k savings plan is probably in their best interest much less being able to figure out what funds to select within their plan structure.

Likewise trying to understand other investment vehicles can too often be difficult or impossible for many, as I believe we have done a poor job in educating in matters financial. Add in the effects of 30+ years of stagnate wages, with too many unable to save (even if they figure out it's important) upon the working class and it simply comes up to disaster in my opinion. I simply do not know how a person graduating from college with a huge student loan debt to service is supposed to think about retirement savings when they can't get a job that pays them enough to move out of Mom & Dad's house.

[donco]

10. Here,Here.

As a retired Teamster, collecting from the plan I agree with this post.

I,ll be loosing about $250 a month of my $3000 dollar pension.I can live with that.Its better than the plan going bankrupt and everyone getting zelch.

[INdemo]

4. Just remember it was our

Corporatist President that signed this bill into law. You know the worker friendly Presidrnt. The same guy that gave us the job killing TPP agreement.
So do you think Hillary would be any different?She is owned by the same corporations whose lobbyist's wrote this bill.