A benefit reduction application by the Teamsters Central States, Southeast & Southwest Areas Pension Fund, Rosemont, Ill., should be denied, 18 House of Representatives members told the Treasury Department in a letter to Kenneth Feinberg, the special master who is overseeing the suspension process created by the Multiemployer Pension Reform Act of 2014.
The members said Central States’ proposed cuts will affect 270,000 people and their communities. “We do not believe placing an inordinate burden on middle-class workers and retirees is the only option for Central States,” the letter, sent Monday, said. One signer, Rep. Marcy Kaptur, D-Ohio, has sponsored legislation to repeal the MPRA’s benefit suspension provision and instead reduce the Pension Benefit Guaranty Corp.’s multiemployer program deficit by closing two tax loopholes.
Under the proposed Central States rescue plan, terminated participants with less than 20 years of service credit would get the largest benefit cut, down to 110% of the PBGC guarantee. Active participants would continue to earn pension credits of 0.75% of contributions, down from the current 1%.
In a separate letter to Treasury Secretary Jacob Lew on Dec. 5, Christopher Langan, UPS vice president of finance for U.S. domestic operations, argued against the application, which he said “is unlawful for many independent reasons.” UPS agreed to cover the shortfall for certain UPS plan participants under certain conditions in a separate labor contract, which Central States “has now attempted to subvert in its proposed suspension plan,” Mr. Langan said. “Given the complexity and importance of the (pension fund’s) proposal, and the (fund’s) failure to provide crucial information requested by UPS to fully assess” it, the company needs to continue analyzing the proposal, Mr. Langan wrote.
AARP also opposes the application. David Certner, legislative counsel and legislative policy director, said in a comment letter Monday the application “demonstrates that the plan has not sought comparable sacrifice from contributing employers, current employees or even the plan itself.”
Central States submitted a rescue plan application Sept. 25 to the Treasury Department, which has up to 225 days to review.
The law requires the Treasury Department to approve an application if a plan’s potential claims would cost the PBGC $1 billion or more. The pension fund had assets of $17.8 billion as of Dec. 31, and is projected to become insolvent in 2026.