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Pension Funds

GAO: Central States pension fund’s investment costs ‘in line’ but funding still declining

Teamsters Central States, Southeast and Southwest Areas Pension Fund, Rosemont, Ill., has made limited progress on its funding level because of industry and market changes, the Government Accountability Office said in a report issued Monday that also addressed the question of investment costs.

In response to congressional requests about the pension fund's asset management practices, the GAO report said the pension fund's investment returns and expenses "were generally in line" with multiemployer plans of similar size and demographics.

Investment fees for the $15.3 billion Teamsters Central States, which average 34 basis points, were 9% lower than the median of large defined benefit multiemployer plans over from 2000 through 2014, largely due to fee reductions since 2007.

Administrative expenses per participant were below the median for large defined benefit multiemployer plans for much of the same period, and as of 2014, were $98 per participant, 16% less than the median.

Factors contributing to Central States' decline include withdrawal by United Parcel Service Inc., Atlanta, and declines in trucking and union membership, with active participants now accounting for only 16% of participants in 2016. Market declines in 2002 and 2008 also had a significant negative impact on the pension plan's long-term investment performance. the GAO said.

A second GAO report released Monday traced the progress of a federal consent decree ordered in 1982 after trustees were accused of fiduciary breaches and the plan was less than 50% funded. That consent decree, still in effect, has led to some funding progress, but never higher than 75%, and since 2002 the funding level has weakened, the GAO said. Since 1982, there have been two investigations of the pension fund, but no adverse findings.