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The War on Pensions Goes Federal

Congress could apply a ‘haircut’ to previously sacrosanct pensions.

Photo Credit: Shutterstock.com/Africa Studio


Alex Adams, 71, worked in the trucking industry for 36 years before retiring in 2003. Five years later, Adams was diagnosed with cancer in his larynx and tonsils. As a result, he now takes food through a feeding tube and has to deal with a number of ongoing medical costs.

Fortunately, as a member of the Teamsters, he regularly paid in to the Central States Fund—a national pension fund jointly administered by the union and several different trucking and construction employers. Now he receives a monthly check of about $3,500 from that fund that covers his medical expenses and allows him and his wife, who live in the Cleveland suburb of Maple Heights, to maintain “the lifestyle that we created for ourselves.” 

That Teamsters pension was part of what drew him to a career in truck driving, Adams says, and motivated him to stay in the field in spite of the tough times that followed the industry’s deregulation in 1980. Working mostly out of Cleveland, he became what’s called a “casual” driver, taking short-term jobs for different employers whenever they became available.

“I wanted that pension. So I went from company to company, sometimes two companies in one day,” says Adams. Later, he found more stable employment and rose to become president of Local 407 in 2000.

In addition to that Central States Fund check, he receives about $1,000 in monthly Social Security benefits and another $800 a month from serving on the Maple Heights City Council, but he says he can’t imagine living without his pension check, since his and his wife’s most significant expenses—like car payments, life insurance and healthcare—all depend on that income stream.

But Adams and hundreds of thousands of retirees like him may have to make do with less. Congress is expected to take up legislation in the next month that would fundamentally reshape the laws governing multi-employer plans. A soon-to-be-introduced bill could allow the trustees of some financially troubled plans, like the Central States Fund, to slash benefits already promised to current retirees. It’s not yet clear how big those cuts would be.

Multi-employer plans in the spotlight

Like the multi-employer health plans that have become a flashpoint in Obamacare debates, multi-employer pensions offer workers “portability”—a construction worker, for instance, can work for a dozen different employers covered by the same union and continue paying into the same pension fund. Established in union contracts with employers, these plans cover roughly 10 million workers, mostly in construction, but also in manufacturing, retail, service and transportation. 

While the reform bill’s language has not yet been drafted, it is expected to closely mirror a February 2013 proposal, Solutions not Bailouts, from the National Coordinating Committee for Multi-Employer Plans (NCCMP), according to the group’s executive director Randy DeFrehn. The proposal calls for granting special authority to pension trustees—comprised of representatives from labor and management—to take “early corrective actions” to prevent the future insolvency of the plans. These actions could include cutting benefits to current retirees like Adams. 

A hearing on the topic by the pension subcommittee of the House Education on Workforce was scheduled for October 10, but has been delayed as a result of the shutdown and debt ceiling crises.

The NCCMP, made up of trade unions and employers that administer multi-employer health and pension plans, has poured hundreds of thousands into lobbying for the bill. Its efforts are lent clout by the fact that the group, at least nominally, represents both labor and management. DeFrehn boasts that his organization has lobbied Congress with representatives from the labor movement, including the Central States Fund and several building trades unions. And a number of different unions with multi-employer pension plans, including the Teamsters, International Association of Machinists and Aerospace Workers (IAM), the International Brotherhood of Electrical Workers (IBEW), Service Employees International Union (SEIU) and the United Food and Commercial Workers (UFCW), participated in the NCCMP commission that led to the Solutions not Bailouts recommendations.