Wednesday, December 30, 2015

Kline-Miller Cromnibus Amendment One Year Later: Teamsters Central States Pension Fund Looking at Benefit Cuts of Up to 60%

One of the more popular posts on this page was last December's "Kline-Miller Cromnibus Amendment: The Coming Death of Defined-Benefit Pensions," which basically cribbed a post of Naked Capitalism's Lambert Strether and then tacked on my own experience about my union pension fund, soon after the Lehman Brothers meltdown, going into the red, which was followed by a host of devastating benefit cuts. It was clear to me last year that the Kline-Miller amendment was intended to free pension-fund boards of the strictures imposed by ERISA, allowing them the flexibility to cut benefits prior to going into "red" or critical status (a version of the famous quote from the Vietnam War, "We had to destroy the village in order to save it"). Well, one year on, that certainly appears to be what is happening.

In the last four months I left my job at a large, statewide union local for a position with a countywide central labor council. A lot of information -- newsletters, newspapers, magazines, email -- from various union locals, internationals and other central labor councils crosses my desk; I try to ingest as much of it as I can. The other day the winter issue of Teamster magazine arrived in the office. Front-loaded in it are two pieces, "Central States Shouldn’t Cut Pensions" and General President James P. Hoffa's "Retirees, Workers Deserve to Receive Their Pensions," about the enormous impact -- cuts of up to 60% -- of the Kline-Miller Cromnibus amendment on the Teamsters Central States Pension Fund.

Let me quote "Central States Shouldn't Cut Pensions" in its entirety:
Workers and retirees contributing to the Central States Pension Fund are having their retirement security threatened by legislation passed by Congress last fall that allows pension funds to cut active and retiree benefits. Administrators of the pension plan filed a petition with the U.S. Treasury Department in late September that would cut pensions by as much as 60 percent.
In an October letter sent to Fund Executive Director Thomas Nyhan, Teamsters General President Jim Hoffa told Nyhan that the proposed cuts are simply outrageous.
“Trying to prop up Central States by proposing draconian pension cuts that will impose significant hardships on the very people the Fund is supposed to serve makes no sense,” he said. “The benefits these workers and retirees earned were the result of their own hard work as well as that of their fellow Teamsters.”
That’s why the Teamsters have been supportive of several legislative fixes. The “Keep Our Pension Promises Act” (KOPPA) would protect workers and retirees from cuts to their earned retirement benefits. The legislation would roll back provisions that were slipped into the fiscal 2015 spending bill approved by Congress last year that made earned pension benefits vulnerable to cuts.
And new legislation by Sen. Rob Portman (R-Ohio) would guarantee thousands of retirees and workers threatened by deep cuts to their pensions a meaningful voice in deciding their own future.

The “Pension Accountability Act” shows that lawmakers across the political spectrum recognize a fix is needed. While it’s not a complete solution, Sen. Portman’s bill would be a start. 
Either way, Congress is unlikely to take action unless they hear from constituents. The Teamsters are asking workers to contact their elected officials and ask them to support both legislative bills. Central States should pull its horrific pension proposal. But if it doesn’t, the Teamsters Union is not backing down.
Teamsters Central States Pension Fund is probably the most "glamorous" pension fund in history in that it plays a central role in Martin Scorsese's 1995 film classic Casino. Instead of using the pension fund largesse to buy up Las Vegas real estate, as it once did, the fund administrators are now slashing retiree benefits. This is a sad but telling commentary of what the United States has become.

The death of defined benefit pensions goes hand in hand with the loss of capitalism's legitimacy in the United States, as well as the legitimacy of two-party democracy. Electoral, representative democracy established itself in the 19th century along with an unspoken acceptance of the Benthamite utilitarian notion of "the greatest good for the greatest number." With the collapse of pensions we no longer live in a society whose mantra is "the greatest good for the greatest number." That is why right now we are just beginning to understand that there is going to be hell to pay.

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