SCHUMER PUSHES PLAN TO RESTORE PENSION TO THOUSANDS OF CAPITAL REGION FAMILIES WHO WORKED THEIR WHOLE LIVES & ARE LOSING LONG-PROMISED PENSION PAYMENTS THROUGH NO FAULT OF THEIR OWN; NEW LEGISLATION COULD PULL PENSION PLAN OUT OF FINANCIAL TROUBLE TO AVOID FURTHER BENEFIT CUTS IN YEARS TO COME
Over 5K Capital Region Teamster Families Are Now Victims Of A Pension System That Could Collapse On Itself; These Teamsters Have Worked For Years Paying Into The System, But Now Have Been Forced To Take A 30 Percent Cut in Benefits & Could Lose Even More Of Their Hard-Earned Pension
Without Action, The Plan Could Suffer Further Financial Trouble and Beneficiaries Could See Additional Cuts; But Schumer-Backed “Butch Lewis Act” Would Help Plans Meet Their Obligations Without Hurting Retirees Or Taxpayers
Schumer: Capital Region Teamsters Need A “Pen-Scription” From Congress To Save Their Hard-Earned Pensions
U.S. Senate Minority Leader Charles E. Schumer today stood with Capital Region Teamsters who have suffered pension benefits cuts and are at significant risk of losing even more of what they have earned and saved over a lifetime of work. Schumer explained that due to Wall Street speculation during the financial crisis and structural shifts in the economy, New York multiemployer pension plans are in financial trouble and now many families could lose out on retirement savings – through no fault of their own. The New York State Teamsters Conference Pension Fund was supposed to pay out an average of $5000 per month for a retiree with 30 years of service - hard-earned retirement money. However, these benefits were cut by 30 percent last year – and without relief, more pension benefit cuts could happen. Which is why
“For years, these plans offered working families a nest egg in their retirement. But today, everything has changed, with pension plans being slashed and with the risk of future, deeper cuts. Teamsters in the Capital Region paid into this program with the promise that they would be able to retire with financial security. Now thousands of Teamsters are facing a financial nightmare – cuts to their hard-earned retirement savings they depend on,” said Senator Schumer. “Workers and their families, who rely on these plans could lose or see a reduction in benefits earned over a lifetime of work, through no fault of their own. The result is that the pensions of Local 294’s members and other hardworking Upstate New Yorkers would be cut down to the bone—putting their families’ financial security and future at risk. That is why I am calling on Congress to immediately pass the “Butch Lewis Act” to help protect the financial safety of thousands of the Capital Region’s retirees, current workers, and their families.”
After the 2008 financial crisis, the Great Recession and tectonic shifts in our economy, many plans, including the New York State Teamster Conference Pension and Retirement Fund, which has more than 34,000 participants, absorbed major financial losses and now they are in danger of not meeting their full obligations to retirees. Last year, Trustees and members of the Teamster Fund faced a tough choice as the plan was 46 percent funded with $1.46 billion in assets and $3.14 billion in liabilities. Ultimately, the Teamsters went through a process to keep the plan solvent in the short term that included a 30 percent cut to benefits. The average cut for those who retired with 30 years of service will be about $2,000 — taking most retirees to $3,550 from $5,000. Still, the future solvency of the plan is uncertain even with these cuts.
Schumer said the New York State Teamster Conference Pension and Retirement Fund is vital to more than 34,000 members, including 16,000 retirees and some 18,00 active members. Approximately 5,500 Capital Region Teamsters from Local 294 are part of this fund, including 2,400 retirees and over 3,100 active members. If pension plans are allowed to fail, not only will employers no longer be able to pay promised benefits, but taxpayers would be at risk of having to pay billions when the Pension Benefit Guarantee Corporation (PBGC), the government-sponsored insurance company for multiemployer pensions, cannot afford to cover losses and becomes insolvent.
Schumer said Capital Region New Yorkers deserve a Better Deal on pensions and is calling on Congress to immediately pass The "Butch Lewis Act". The bill, introduced by Senator Brown of Ohio, would work to help protect the American pension benefits that they deserve. For the members of the New York State Teamster Conference Pension and Retirement Fund, this bill would help the plan avoid cuts in the future and even help reverse past cuts that have been made. Schumer added without this bill's protections, future and further cuts are still possible.
Schumer explained the “Butch Lewis Act” would create a new office within the U.S. Treasury Department, which would be called the Pension Rehabilitation Administration (PRA). The PRA would allow pension plans to borrow the money they need to remain solvent and continue providing retirement security for retirees and workers for decades to come. The money for the loans and the cost of running the PRA would come from the sale of Treasury-issued bonds to financial institutions. The PRA would sell Treasury-issued bonds in the open market to large investors such as financial firms. The PRA would then lend the money from the sale of the bonds to the financially troubled pension plans. To ensure that the pension plans can afford to repay the loans, the PRA would lend them money for 30 years at low-interest rates, around 3 percent. The 30-year loans would buy time for the pension plans so they can focus on investing for the long-term health of the plan, while the loans pay benefits owed to current retirees.
Schumer was joined by 294 President John Bulgaro President and local Teamsters and Retired Teamsters.
In addition to prohibiting the borrowed funds from being used to make risky investments, the bill also requires plans that borrow money to submit reports to the PRA every three years to demonstrate that the plans are on track to getting back on solid footing. Pension plans may borrow as much money as they need, as long as they can demonstrate the ability to repay the loan. The interest will be comparable to that of a 30-year Treasury bond. The rate may be slightly higher in order to cover operating costs for the PRA. During the first 29 years of the 30-year loans, the pension plans will pay only fixed interest rates on the money they’ve borrowed. In the last year, the pension plans will pay interest on the loans and repay all the money they borrowed. Since the money comes from the sale of Treasury-issued bonds to financial institutions, these PRA bonds will be fully backed by the Treasury. Schumer said the PRA will not have trouble raising the money because investors want long-term bonds that carry little risk.