Well it finally happened. As of late last month, one of the strongest and most successful pension funds officially ran out of money. The Teamsters Local 707 fund began their efforts to avoid this insolvency in early 2016 when they lowered payouts for already retired members. Now, the 4,000 already retired Local 707 members are left with nothing.
While this news is disastrous for members of Local 707, it also speaks to the problem of underfunded pensions as a whole. Namely, it begs the question: “if one of the strongest funds couldn’t survive, why should any other plans?”
There are currently 68 pensions plans that have been listed as having “critical and declining status.” This means these 68 will soon have to apply to cut benefits. Meanwhile, there are 10 private-sector funds that have already applied to the U.S. Treasury Department for approval to slash benefits.
As it stands, “nearly 1 million working and retired Americans are currently covered by pension plans in imminent danger of insolvency.”