The Teamsters Central States Pension Plan is swirling the bowl, just waiting for the final flush. Earlier this month, the Treasury Department, which must approve any plans to cut pension benefits, rejected that proposed by the union. The Treasury official appointed to review the planned reorganization said the proposal was based on flawed assumptions and did not demonstrate it would successfully rescue the ailing fund. He also claimed the plan’s proposed cuts were not “equitably distributed” among the retiree population, and the notice provided to plan participants about the cuts was too “technical” and “overly complex.” However, the reality is that the Treasury, in cahoots with the DOL and the Pension Benefit Guaranty Corporation, used the rejection as a way to ignore the 2014 law Congress passed specifically to solve such a problem. By blocking the restructuring, the burden will fall on the the backs of American taxpayers via the cost of a later, more expensive bailout.
The problem will have an impact far beyond the Teamsters members and retirees. If (when) Central States fails, as one of the largest plan of its kind, it will likely bring down the Pension Benefit Guaranty Corporation (PBGC), the federal insurance program for pension funds of this type. The result could impact tens of thousands of other retirees who were never members of the Teamsters.