Tag: pensions
Congress Must Act To Save Central States Pension Fund

Congress Must Act To Save Central States Pension Fund

There are two ways to tell the tale of the Central States Pension Fund.

There’s the numbers story: an actuarial tale of how a pension fund that was supposed to cover the retirement years for nearly half a million Teamsters wound up headed for insolvency.

And then there’s the human tragedy: aging workers fearful that pensions they earned through decades of labor are gone.

Either way, this is the ultimate in a bureaucratic kicking the can down the road.

Nearly a month has passed since the U.S. Treasury Department said “no” to a rescue plan to shore up the finances of the failing Central States Pension Fund, which covers some 400,000 participants. The idea was that by cutting benefits for some retirees now, some up to 60 percent, the fund could stave off insolvency. The shorted checks were to start in July. But Treasury said no deal, arguing that the plan didn’t meet regulations, and the cuts were scrapped.

It was cause for a momentary sigh of relief for the retirees, who had filled auditoriums in cities nationwide to plead their case with federal officials.

But the Central States Pension Fund is still predicted to be insolvent within 10 years. And the fund is the canary in the mineshaft for similar multi-employer pension funds also at risk.

In late May, the overseer of the pension fund pretty much threw up his hands and said Congress needed to save the retirees, floating the idea of a bailout. It was explained that too much time has passed, and the trustees, actuaries and lawyers can’t figure it a new way to save the fund from insolvency that would satisfy government regulations.

“Therefore, there will be no new rescue plan,” was the wording on the one-page announcement by the executive director of the Central States Pension Fund.

For the 400,000 people whose pensions are managed by the fund, many of them already aging and ailing, there will be no escaping the devastating effects of this decision to do nothing.

If the fund goes bust, mortgages won’t be paid. Prescriptions won’t be filled. Utility bills and grocery shopping will be a regular hardship.

In recent weeks, a handful of Democratic senators made pressed Senate Majority Leader Mitch McConnell to do something before Congress takes its summer break.

Fat chance.

Unions are involved here, and Republicans like nothing better than showing contempt for unions. Never mind that union corruption in the 1970s is merely where the fund began to unravel. A consent decree involved the courts, Wall Street firms and other trustees into the management of the fund. Congressional decisions affecting the trucking industry through deregulation had a massive impact, as companies that had once paid into the fund went bankrupt.

Congress dealt a huge blow two years ago when it struck down an enshrined American ideal. Money earned for a pension can’t be pulled out from under you like a rug once you retire. That promise, once codified in law, was upended by the passage of the Kline-Miller Multiemployer Pension Reform Act of 2014, which was tucked into a must-pass omnibus bill. President Obama signed it. The new law allowed for the proposed cuts that were to begin in July.

Several bills have been introduced to help repair that damage. One would repeal the 2014 provisions allowing cuts to pension checks. Another tries to control the excessive pay and bonuses given to executives of troubled pension funds, if they issue cuts to retirees. Talks are on-going about closing federal tax loopholes and redirecting some of the money to shore up the multiemployer fund pensions.

Something must be done here, because the risks are great if Central States fails. It could take down the multiemployer arm of the Pension Benefit Guaranty Corporation, the federal government’s multiemployer pension insurance program. That fund is in trouble too.

Where will this saga end? Here’s a prediction.

Nothing will happen until Congress is embarrassed into action. Central States or some other fund teetering on edge will go bust. Media will highlight retirees without their hard-earned pensions. We’ll find these seniors moving in with their children when they lose their homes, forgoing doctor’s appointments to save money and embarrassed to be asking for help from local food pantries.

Congress will act when it is desperate enough to stave off the uncomfortable images of grey-haired men with canes suffering because of broken promises. But by then more pension funds will be in trouble and any congressional action might be little more than plugging holes in a sinking boat.

(Mary Sanchez is an opinion-page columnist for The Kansas City Star. Readers may write to her at: Kansas City Star, 1729 Grand Blvd., Kansas City, Mo. 64108-1413, or via e-mail at msanchez@kcstar.com.)

(c) 2016, THE KANSAS CITY STAR. DISTRIBUTED BY TRIBUNE CONTENT AGENCY, LLC

Five Jobs That Still Come With A Pension

Five Jobs That Still Come With A Pension

By Jeanne Tepper, GOBankingRates.com (TNS)

There has been a lot of discussion about pensions and their disappearance from retirement benefits plans throughout the years. A 2014 report released by professional services organization Towers Watson found that only 24 percent of Fortune 500 companies still offered any type of defined benefit plan to their newly hired employees by the end of 2013, with nearly two-thirds of the 24 percent offering cash balance plans. Instead, these employers have adopted defined contribution and hybrid plans.

“There’s a move away from pensions, that’s nothing new,” senior retirement consultant at Towers Watson Alan Glickstein told The Washington Post. “But the move is slowing.”

Although the number of Fortune 500 companies offering traditional defined benefit plans has dropped significantly over the years, it is possible to find a job that still offers some sort of pension.

GAS AND POWER UTILITIES SECTOR

Many Fortune 500 companies in the utilities sector offer defined benefit plans to new employees, and they have kept their retirement benefits consistent between union and non-union workers. Because these jobs tend to be physically demanding, defined benefit plans “encourage/allow workers to retire at an appropriate time,” states the Towers Watson analysis.

INSURANCE

The Towers Watson analysis also found that 46 percent of insurance companies offered hybrid and defined contribution plans, and 20 percent offered traditional defined benefit and defined contribution plans in 2013. Meanwhile, 34 percent offered defined contribution-only plans. According to the analysis, “due to their training and the nature of their work, employees in the insurance sector may be more inclined to understand and appreciate (defined benefit) plans relative to workers in other sectors.”

PUBLIC SECTOR

If you get a job as a public employee — such as a police officer, firefighter, etc. — you have a good chance of being enrolled in a state pension program. According to Monster.com, a state pension program could possibly “pay you up to 90 percent of your salary at retirement.”

MILITARY

Currently, troops can retire and receive their pensions after 20 years of service. The Military Times, however, reported in January that a military panel proposed a hybrid system that would “shrink the size of future troops’ pensions and end the 20-year, all-or-nothing aspect of the current benefits package by starting 401(k)-style investment funds with government contributions for lower-ranking troops.” According to USA Today, the new plan is expected to be in place by October 2017.

HEALTH SERVICES

The top five employers ranked in AARP’s 2013 list of the “Best Employers for Workers Over 50” are in the health care/health service industry. At least four out of five of them offer some type of pension. For example, the National Institutes of Health offers employees a 403(b) plan with employer match as well as a defined benefit plan, and the Atlantic Health System gives full- and part-time workers a 403(b) plan and a cash-balance or other type of hybrid pension plan, according to AARP.

If you are considering a job change in the near future, take a close look at the retirement benefits certain positions offer. Use resources, like the Bureau of Labor Statistics, to discover pertinent facts about the salary and benefits. Even if you are not 50 years old, AARP’s list of the “Best Employers for Workers Over 50” has useful information about retirement benefits you might want to read up on before you apply for your next job.

Photo: Elvis Kennedy via Flickr

Emanuel Makes Nice As Chicago Election Bypasses Pension Morass

Emanuel Makes Nice As Chicago Election Bypasses Pension Morass

By Tim Jones and Elizabeth Campbell, Bloomberg News (TNS)

CHICAGO — Chicagoans could be forgiven if they found the humble man in the V-neck sweater unfamiliar.

“I can rub people the wrong way, or talk when I should listen,” a contrite Mayor Rahm Emanuel says in a television ad aimed at soothing a restive electorate.

The former White House and congressional political enforcer has been thrust back on his heels in his bid for a second term. Voters in this city of 2.7 million are witnessing a rarity: a competitive mayoral election.

Three weeks remain before the April 7 runoff between Emanuel and Jesus “Chuy” Garcia, a Cook County commissioner and fellow Democrat whose candidacy is the vehicle for grievances against the mayor and his efforts to steer the city away from insolvency. Chicago has $20 billion in unfunded pension liabilities, a school system deep in deficit and a credit rating dropping toward junk. It’s in danger of being overwhelmed by debt unless it embraces onerous solutions that probably would include retirement benefit cuts and tax increases.

“I don’t think I’ve ever seen such financial uncertainty and so many moving parts all going on at once, and no one wanting to blink first by saying what he’s going to do about it,” said Donald Haider, a former Chicago finance director who ran for mayor in 1987.

The last time Chicago went through such electoral suspense was 1983, when Harold Washington won a racially charged contest to become the city’s first black mayor. This election is more defined by ideology, pitting the union-backed Garcia, 58, against Emanuel, 55, who has close ties to the corporate elite and a reputation for aggression.

The mayor’s supporters include business executives such as Ken Griffin, chief executive officer of the hedge fund Citadel LLC, and Michael Sacks, chairman and CEO of Grosvenor Capital Management. Griffin contributed $250,000, and Sacks and his wife Cari combined gave $250,000, according to a recent campaign filing.

Garcia, who last week reported a $350,000 contribution from the American Federation of Teachers, has drawn endorsements from Democratic progressives including civil-rights leader Jesse Jackson, former Vermont governor and Democratic National Committee chairman Howard Dean, and Emil Jones Jr., the one-time president of the Illinois Senate who is known as President Barack Obama’s mentor. Obama has endorsed Emanuel.

Emanuel held a 51 percent to 37 percent lead over Garcia in a poll taken March 6-11 that was published in the Chicago Tribune. The survey of 712 registered voters has a margin of error of 3.7 percentage points. Garcia shrugged off the findings.

“This is a dead heat,” Garcia said March 13. “I have the greatest confidence that I will win.”

While crushing debt bears down, including an additional $600 million pension payment the city must make next year, daily campaign discourse has focused elsewhere.

Emanuel, who was forced into a runoff Feb. 24 when he failed to win a majority against Garcia and three other challengers in the nonpartisan election, announced March 8 that the city would remove 50 red-light cameras, partly reversing his defense of a program that has come under loud criticism. Three days later, he proposed creating tax-free zones in impoverished neighborhoods, where his support was weakest in the February vote.

Garcia is backed by the Chicago Teachers Union, a vociferous critic of Emanuel’s 2013 closing of 50 public schools. He proposed an 18-page financial-recovery plan March 13, saying he wouldn’t support pension-benefit cuts unless they were negotiated. He said he would wait to decide on tax increases until after taking office.

“On April 8th, I will appoint a committee of experts to help us look at all the revenue options,” Garcia said during a press conference. “It is too early to tell residents of the city of Chicago that we’re going to give them that medicine.”

Others say it’s none too soon. Moody’s Investors Service downgraded the city’s credit rating Feb. 27, citing “highly elevated unfunded pension liabilities and continued growth in costs to service those liabilities.” The cut, to Baa2, or two levels above junk, underscored the peril that has Chicago the lowest-rated among the 90 biggest U.S. cities, excluding Detroit, which is fresh from a record $18 billion bankruptcy.

Despite the visual contrasts of Chicago, a gleaming lakefront metropolis on Lake Michigan, to Detroit, a shrinking, post-industrial city on a river, the former’s financial morass draws parallels to the latter.

Detroit, a city of about 700,000, had unfunded pension liabilities of about $3.5 billion. Chicago has roughly four times the population and a retirement shortfall of $20 billion.

“People will say Detroit and Chicago aren’t alike, that they’re night and day, but if you burrow underneath the finances, I don’t think that’s true,” said Frank Shafroth, director of George Mason University’s Center for State and Local Government Leadership in Arlington, Va. “There’s a lot at stake here.”

For the city’s next leader, fixing the fiscal disrepair won’t be as simple as merely summoning courage. Illinois’s own financial stress will complicate the task. The state has $111 billion in unfunded pension liabilities and about $6.4 billion in unpaid bills.

Republican Governor Bruce Rauner, Emanuel’s friend and former business associate, has proposed cutting more than $300 million in income-tax, transit and pension assistance to Chicago and its schools. Nor can the city ease retirement costs without legislative approval.

Lawmakers restructured two of Chicago’s four pensions in June, affecting about 60,000 employees, who will pay more and get fewer benefits. The progress, touted by Emanuel’s administration, is tenuous; unions have sued.

“It’s a three-ring circus,” Haider said. “The courts with pensions, Rauner with the budget and the city with its back against the wall.”

Photo: ctaweb via Flickr

On Docks, Workers Still Have Power

On Docks, Workers Still Have Power

By Chris Kirkham and Andrew Khouri, Los Angeles Times (TNS)

LOS ANGELES — More than 4,400 ships bring nearly $400 billion worth of goods through the ports of Los Angeles and Long Beach every year, a crucial link in the global supply chain of factories, warehouses, docks, highways and rail lines.

Wages for most blue-collar workers along the chain have fallen with the quick rise of global trade. But the longshoremen who move the goods the shortest distance, between ship and shore, have shrewdly protected pay that trumps that of many white-collar managers.

About half of West Coast union longshoremen make more than $100,000 a year — some much more, according to shipping industry data. More than half of foremen and managers earn more than $200,000. A few bosses make more than $300,000. All get free health care.

Longshoreman pay dwarfs that of almost all other transit employees, such as trucking, railroad or airline workers. At massive warehouse complexes in the Inland Empire, just an hour’s drive from the ports, goods for the nation’s largest retailers are shuttled around by temporary workers making as little as $10 or $11 an hour, with no benefits or job security.

The unique clout of the International Longshore and Warehouse Union came into sharp relief recently with the partial shutdown of 29 West Coast ports. The crisis passed with a contract deal a week ago, but it will take up to three months to clear the backlog of cargo on the docks and ships stranded offshore. Many businesses and workers won’t recover the money they lost because of port gridlock.

Union spokesman Craig Merrilees said the shipping companies’ pay figures fail to account for the more than 8,000 so-called casual workers — part-timers who don’t receive benefits and often work for years to become registered union members. The data, released by the Pacific Maritime Association, reflect 90 percent of the “registered” union members or more than 12,000 workers.

The association declined a Los Angeles Times request for similar pay data for casual workers and about 1,100 lower-tier union members.

“They don’t want to talk about the other workers,” Merrilees said. “I don’t think it’s responsible.”

How the Pacific longshoremen have weathered forces that have crippled many other unions is a tale of foresight, geography, and technology.

A deal cut by union leaders half a century ago allowed workers to share in the gains from innovations in efficiency, such as modern shipping containers. Another key move: organizing all West Coast ports in the 1930s under a single contract, which prevents shipping companies from pitting workers at neighboring ports against one another.

More recently, longshoremen benefited from the rise of U.S. trade with other Pacific Rim countries, positioning the ports as a strategic nexus, another key leverage point in wage talks.

“So many labor unions don’t have that power anymore,” said Ruth Milkman, a professor specializing in labor movements at City University of New York. “Here’s a place where globalization has benefited the union, whereas the opposite is true in manufacturing.”

Since 1980, container traffic through West Coast ports has grown more than sixfold, according to the most recent data from the American Association of Port Authorities. Pacific ports now handle 52 percent of U.S. cargo volume, compared with 41 percent at East Coast ports.

Unlike factories, ports can’t be moved to low-wage countries. The jobs are “impervious to outsourcing,” said John Ahlquist, a political science professor at the University of Wisconsin, Madison who has studied port unions worldwide.

The longshoremen’s union has served as a gatekeeper for new entrants to the industry. There are more than 13,000 registered union longshoremen, clerks, and foremen, according to West Coast shipping industry data from 2013.

But the more than 8,000 casual workers compete daily for hours of dock work, hoping to snag leftover shifts after union members get first pick. Many toil for years in a part-time holding pattern, waiting for a new round of hiring.

Patience can pay off. Full-fledged union members are divided into three classes: longshoremen, clerks, and foremen/walking bosses.

The majority are longshoremen, about half of whom — 4,900 — made more than $100,000 in 2013, according to shipping company data; 1,400 longshoremen made more than $150,000 in 2013, according to the data.

More than half of the 600 foremen and walking bosses took home more than $200,000. At the top end, 85 of them earned more than $250,000.

Overtime, paid at higher rates, accounts for about a third of all hours worked, according to the shipping industry. Longshoremen also get bonuses for specific skills and night shifts.

Michael Dimon got his start on the docks in 1978, following his father and great-grandfather. He’s proud of the wages he earns and credits collective bargaining for allowing him to buy a home and save money for his two children to attend college. Dimon never finished high school.

Before 2013, he said, he never made more than $100,000 a year. That year he made $117,000, he said. Last year, he made more, as port traffic at Los Angeles and Long Beach surged to the third-busiest year on record. He declined to say how much.

“I would never pretend to be ashamed of the wages that we negotiate and fight for — absolutely not,” Dimon said. “What it allows me to do is live the American dream. And sadly to say, it’s dying here in America.”

The longshoreman’s dream was forged by a series of strategic decisions that have given the ILWU unparalleled strength.

In the 1930s, West Coast port union leaders succeeded in negotiating a single contract that linked ports from the Pacific Northwest to San Diego.

In 1960, the ILWU cut a deal that paved the way for a revolution in shipping. For centuries, longshoremen had used highly labor-intensive methods when loading and unloading ships — nets, metal hooks, and pallets. The union offered to embrace the use of containers in exchange for higher pay and benefits, along with richer pensions and buyouts for displaced workers.

The strategy continues to define the union’s approach. In 2002, contract negotiations broke down in part over computer systems intended to replace clerical workers who tracked cargo. The deal led to the elimination of hundreds of clerical jobs, but the union negotiated substantial increases in pension benefits and held on to free healthcare.

In the contract talks resolved last month, one of the main sticking points was over who should maintain and repair the trailers that truckers use to haul goods from the ports. Shipping lines recently outsourced the equipment to third-party companies, threatening the union’s maintenance jobs.

Merrilees, the union spokesman, said the union retained the right to do some inspections and repairs on the trailers. But trade experts said the presence of third-party companies could continue to complicate the issue.

Experts point out that the ILWU’s unique place in the supply chain has allowed it to benefit despite automation. But it’s unclear how long the union can prevent technology from eroding pay and job security.

The union may struggle to maintain high wages in a low-wage transportation network, said Nelson Lichtenstein, a history professor and director of the Center for the Study of Work, Labor and Democracy at the University of California, Santa Barbara.

“The nail’s sticking up,” he said, “and people have hammers.”

Photo: John Morgan via Flickr