(TRUNEWS) The Treasury Department will announce in the next few weeks whether they will approve reductions in pensions by one of the country’s largest plans.
Congress passed a law in 2014 to allow companies to reduce benefits for retirees if it would improve the solvency of the fund, according to The Washington Post.
The Central States Pensions Fund handles benefits for Teamster union truck drivers from multiple states. This marks the first time in history a plan has filed for the approval of a reduction in payouts.
Many workers are angry at the cuts because unions had frequently negotiated against pay raises and other benefits in order to protect pensions.
U.S. Treasury Secretary Jack Lew gives a news conference at the 2015 IMF/World Bank Annual Meetings in Lima, Peru, October 9, 2015. REUTERS/Mariana Bazo
Experts claim the move could start a trend as other pension plans have struggled financially since 2008.
“This is going to be a national crisis for hundreds of thousands, and eventually millions, of retirees and their families,” said Karen Friedman, executive vice president of the Pension Rights Center.
Even though the stock market has improved, the Central States Pension Fund was not able to fully recover and is expected to be broke within 10 years. Plus, contributions by companies declined as the number of people retiring went up. A benefits cut could buy the company 30 years.
Now the fund is paying out $3.46 for every $1 it is receiving.
If the Treasury approves the move, the retirees could start seeing a cut in benefits by July 1. Cuts are expected to be about 23 percent.
About 10 million people are covered by multi-employer pension plans. About 1 million are in plans that may run out of money in the next 20 years.
Several senators, including Sen. Chuck Grassley (R-Iowa), Elizabeth Warren (D-Mass.) and Tammy Baldwin (D-Wis.) are pushing for a new solution to the problem.
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