Thread: MEP Watch
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Old 12-09-2014, 04:20 PM
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Mary Pat Campbell
Join Date: Nov 2003
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Nearly 230,000 Chicago-area union workers and retirees risk not getting the pensions they've been promised, and some may not get any retirement benefits at all unless Congress comes up with a fix soon.

While lawmakers wrestled with the issue for at least 10 years, $6.26 billion in unfunded retirement obligations was racked up by 30 union-affiliated plans in the city and suburbs that are in financial danger. That doesn't count the Teamsters Central States, Southeast and Southwest Areas pension fund, which alone is $17.55 billion short of what it needs to pay benefits for its nearly 408,000 members nationwide, including 30,000 in Illinois.

It has been a quiet, slow-moving crisis, but Central States could change that. If a solution isn't in place by 2017, the Rosemont-based plan is expected to go belly-up in 10 years or so, experts say.

The problem for all multiemployer plans across the country is that a Central States insolvency will swamp PBGC, causing it to go bankrupt, too. The agency reported last month (see its PDF) that it has more than a 50-50 chance of going bust in eight years.

“There could be a complete benefit cut if PBGC has no money,” says Josh Gotbaum, the agency's executive director from 2010 to 2014 and now a guest scholar at the Brookings Institution, a Washington, D.C., think tank.

Even with $17.77 billion in assets, Central States largely is unsustainable because deregulation of the trucking industry in 1980 has wiped out all but two of the 50 biggest contributors to the plan. Today it's paying out $4 for each dollar it collects from employers, including about 415 firms in Illinois (see their PDF).


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