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  #161  
Old 03-10-2016, 08:03 PM
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Mary Pat Campbell
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SOA STUDY
https://www.soa.org/Research/Researc...-analysis.aspx

Quote:
The SOA is pleased to make available a report analyzing the funding progress of contributions in the multiemployer pension plan system. The report was authored by SOA staff actuaries Lisa Schilling and Patrick Wiese.

The authors extend special thanks to the individuals who volunteered their time and expertise to support the production of this report, including the following actuaries.

Christian E. Benjaminson, FSA, EA, FCA, MAAA
Bruce Cadenhead, FSA, EA, FCA, MAAA
James B. Dexter, FSA, EA, FCA, MAAA
Paul B. Dunlap, FSA, EA, FCA, MAAA
Eric A. Keener, FSA, EA, FCA, MAAA
Lawrence I. Pollack, FEA, EA, MAAA
Josh A. Shapiro, FSA, EA, MAAA
R. Dale Hall, FSA, CERA, CFA, MAAA, SOA Managing Director of Research
Andrew Peterson, FSA, EA, FCA, MAAA, SOA Senior Staff Fellow, Retirement Systems
To access the full report, click on the link to the right.

Executive Summary

The multiemployer pension plan (MEPP) system in the United States includes approximately 1,300 plans that cover roughly 10 million participants—about 3.5 million of whom are retired— from about 200,000 employers in the private sector. The system carries significant unfunded liabilities. For 2013, total unfunded liabilities ranged from approximately $115 billion when measured for purposes of determining funded status “zones” under the Pension Protection Act of 2006 to $500 billion when measured using Treasury rates and the market value of assets. Note that Treasury rates dropped by roughly 100 basis points over this period, driving significant increases in costs under this measurement.

In general, contributions to these plans are negotiated between unions and employers, and benefits are set by the plan’s board of trustees. Usually contribution levels are not directly linked with benefit levels and funded status, although there may be indirect links.

This study analyzes the funding progress of MEPP contributions for plan years 20092013 and 2014 based on Form 5500 data to the extent they were available as of Jan. 5, 2016. Note that reported employer contributions include and do not separately identify withdrawal liability payments, which are excluded from Minimum Required Contribution (MRC) calculations. Key findings over 2009-2013 include:

The system’s aggregate contributions increased on a verage 6.9% per year, significantly outpacing the average inflation rate of 2.1% per year. At the same time, contributions for a large percentage of plans were insufficient to prevent their unfunded liabilities from growing, let alone to close their funding gaps. For 2013, this applied to 46% of plans when liabilities are measured using the plan actuaries’ discount rates and to 75% when liabilities are measured using Treasury rates.
Also over this period, contributions to the system significantly exceeded legally defined MRCs, although the margin declined. For 2009, aggregate contributions were 8.75 times the aggregate MRC, and contributions for 94% of plans exceeded their MRCs. By 2013, aggregate contributions were twice the aggregate MRC, and contributions for 89% of plans exceeded their MRCs. Roughly 75% of plans had no MRC for these years.

Aggregate MEPP Contributions Compared to Benchmarks
[graph omitted]

In general, MRCs are low even though there are large unfunded liabilities because many plans have accumulated large Credit Balances, which directly reduce required contributions. A Credit Balance indicates that historically the plan has contributed more than required by law; a Credit Balance is not directly related to funded status. Because MEPP contributions are negotiated in advance and determined for several years at a time, many MEPP practitioners consider the Credit Balance or some other mechanism that offers flexibility for meeting legally required contributions to be a valuable practicality for this system.

Decreasing numbers of active participants compounds the funding pressures. The number of active participants fell roughly 2% per year. Because MEPP contribution rates are typically negotiated for several years in advance as a function of active participants (for example, amount per hour worked), decreasing numbers of active participants may mean that contributions actually received toward the end of the negotiated period may be significantly less than anticipated during negotiations.

Many plans are expecting increased contributions in future years, in accordance with their funding improvement plans or rehabilitation plans. With about 60% of plans having reported by Jan. 5, 2016, results for 2014 appear more positive.
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  #162  
Old 03-11-2016, 05:44 PM
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Link to study:
http://benefitslink.com/m/url.cgi?n=26845&p=1457718124

more:
http://www.plansponsor.com/Multiempl...fullstory=true

Quote:
There are several factors that contributed to the MEPP system’s unfunded liabilities, according to the SOA.

The system’s aggregate contributions increased on average 6.9% per year, significantly outpacing the average inflation rate of 2.1% per year. However, contributions for a large percentage of plans were insufficient to prevent their unfunded liabilities from growing, let alone to close their funding gaps.

Contributions were insufficient to keep unfunded liabilities from growing for most plans—75% of plans saw unfunded liabilities grow when liabilities are measured using Treasury Department rates.

Decreasing numbers of active participants compounds the funding pressures as the number of active participants fell roughly 2% per year. Because MEPP contribution rates are typically negotiated for several years in advance as a function of active participants, decreasing numbers of active participants may mean that contributions actually received toward the end of the negotiated period may be significantly less than anticipated during negotiations.

“The good news is MEPP funding levels appear more positive for 2014, plus many plans expect increased contributions in future years,” says Lisa Schilling, a retirement research actuary at the SOA. “Early indications for 2014, based on roughly 60% of plans reporting by January 2016 are show improving trends.”

The SOA will be releasing a portion of this analysis—the MEPP Contribution Index—later this month, and will update the Index annually for release every January.
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  #163  
Old 03-17-2016, 04:20 PM
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CENTRAL STATES
TEAMSTERS

https://teamster.org/news/2016/03/te...ments-treasury

Quote:
Teamsters Submit Response on Central States Pension Fund Comments to Treasury
I downloaded their response, and I'll excerpt:
Quote:
Unreasonable Investment Assumptions – Central States’ Asset Base Has Deteriorated Significantly Since June 30, 2015

What is most striking about the Central States’ March 1, 2016 letter are the issues raised by the IBT which Central States neglected to address. When Central States filed its Application, it used June 30, 2015 assets for purposes of solvency projections, which was consistent with the Treasury temporary regulations, but inconsistent with reality.

According to the Quarterly Reports of the Fund’s Independent Special Counsel appointed by the U.S. District Court for the Northern District of Illinois (See Exhibit 1), Central States’ assets declined from $17.330 billion on June 30, 2015 to $15.922 billion on September 30, 2015, a decrease of $1.408 billion or an 8.1% drop in plan assets due to negative cash flow and investment losses. In the nine months ending September 30, 2015 Central States assets dropped $1.941 billion or 10.8%. Our best estimate is that Central States’ assets remained near $16 billion at the end of December 2015, with asset gains neutralized by negative cash flow. In the two months ending February 29, 2016, estimated investment performance was again negative with assets declining to an estimated $15.5 billion, if not lower.

Treasury should demand current asset information from Central States, and require Central States to rerun their stochastic solvency projections based on updated assets. This is not a burden on Central States or their actuary in light of modern actuarial software technology, and could be prepared quickly for Treasury’s review. Treasury cannot ignore the fact that Central States’ assets have deteriorated significantly during the pendency of the Application without making a mockery of Treasury’s approval process. What has happened to Central States’ assets in the past eight months is highly consistent with the IBT’s original comments and concerns that the Application’s investment assumptions of either 7.5% in each and every year, or a decade of lower returns followed by higher returns which come out to 7.5% long term, are clearly erroneous.

Unreasonable Investment Assumptions – Using a Single Long Term Investment Assumption for a 50 Year Time Horizon for Expected Return Assumption While Ignoring the Current Low Interest Rate Environment and Central States’ Severe Negative Cash Flow is Clearly Erroneous

Central States’ March 1, 2016 letter mischaracterizes the IBT’s criticism of the Fund’s use of a 7.5% investment assumption. The IBT did not state in its public comments that earning 7.5% over the long term is unattainable. In fact, the IBT’s comments were much more nuanced and focused on Central States’ unique financial, actuarial, and demographic characteristics and history.1 Central States is
currently bleeding $2.2 billion in benefit payments and administration expenses each year after employer contributions and withdrawal liability payments. This negative cash flow represented 14% of plan assets. Even if the proposed cuts are made, the negative cash flows starts at 9% of assets and grows steadily thereafter. A normal pension plan may be in a position to rely on a 7.5% investment assumption long term. But Central States’ situation is far from normal. That is why the IBT finds it ludicrous for Central States to use a single long term assumption for a 50 year time horizon for its asset class capital assumptions.

------

1 Significantly, the only pension plan at issue in the Application is Central States. The assumptions used by other multiemployer pension plans are totally irrelevant to the merits of this Application. Nevertheless, Central States’ gratuitous, misguided attack on Cheiron, the IBT’s actuarial consultant, is not only beside the point but blatantly inaccurate. Cheiron, a preeminent actuarial firm in the multiemployer pension plan universe, never asserted that Central States cannot earn 7.5%. Their analysis was based on the fact that there will be significant variability in the return from year to year, that in the short-term 7.5% is an unlikely outcome especially considering the experience over the last six months of 2015, and that the Plan’s negative cash flow makes it extremely vulnerable to investment volatility.
------------------------
......
Unreasonable Investment Assumptions - Central States’ Explanation of Historic Returns is Misleading and Inaccurate

Central States’ March 1, 2016 letter informs us for the first time that the expected return assumptions for stochastic projections in their Application at Item 7.1.24 (see Exhibit 4) were arithmetic returns, not geometric returns, and thus not comparable to the assumptions in the Horizon Survey of Capital Market Assumptions (2015 edition). It is unfortunate that Central States failed to disclose this fact in their Application. However, this new information does not in any way weaken the IBT’s argument about unreasonable investment assumptions. It is noteworthy that Central States does not take issue with the Horizon Survey analysis testing the probability of earning the 7.5% assumption. The IBT’s public comments document Horizon’s findings for a hypothetical multiemployer plan which shows on average a 45.7% probability of meeting or exceeding 7.5% over a 20 year horizon and a 37.8% probability over a 10 year horizon. In both examples, the Treasury standard of at least a 50% probability of maintaining solvency required under the temporary regulations fails, indicating the challenges facing pension plans that have to earn 7.5% annually into the future.

Central States’ arithmetic versus geometric return exercise raises another, more important technical question regarding Central States’ assertions -- its use of expected time weighted returns versus expected dollar weighted returns. This is a hugely important issue for Central States because of its uniquely high negative cash flows. Central States has to earn 7.5% on a dollar weighted basis over the 50 year solvency period to avoid insolvency. All actuarial projections are based on dollar weighted returns. Almost universally, reported pension plan returns are based on a time weighted basis, which are always based on geometric returns and which are always lower than arithmetic returns, as Central States has pointed out. Yet, Central States has repeatedly commented on its historical returns using arithmetic average returns by claiming, for example, that it has exceeded 7.5% over 20 years between 1996 and 2015. Central States’ assertion that it has outperformed the 7.5% assumption by nearly 1.0% annually seems counterintuitive with its severe underfunding and projected insolvency. This is because using arithmetic average rates of return is grossly misleading and not representative of the actual return a pension fund has earned. Even reporting geometric returns on a time weighted basis will overstate dollar weighted returns. Dollar weighted returns are the only returns that matter.

....
Unreasonable Contribution Increase Industry Decrease Assumptions
Central States has very little to say about the IBT’s criticism of the Application’s contribution increase assumptions, other than a gratuitous comment about the IBT’s ability to negotiate increases in salaries and pension contributions that keep pace with inflation. Again, we face a reality check with Central States, which seems incapable of grasping the fact that it’s existing and growing outsized contributions are crowding out the Union’s ability to negotiate wage increases and maintain health insurance coverage for active workers. It is clearly erroneous to expect a group of contributing employers to decline from 65,000 active members in the Fund to 20,000, while at the same time assume contributions will increase fivefold and base wages become a smaller and smaller portion of the entire wage package. At some point, well before 50 years, active workers will have no reason to support this dying plan from which they are not likely to ever collect a benefit from.

......
Conclusion

Central States’ application has a series of fatal flaws that have been enumerated in the IBT’s December 7, 2015 public comments and in this letter. Central States’ letter of March 1, 2016 represents a continuation of the Fund’s blind rejection of financial realities in terms of the economic choices it is presenting to its participants and contributing employers. The investment assumptions and contribution assumptions in the Application are a reflection of Central States’ failure to get a grip on these financial realities. The IBT has focused on the Application’s key economic assumptions and finds that they are
clearly erroneous based on Central States’ unique and tragic history. Central States’ rejection of the IBT/Kroger pension agreement demonstrates a clear failure to satisfy the all reasonable measures standard of MPRA, and is possibly a breach of fiduciary duty to negotiate the best withdrawal liability terms in the best interests of the Fund and its participants. The IBT believes with great certainty that if the Application is approved, Central States will fail its first annual certification a year from now and will be forced to suspend additional benefits or fail the MPRA tests. For all these reason, we implore the Treasury Department to reject the Application.
Sincerely,
John F. Murphy
International Vice President
cc: Special
http://www.mprnews.org/story/2016/03...d-pension-cuts

Quote:
About a hundred members of the Teamsters union rallied at the state Capitol Saturday to oppose proposed pension cuts. The cuts are part of a plan to rescue one of the country's major multi-employer pension plans because it's running out of money.

Some teamsters say they could lose half of their benefits under the proposed plan.
....
The Multiemployer Pension Reform Act of 2014, which was co-written by Minnesota Congressman John Kline, permits pension cuts to avoid bankrupting the federal agency that insures pensions. Kline said in a statement that retirees would face "even greater financial hardship" without the law. "The steps we've taken will help ensure these retirees are better off than if Congress had simply done nothing, he said.

The U.S. Treasury is considering the plan. If approved, cuts would take effect this summer.


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  #164  
Old 03-31-2016, 05:18 PM
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UNITED MINE WORKERS OF AMERICA

http://www.washingtontimes.com/news/...pension-bailo/

Quote:
Stateside, a similar day of reckoning fast approaches the United Mine Workers of America. Unfortunately, as the UMWA’s pension fund nears insolvency, some lawmakers want to bail it out.

That would set a dangerous precedent. Rewarding the irresponsible and reckless actions of UMWA officials and pension managers would encourage other plans to follow in their footsteps.

When the pension plan was created, the UMWA fought to give pensions to workers who never earned them. Since then, it has continually negotiated for and promised larger pensions than it can afford to pay. Despite its acknowledgement that its pension plan will be insolvent within a decade, the UMWA issued special pension bonuses in 2014, 2015 and 2016.

Coal mining is not an easy job. Yet, many workers took jobs in the mines — despite the hard labor and dangerous conditions — because it would at least provide a secure retirement. It’s not the coal miners’ fault that money they were promised isn’t there, but it’s also not the fault of taxpayers or the UMWA’s competitors. Yet, that’s who the UMWA and some lawmakers want to pay for the union’s irresponsible behavior.

H.R. 2403 and S. 1714 siphon off nearly a half-billion dollars annually from taxpayers and the Abandoned Mine Land Reclamation Fund (AML) to make up the shortfall in the UMWA’s health and pension plans.

The AML was established to clean up environmental damage caused by pre-1977 mines. Millions of Americans live within a mile of these abandoned and as-yet-uncleaned sites, and the AML itself is already underfunded, with assets of only $2.5 billion in the AML and more than $6 billion in high priority cleanup sites still to go. This shortfall has led the administration to ask for an AML fee increase.

AML fees are paid by coal producers according to their output. In 2015, UMWA coal producers accounted for about 9 percent of total coal production, and therefore, about 9 percent of all AML fees. The remainder came from other union mines (5 percent) and non-union coal producers (86 percent).

All non-UMWA coal companies are already forced to subsidize the UMWA’s unfunded retiree health care costs. Making them shoulder UMWA pension costs on top of that would further reduce what they can provide for their own workers, and could lead to the demise of mines now struggling to stay afloat.

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  #165  
Old 04-01-2016, 04:51 PM
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CENTRAL STATES

https://badgerherald.com/news/2016/0...irees-in-debt/

Quote:
Pension cuts to keep federal fund afloat could drown retirees in debt
Retiree speaks out about future fears, impact pension cuts would have on livelihood

A recovery plan that would reduce pension paychecks to keep the Central States Pension Fund afloat could ultimately drown Wisconsin retirees and the state’s economy in financial problems.

The fund provides pensions for teamsters across the country, Dale Dodds, Committees to Protect Pensions organizer, said. Because of several financial issues related to the 2008 recession, bad investments and a loss in supporting companies, the fund was on the brink of declaring insolvency in 2014, meaning it would not have enough money to pay its bills and debts.

Central States Pension Fund previously said in a statement that several teamster employers contributed to the fund on behalf of their employees. Now, many of these employers have backed down or gone bankrupt, forcing the fund to pay around $2 billion more annually than it should.

.....
But Dobbs said the decision to create a recovery plan based on this law could result in 30 to 70 percent cuts in pension.

Charles Wichern, a retired Wingra Redi-Mix teamster, said he was shocked and “did not believe” that the Central States Pension Fund announced in September 2015 that it would cut pension checks.

.....
Dobbs said retirees nationwide are seeking bipartisan support on the matter.

The U.S. Department of Treasury is reviewing Central States’ Pension Fund’s recovery plan and will give its final verdict in May.

http://www.desmoinesregister.com/sto...cuts/82486406/

Quote:
Steep cuts in pensions are looming for Teamsters union members, which prompted a rally attended by about 150 retirees Thursday at the Iowa Capitol.

They came from Des Moines, Dubuque, Marshalltown, the Quad Cities, western Iowa and other parts of the state. They held signs that read, "Stop cuts to our pensions" and "Save our pensions now." They told of facing cuts in their pensions of as much as 50 to 70 percent that will create hardships for them in old age.

.....
The fund, which has $17.3 billion in net assets, covers more than 250 local union shops. But it has been paying out about $3.50 for every $1 taken in and stands to go bankrupt within 10 to 15 years.

The severe cuts were made possible by a federal act passed by Congress in December 2014. The Multiemployer Pension Reform Act allows the heads of “critical and declining” multiemployer pension plans facing insolvency to cut pension benefits already earned by workers. The U.S. Treasury Department has the plan under review until May.

.....
Longer life expectancy, deregulation of the trucking industry in 1980 and declining union membership have all been contributing to the decline of the Central States fund. But allegations of corruption and mismanagement, past and present, have hurt its reputation. Today, a board of trustees oversees the fund, but its management is left to Northern Trust in Chicago with federal oversight.

http://whotv.com/2016/03/31/iowans-s...-pension-cuts/

Quote:
Iowans Struggling, Fearful of July 1 Pension Cuts

DES MOINES, Iowa -- Teamsters rallied on the steps of the Statehouse on Thursday to protest pension cuts.

After a bill passed in 2014, struggling pension funds were allowed to cut pension plans in order to stay afloat.

Teamsters are fearful that pension cuts slated for July 1 will change the way they live.

"They're telling us it's a 50 percent cut, but maybe it's a 60 percent cut. And after forty years of being in the union, he was supposed to get over $3,600 per month,” said Judy Vandall, whose husband is a 68-year-old truck driver. He’s still working because his pension is in doubt.

.....
With the Central States Pension Fund expected to go bankrupt in the next 10 years, an investigation was launched by Sen. Chuck Grassley into the Department of Labor's oversight of the fund.

The teamsters hope the investigation will uncover wrongdoing.

“The way the fund was used was corrupt. There was a lot of greed, and there were a lot of hands in the till. When Wall Street manages a fund and did what they did in 2008, common sense will tell you they used the fund to offset their losses,” Vandall said.

.....
The group that organized the rally, the Committee to Protect Pensions, is planning a trip to Washington, D.C. on April 12 to lobby members of Congress.

That's not likely to bring up anything that will be enough to save the fund.
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  #166  
Old 04-05-2016, 02:20 PM
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CENTRAL STATES
HISTORY

http://www.marketwatch.com/story/how...mob-2016-04-04

Quote:
Real estate investments in Las Vegas casinos and hotels once threatened the integrity of a Teamsters pension fund that the federal government wrested away from corrupt trustees and organized crime after five years of legal battles.

A quarter-century later, the professionals who replaced them—Central States Pension Fund administrators; the Goldman Sachs & Co. and Northern Trust Global Advisors fiduciaries; and Department of Labor regulators—stood watch while the financial markets accomplished what the mob had failed to: which was to smash the fund’s long-term solvency with massive money-losing investments.

The debacle unfolding at the $16.1 billion Central States fund in Rosemont, Illinois, is a cautionary tale for all Americans dependent on their retirement savings. Unable to reverse a decades-long outflow of benefits payments over pension contributions, the professional money managers placed big bets on stocks and non-traditional investments between 2005 and 2008, with catastrophic consequences.

When the experiment blew up, rather than exhume the devastated portfolio to better understand the problem—and perhaps seek accountability—Central States administrators lobbied Congress to pass legislation giving them authority to cut retirement benefits by up to 50% after Treasury Department approval.

That’s close to Central States’ astonishing 42% drop in assets—and a loss of about $11.1 billion in seed capital—in just 15 months during 2008 and early 2009. And while the investment losses are not the source of the retirement plan’s unsustainability today, they accelerated the pension’s problems, and almost certainly made the benefits cuts deeper. The professionals made more money disappear in a shorter period of time than the mobsters ever dreamed of.

.....
This February, Sen. Chuck Grassley (R-Iowa) asked the Government Accountability Office to inform Congress on a series of concerns, among them:

•Was the allocation of Central States investments consistent with comparable pension plans that have managed to remain solvent?

•Has the Labor Department appropriately reviewed Central States’ decisions regarding changes in investment managers and strategies?

•Has Labor maintained proper oversight of a special independent counsel whose appointment was a condition of the 1982 federal consent decree that broke the grip of organized crime at the fund?

“While Central States is not the only multiemployer pension fund that is facing severe funding issues,” Grassley wrote, “what is unique is the role the federal government has played in the operations of the fund since at least 1982.” The consent decree, he noted, “granted DOL considerable oversight authority as to the selection of independent fund managers as well as changes in investment strategies. DOL was further granted oversight of a court-appointed independent counsel.”

......
Central States is considered to be a multiemployer plan because thousands of independent trucking companies paid into a shared retirement fund for union drivers. One problem with multiemployer plans is that as some employers went bankrupt, or otherwise shirked their obligations, the remaining employers faced larger liabilities, and the pensioners fewer funds.

Today, only three of the plan’s 50 largest employers from 1980 still pay into the plan. And for each active employee, it has 5.2 retired or inactive participants.

......
In response to Sen. Grassley’s questions to the GAO, I offer the following:

Q: Was the allocation of Central States investments consistent with comparable pension plans that have managed to remain solvent?

A: No. Central States’ portfolio allocation was about two-thirds stocks, and less than one-third bonds entering the 2008 financial markets crisis. That is much more aggressive than the 48% median allocation to stocks by all Taft-Hartley Union plans at the beginning of 2008; and well above the median allocation of 59% of Taft-Hartley plans with assets of more than $2 billion.

What’s more, Central States’ investment loss of 29.81% in 2008 exceeded the 25.9% loss of its median peer, as well as the 20.46% median decline of all Taft-Hartley plans, according to data prepared for MarketWatch by Wilshire Associates. And Goldman Sachs and Northern Trust each underperformed their investment benchmarks for the fund in at least three out of four years, from 2006 through 2009.

......
Q: Has the Labor Department appropriately reviewed Central States’ decisions regarding changes in investment managers and strategies?

A: Labor spokesman Trupo replies: “While the department may object to actions proposed or discovered in its review, the court gives the department no role in the day-to-day operation or investment decision-making of the fund.”

I’m not sure that answers if Labor provided appropriate oversight but it does suggest that the government regulator was not very proactive.

Trupo also provided me with the statement that: “The chief problem facing the Central States plan has been underfunding. Trucking deregulation in the 1980s exacerbated the funding problem because of the dramatic contraction of the industry, and the accelerated number of contributing employer bankruptcies that rapidly and substantially reduced the fund’s contribution base. At the same time, those bankruptcies substantially increased the fund’s legacy costs with no foreseeable way to make up those lost contributions. These converging factors, rather than poor investment strategy or performance, were primarily responsible for the severe underfunding that the fund is now experiencing.”

Q: Has Labor maintained proper oversight of a special independent counsel whose appointment was a condition of the 1982 federal consent decree?

A: Trupo: “The special counsel is chosen by the court, not the department.”

This suggests that Labor did not provide active oversight.


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  #167  
Old 04-09-2016, 05:22 PM
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CENTRAL STATES

http://www.mystateline.com/news/kinz...-cuts-proposal

Quote:
Rep. Adam Kinzinger (R) speaks out after a law he supported in 2014 has truck drivers outraged.

Protesters lined up outside the Statehouse last week against the Multi-Employer Pension Reform Act. It cuts benefits for workers and retirees because the fund is in danger of running out. But, that means some 400,000 retired truck drivers saw pension paychecks cut in half. Kinzinger says that's unfortunate, but can't be helped.

"At the end of the day, you can't invent money," said Kinzinger. "Illinois is doing the same thing trying to invent money that doesn't exist. You have benefits that are promised that simply aren't paid for and you have to find the best way out to preserve those benefits for people."

A Rockford retired truck driver says he'll rally in Washington, D.C. next week in support of a federal proposal to suspend the cuts.

http://qctimes.com/business/rally-to...30531d7b7.html

Quote:
Wheatley, 58, is among 40,000 people in Iowa and Illinois who are part of the Central States Pension Fund, which last fall asked the federal government to approve a plan reducing payments by $11 billion. Short of a federal bailout, the pension fund's trustees say, the cuts are the only thing that will keep the plan's nearly 400,000 members from losing practically everything.

The proposal has sparked protests across the country, and Thursday thousands of people are expected to descend on Washington, D.C., hoping to draw attention to their plight — and attract the notice of lawmakers who approved a little-noticed provision in a big spending bill a year and a half ago that paved the way for the potential cuts.

"My company paid every dime that was owed to this pension fund, and I worked there 32˝ years and did everything I was supposed to," Wheatley says.
......
Central States, one of the largest of the country's approximately 1,400 multi-employer pension funds, blames deregulation in 1980 for the loss of 10,000 firms that used to pay into the fund, along with more recent economic downturns. The fund says for every $3.46 it pays out in benefits, it only collects $1 from employers.

Its annual shortfall is $2 billion.

Central States says the average cut is 22.6 percent, but those over 80 or disabled are exempt from any reductions. Critics say 270,000 people throughout the pension fund would see cuts, with those hit hardest getting their pensions cut by 50 to 70 percent.

If approved, the cuts would begin July 1.

The Treasury Department is expected to rule on Central States' plan by May 7. But the rules also require plan members to vote on the proposal.

That might seem to give retirees a voice, but many of the retirees say the process is rigged.

They say that if a vote isn't cast, it counts as support for the restructuring plan. In addition, the Treasury Department can bypass a vote and approve the restructuring anyway, if it finds the fund is "systematically important," a designation linked to the impact a failure would have on the Pension Benefit Guaranty Corporation. The PBGC, a federal agency, insures direct benefit plans like Central States.
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  #168  
Old 04-11-2016, 07:58 AM
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Quote:
Originally Posted by campbell View Post
part 2

http://www.marketwatch.com/story/los...uts-2016-04-06

Quote:
One of America’s most battle-hardened pension funds was flying high last decade with large bets on stocks, lower-rated bonds and real estate. But even during the best of times, the Central States Pension Fund needed to draw down at least $1.2 billion a year in capital to pay for overhead and Teamsters union drivers’ benefits.

And when the global financial markets crash struck in 2008, an astonishing $11.8 billion—or 40% of the plan’s total investments—disappeared that year alone. What remained and was recovered afterward couldn’t cover the fund’s long-term obligations.

Today, the Treasury Department is weighing Central States’ application to cut the retirement benefits of two-thirds of the plan’s more than 400,000 American workers, retirees, dependents and survivors who’ve have waited a lifetime for them.

.....
Central States’ investments lost 29.81% in value during 2008 compared to the median loss for all Taft-Hartley Union plans of 20.46%; and a median loss of 26.37% at all Taft-Hartley plans with assets greater than $2 billion, according to data prepared for MarketWatch by Los Angeles-based Wilshire Associates.

And that doesn’t capture the bigger picture.

The pension’s two investment fiduciaries—Goldman Sachs & Co. GS, -0.09% and Northern Trust Global Advisors NTRS, +0.38% —each underperformed their benchmark returns in at least three out of four years from 2006 through 2009, while exercising broad discretionary authority as the result of a decades-old consent decree between the fund and the government. Before resigning in July 2010, Goldman underperformed in eight out of the last 14 quarters for which information is publicly available.

So to pay benefits and bills, the pension had to sell more assets each year, accelerating the decline and deepening the inevitable cuts. In 2008, it liquidated investments at a net loss of $2.4 billion, filings with the Labor Department show.

.....
While Northern Trust did outperform its benchmark in 2009, this did not offset the losses from its underperformance in 2008. Instead, it took more than two years for Northern Trust to recoup its losses, and nearly four years—until 2012—for the fund as a whole to recover all investment losses.

By then, it was too late. The plan’s actuary projected for the first time in 2009 that the fund would become insolvent in little more than a decade. And last year its actuary at the Segal Group certified to the Treasury Department that the Central States fund was “in critical and declining status.”

and more at link
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Old 04-13-2016, 09:38 PM
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https://cei.org/blog/pbgcs-perverse-...loyer-pensions

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PBGC's Perverse Incentives Undermine Multiemployer Pensions

For years, the Pension Benefit Guaranty Corporation (PBGC), the federal agency that insures private sector defined benefit (DB) pension plans, has been severely underfunded below what it needs to cover its payout obligations to retirees, especially for multiemployer pensions. Closing this funding gap is urgent. Yet despite greater attention to the problem by lawmakers, the media, and the public, the problem persists.

A major reason for that is the perverse incentives built into the very workings of the PBGC. And it’s even worse for its multiemployer pension program.

First, PBGC premiums are set by Congress—a sure way to politicize the process and end up with premiums that don’t reflect actual funding risks.

Second is the “last man standing” rule, under which all participants in a multiemployer pension plan are responsible for the pension obligations of every other company in the plan. That means if one company goes bankrupt, its pension obligations are taken on by the other plan’s member companies.

Add to that federal pension insurance with too-low premiums and you’ve got a recipe for disaster. Indeed, the PBGC’s multiemployer insurance program is now a slow-moving disaster that threatens to undermine the PBGC’s very viability.

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Old 04-14-2016, 05:22 PM
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CENTRAL STATES

RALLY

http://www.wiscnews.com/portagedaily...b0d11bd37.html

Quote:
Rally in Washington marks growing 'optimism' for pensions groups

ENDEAVOR — About 5,000 retirees facing cuts of up to 70 percent of their pensions are set to attend a rally Thursday in Washington, D.C., at a time when opposition groups are reporting receptiveness to the issue among those in Congress.

.....
Anderson spoke Saturday at the Endeavor Protect Pensions committee, from which an estimated 50 people will attend Thursday’s rally to protest legislation that lets distressed funds like Central States slash pension checks. The Endeavor committee is one of more than 50 from across the U.S. and meets on the second Saturday of each month in the Endeavor/Moundville fire station.

Speakers at Thursday’s rally in Washington will include presidential candidate Bernie Sanders, Sen. Tammy Baldwin and Rep. Gwen Moore, both Wisconsin Democrats, among several others. The rally begins at 11 a.m. and is expected to last two to three hours.

Recent developments have lifted the spirits of many Protect Pensions members, Anderson said, including a meeting on March 18 with Speaker of the House Paul Ryan. Ryan met with seven Milwaukee chapter members, telling them he agrees they’re “getting a raw deal,” Anderson said. Protect Pensions leaders will meet with Ryan’s chief of staff today in Washington for further discussion of the issue.

Protect Pensions groups in the past had struggled to set meetings with several lawmakers, including Sen. Ron Johnson, R-Wis., but Anderson noted meetings are now set for today with both Johnson and Baldwin in Washington.

BAILOUT?

http://www.power965.com/news/mccaski...s-pension-fund

Quote:
McCaskill: Bailout Teamsters Pension Fund

Missouri Senator Claire McCaskill says she's hoping to get some bi-partisan support to help save the pensions of Teamsters in the Ozarks and across the country.

The Central States Pension Fund is in danger of going broke in ten years -- and the government wants to cut pensions in half.

McCaskill says the fair thing to do would be to come up with a bailout to help save their retirement savings.

"My heart breaks for these families who are sitting around the kitchen table -- with something they had been told they would get for all of their adult lives -- being told now "never mind."

The government took over the Central States Pension fund in the 80s because of mob corruption.

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