In October 2015, when word came down that hundreds of thousands of current and future Teamster retirees were facing the loss of a portion of their pension benefits—in some cases, more than half of the monthly payment—Jim Gallagher, a business columnist for the St. Louis Post Dispatch, did what good journalists do. He started asking questions, understanding context, and crafting a cohesive narrative about a crisis that will ultimately reach far beyond the households of union truck drivers. The result was a strong early piece about a story that has drawn increasing attention from local media, but deserves a much bigger spot on the national news agenda.
Historically, it was illegal for pension plans to cut core benefits to people who are already retired; if the plan had money in the bank, it had to pay promised benefits. But many so-called “multi-employer” plans, which serve workers from multiple companies in a particular industry, have been falling into financial distress for years. The federal Pension Benefit Guaranty Corporation (PBGC) is supposed to backstop failing private pensions, but the guarantees are lower for multi-employer plans, and the PBGC itself is in trouble.
One response could have been to give the PBGC more funds to do its job. But there was no appetite for that in Congress, so in late 2014, federal lawmakers responded to the dilemma in another way: They made it possible to cut retiree benefits. The Multiemployer Pension Reform Act, tucked into a huge omnibus spending bill and passed without public hearings or debate, set up a mechanism through which pension trustees could propose a plan to reduce monthly payments. Backed by a coalition of pension plan trustees, unions, and employers, this approach will stretch the dwindling assets of troubled funds further into the future. But for retirees, most of whom knew little or nothing about the change in law as it was happening, it means benefits they earned could go up in smoke.
Gallagher’s story introduces us to some of those retirees, and the betrayal they’re now feeling, as they wait to hear whether the pension plan’s proposal to cut their benefits will be approved or modified. “You can work until you’re our age and then they just jerk the rug out from under you,” one tells him. One point of frustration: The reform law gives pension plan members a vote on the changes, but if they reject it, the Treasury Department can override the result. Gallagher sums up the situation this way:
Their case contains a lesson about the current attitude in Washington. In an economic pinch, Congress and the White House will bail out banks and auto companies. But when it comes to workers’ pensions today, it’s let them eat cuts.
The Teamster retirees are covered by the Central States pension fund, which was the first to file to reduce benefits under the new law. Since then, two smaller plans have filed, and another has announced that it will. But that’s likely just the tip of the iceberg. The Pension Rights Center, an advocacy group, maintains a list of multiemployer plans that have notified the federal government that they are in “critical and declining” status, and could file proposals to reduce benefits. It currently has 52 entries.
Gallagher is hardly the only journalist on this story—it’s been covered in the trade press and around the Midwest, where a lot of retired Teamsters live, with some local outlets doing a more thorough job than others. Articles in the Detroit Free Press, the Minneapolis Star-Tribune, the Milwaukee Journal Sentinel, and the Belleville News-Democrat all offered some clarity and detail. Recent hearings in Detroit, Minneapolis, and Kansas City drew crowds in the hundreds and another round of coverage; Kansas City Star columnist Mary Sanchez wrote that the Teamsters’ pension “is a canary in the mineshaft for many multiemployer funds.”
The Central States filing to reduce benefits back in October drew a little national coverage, too, and The Washington Post recently reported on a similar concern with coal miner pensions. But overall, the national press has done little to develop the story. That’s puzzling, especially given that Sen. Bernie Sanders, who’s made waves in the presidential race with a campaign focused on income inequality and financial security for the middle class, is the sponsor of a bill that would repeal the provisions to cut workers’ benefits and close a couple tax loopholes to supply more funding for the PBGC.
The story merits sustained coverage from local outlets, and much more attention from national media—and there are a number of angles to pursue. The Treasury Department is expected to decide by May whether to approve the benefit-cutting plan submitted by Central States. Every Monday, Kenneth Feinberg, the appointed special master for the program, holds listening sessions by phone with retirees and others across the country. When I listened in on a recent session, retirees were angry and frustrated. One 66-year-old who spent his career hauling cars across the country said he was going to lose $2,000 a month. “I am willing to take a cut, but not 68 percent,” he said. Others said they had disabilities arising from the job. A 74-year-old in bad health told listeners he was facing a cut of $1,700 a month. “The media is going to have to get involved,” said one caller. “Eventually it is going to have to get out and tell about our dilemma.”
I asked Gallagher if he had suggestions for covering this story. “Pensions are rough stuff to understand, even for a business reporter,” he said. He suggested the Pension Rights Center, the PBGC’s annual report on its own solvency, and data on individual plans available through the Department of Labor website. He also recommended finding a friendly accounting professor for guidance and watching for other companies that pull out of multiemployer plans, as UPS did a few years ago.
To that I’d add: Listen to the Monday calls over the next few weeks, to get a feel for what retirees are saying. Reach out to the experts at the Center for Retirement Research, and contact local unions, which don’t necessarily talk with one voice on this. Be alert to local organizing efforts and town hall meetings, like the one where the Akron Beacon Journal recently found “genuine anger, frustration, protest and even revolution in the air.” Explore how the loss of retirement income will affect families and communities, why Washington doesn’t seem to be taking greater interest, and what the impact could be as more plans file to make cuts.
“We’re just at the start of this,” says Gallagher. “There will be more pensioners finding the rug pulled from under them at a time when there’s nothing they can do about it.”