Yellow | Multiemployer Pension Reform Act of 2014
- Thread starter BaBaLoo
- Start date
They think they ARE. By trying to preserve the fund...
I agree. We all do. But the math doesn't work. So, while we twiddled our thumbs for the Fund to act, Congress did. Now, we have no choice. Work out an acceptable agreement, or lose it all...
This whole concept of "orphans" just proves (in my opinion anyway) that our pension funds operate as glorified Ponzi schemes. If I work say for 10 years and my company pays in all required contributions on my behalf while I'm working, why should there be such a thing as a withdrawal liability incurred by my company if they then go out of business for instance? I have earned 10 years of pension credit and the funds were paid in on my behalf so why isn't that all that is required to fund my future benefits? If it's not enough - as it seems to be the case - then obviously any one individual's benefits seem to depend at least partially on contributions being made for people working after the first individual ends his employment. That concept seems to me to be the classic definition of a Ponzi scheme. Somebody correct me if I'm wrong.
I don't consider it a Ponzi scheme. But I'll take a shot at answering it. I'm basing my answer on the assumption that the withdrawal liability and the underfunded pension liability are the same thing. Even though your company made it's contributions in the amount agreed to in the contract the overall fund's status may have change during the years of that contract. So more was need than what the company actually contributed. Meaning the company had an underfunded liability which by law was allowed to increase or decrease from contract to contract depending on investment returns.
When the company went out of business it still owed an underfunding or withdrawal liability to the fund in order to make your retirement whole. If under the bankruptcy laws the company didn't pay the agreed upon liability then it's retirees are now being unfairly classified as "orphans".....................That's just my opinion and not to be considered as fact.
The whole ORPHAN thingie, should go away, because it is not the fault of the so called orphans, that this happened, EQUAL ACCROSS THE BOARD. Anything else is discriminatory. AMEN
Thank you Crystal, excellent reply. Let me continue with my analysis of this issue. I agree with and understand the underfunding/withdrawal liability concepts as you've stated them. My issues are these. If the funds require additional funding from the remaining operating companies over and above the normal periodic contributions then something is wrong here. It tells me that basically the funds have promised more than they can deliver. Yes, there have been economic downturns and times when the investment returns have been less than what was expected, but in a professionally run fund those scenarios should have been taken into account when investment decisions were being made and payouts were being set. It appears that the companies are being required to essentially "bail out" the inadequate funding situations which now exist in some of the funds. It is because of the fact that the periodic contributions made on behalf of employees are not by themselves enough to fund the pensions of those employees that I characterize all of this as a Ponzi scheme.
Somewhere about the time of ERISA, Congress made it law that either a fund raise payouts or reduced the incoming payments. Until then I think they were properly funded. Congress apparently made it illegal to be 'overfunded'..
That underfunding, combined with ESP's Orphans, did the fund in. Sorry, ESP, the orphan thing ain't going away. Its the crux of the problem.....
Well then let me say this. Let one young puke come up to me and say I am not entitled to my pension and or pension cuts to be equal and I will show you how I respond.
that was a past quote from a retiree (esp)
i felt too respond because guilt and law does
not hide
that was a past quote from a retiree (esp)
i felt too respond because guilt and law does
not hide
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But the "orphan" idea only exists because of the "unfunded liability" situation in the first place. As I see it (and I could certainly be wrong) if an employee worked say 20 years in covered employment and had the proper contributions made on his behalf for all that time, regardless of what happened to his company after he stopped working, he should be on the same footing as an employee whose company is still in existence. The whole idea of "unfunded liabilities" itself seems a little bizarre in the first place. I understand this may have been forced on the funds by government regulations, but it seems to me there should never have been any "unfunded liabilities" placed on any companies if they made all their normal contributions to the pension funds as required. Either the fund actuaries were way off base when calculating the pension amounts that would be paid or, as you say, the government forced this situation to take place.
Ding ding ding! You said the magic word! 'Government'. Nothing else need be said...
I 'll take my best shot here. Deregulation of the trucking industry is the at the root of all of the unfunded liabilities. It started when companies started to go under and their payments stopped coming in. Any fund is based upon actuarial tables of incoming and outgoing payments based upon the ratio of retirees to active employees. No new blood has come into the fund to replace the companies that have gone out of business. The union came up with the adjustable benefits, such as 30 and out, in the 1980's as a way to induce us to put more money into the fund rather than take it on our checks. This worked for a while, but eventually the day of reckoning would come if no new money was found. So this is the real answer to why we are in the position we are in now. Exactly how many new companies have the International Brotherhood of Teamsters organized to get them to pay into the fund over the past 30 years? Remember how they said they were going to end double breasting. Never happened. Why haven't they organized CCX? That's why this whole issue of orphans is an insult to all of us! Payments were made into the fund for every year that you worked. End of story. We all have skin in the game. As a matter of fact I believe that CF is still in business. It's just that today it is called CCX. This whole mess has been on the horizon for some time now and we are just given lip service by the International. They are playing shell game with peoples lives while they are trying to cover up their inefficient leadership. Either that or they have sold us out and don't give a damn. Bottom line, the Central States Pension Fund is underfunded because our union officials did not do the jobs that they were being paid to do.
I totally agree with most of what you say here except for the following. Deregulation per se didn't cause our current problems. Regulation only protected poorly run companies from competition. We (Teamsters Union in general) failed to organize the newer companies that started up or expanded after deregulation, that's the real problem. As far as funding of pensions, if ever increasing numbers of workers paying in are needed to pay the benefits of current retirees that is just about what a Ponzi scheme requires. There is a practical limit to expanding numbers of new employees and that's when the scheme collapses. To some degree that's what's happening today.
Please figure out the arithmetic, it's just like your checkbook for your household, you have to have money coming in to write checks!
Kind of like you shouldn't agree to spend money that you EXPECT to earn just in case you don't get to earn it for some reason.
If the money coming in is reduced the money going out is reduced.
Yes in a sense our fund is a Ponzi scheme. It always requires new money. The amount that was paid in on my behalf will never equal the amount I will draw out if I live into my eighties. That's where the actuarial tables come in. It's like insurance. The fund wins on some, loses on others. Active workers continue to provide funds for retirees. This formula should work for the long term ensuring active workers will be able to draw when they reach retirement age. Unfortunately the ratio of retiree to active worker is now upside down. The kicker comes in when the money trustees invest to increase the overall value of the fund fail to get a decent rate of return. The reason that the Western Conference is in the green zone is because their trustees took a conservative approach towards investing with a more stable rate of return. Central States did not. But I am much more cynical than that. Our fund has probably been taken to the cleaners by a bunch of crooks. That's how the 6 billion from UPS disappeared. We were better off when the mob ran the fund. At least they repaid their loans.