Freightmaster1
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ABF | Central States Pension Financial Update
- Thread starter Freightmaster1
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Freightmaster1
TB Legend
- Credits
- 607
Thanks FreightMaster, That is basically what I was arguing with EX396. The pension fund is not broke (loosing money) but it is only holding ground because of the ROI (Return On Investments). The problem is what happens when the fund managers cannot get HIGH ROI? Or the fund invests into equities that loose money (2008-2009)? The fix is easy if we do it soon, before the fund starts loosing capital.
You sure are a glass is half-full type guy ;). The fund basically "broke-even" in Q2Y14 when the S&P 500 was up an annualized 20.17% (4.7% for the quarter). The article also notes that the number of retirees has decreased slightly.
Hmmm? Fantastic returns and the number of folks it is supporting declines and the fund breaks even.
The fund has less than 90K per current retiree. At an average retiree benefit of $1,123/mo. the fund is flat broke in less than 9 years if it gets 6% ROI. The only reasonable expectation to save the fund at the ROI trend is to lose current retirees faster than current workers retire....oh yeah and to get some new contributors. Good luck with that. Who's jumping on that ship?
D
Deleted member 5115
Guest
I think you're right but there is also a new insurance plan that covers UPS Freight workers through the Central States Fund and I think it might be called TeamCare.
EX396 my friend, your math looks correct but I don't believe the only way to save the fund is to cut retirees faster than the current workers retire. And to gain contributors. That is my knee jerk reaction because I NEVER like dichotomies (either-or situation). I think there are other options. Say cutting current retirees and future retirees (until the fund is more stable) payout by 10%. That would cut each retirees payout by an average of $112.30 a month. Not a great deal but it is less than the reduction in pay most of the current workers have taken over the last 5 years. Look at YRC, they took a 15% pay cut and we at ABF have taken a 7% + a weeks vacation pay cut. We share the responsibility so we should also share the consequences. And I don't believe these are the only options, but I am not smart enough to think of any others at this moment. Anyone have any suggestions?
I do know that Teamster management reads these message boards; it was a topic of discussion in the December union meeting. Think positive :)
I do know that Teamster management reads these message boards; it was a topic of discussion in the December union meeting. Think positive :)
I agree it is not the only way to save the fund, however, as I stated I believe it is the only reasonable expectation.
But let's look at your 10% reduction scenario and assume no change in the contributor:retiree ratio. A 10% benefit reduction across the board and a 6% ROI still puts the fund flat broke in less than 10 years. The cuts would have to be much larger, the ROI much stronger than 6%, and/or a significant increase in contributors vs. retirees.
At a 6% ROI and the fund to remain the same size, the average payout per current retiree would have to be cut by almost 60%.
What I don't think you are taking into account is that the ration of contributor to retiree is going to change. The retirees are older and have less time to receive benefits than do contributors (employees). Think about it, a lot of people work for union lines for 30 to 40 years before retiring. If these individuals retire at age 65, then they would have to be 95 or 105 years old before they spent as much time in retirement as they did working. This makes you wonder what the average age of the current retirees are and how much longer before they stop receiving funds? Remember the ration of contributors to retirees is 1:3.66. So if 3.66 retirees stop receiving benefits for every employee who retires, then sooner or later the fund will become solvent. Also, as the number of retirees declines, the amount of capital in the fund can decline in order to pay out the same amount of benefits to each current retiree.
And as the economy stabilizes and continues to grow those companies that are not contributing there contractual amount will (hopefully) become more stable and pay they full amount. This will further stabilize the fund and possibly even allow it to become over-funded at some point in the future.
There is also the possibility that as the economy grows and unemployment declines that the pension contributing companies will grow with the economy and hire additional personnel to meet the growing demand for these companies services.
What do you think?
And as the economy stabilizes and continues to grow those companies that are not contributing there contractual amount will (hopefully) become more stable and pay they full amount. This will further stabilize the fund and possibly even allow it to become over-funded at some point in the future.
There is also the possibility that as the economy grows and unemployment declines that the pension contributing companies will grow with the economy and hire additional personnel to meet the growing demand for these companies services.
What do you think?
I stated above the and/or a significant increase in contributor:retiree ratio was another option to help the fund.
However, that isn't the way it is trending. The number of folks contributing has fallen drastically over many years. People are living longer as well. Have you looked around to see the average age of those still working at YRCW (for example).....lots of 20+ year teamsters.
I don't believe it is going in the right direction. Having record returns and the fund just treading water is a strong indicator of the problem.
I thought breaking it down a per person dollar amount would help folks visualize just how poor shape the plan is in.
You've got less than $90K saved for each current retiree. You have 3.66 people each drawing out $1123/mo (49K per year total) for each person contributing an average of less than $12.5K.
EX396, I think the trend you are speaking of is changing. The new trend, as I see it, is a slow reduction in retirees and an increase in fund capital. I am basing this new trend on the numbers from the Central States Pension Fund reports from September 30, 2013 and June 30, 2014.
According to the 2013 report there were 212,709 retirees in August 2012. That number dropped to 208,936 retirees on May 2014 according to the 2014 report. That is a reduction of 3,773 retirees or 1.75% over 21 months.
According to the 2013 report there was $17,765,259,000.00 in the pension fund on Dec. 31, 2012. According to the 2014 report there was $18,735,388,000.00 in the fund on June 30, 2014. That is an increase of $970,129,000.00 ($970 million) or 5.46% over that 18 months.
https://tdu.org/sites/default/files/CSPFFinancialInfoPension2nQtr2014.pdf
https://tdu.org/sites/default/files/CentralStatesFinancialThirdQtr2013.pdf
The funds capital increase is due to the very high Rate of Return in the stock-market (no argument there). Put the point I am trying to make is that the pension fund has more money now than it did 18 months ago and less retirees than it did 21 months ago. This may or may not be the start of a trend but it is a definite improvement in the pension funds stability.
According to the 2013 report there were 212,709 retirees in August 2012. That number dropped to 208,936 retirees on May 2014 according to the 2014 report. That is a reduction of 3,773 retirees or 1.75% over 21 months.
According to the 2013 report there was $17,765,259,000.00 in the pension fund on Dec. 31, 2012. According to the 2014 report there was $18,735,388,000.00 in the fund on June 30, 2014. That is an increase of $970,129,000.00 ($970 million) or 5.46% over that 18 months.
https://tdu.org/sites/default/files/CSPFFinancialInfoPension2nQtr2014.pdf
https://tdu.org/sites/default/files/CentralStatesFinancialThirdQtr2013.pdf
The funds capital increase is due to the very high Rate of Return in the stock-market (no argument there). Put the point I am trying to make is that the pension fund has more money now than it did 18 months ago and less retirees than it did 21 months ago. This may or may not be the start of a trend but it is a definite improvement in the pension funds stability.
I have many opinions on the state of our pension situation, but thinking about it just depresses me and makes me angry. The fact that the government put regulations into effect that forced plans to pay out monies that should have been saved for the leaner times, and then when that blew up they are now not willing to backstop the plans that they helped to place in this spot, burns me no end. See, that run-on sentence is an example of how upset I get! And since as of now nothing I can say or do really can have much impact, I am waiting for word from Central States about just how bad things are going to get. It's not so much that nobody cares or has an opinion, more like banging your head against a wall only gives you a headache and doesn't hurt the wall.
I'm not sure if I agree or not., but I do care. You and EX396 have taken the discussion to a level that's way out of my league. You and I started out arguing over the way the Kline-Miller Pension Reform bill was enacted. I still disagree with you on that. But I now see that you are knowledgeable on pension and funding issues so I quietly read and respect your opinions.....................As for EX396, he does bring up some good points. But IMO he has lost all credibility on this forum with his biased posts against the union and the our MEPFs. As I read his posts I expect to find comments aimed at attacking the Teamsters.
D
Deleted member 5115
Guest
Good...I mean great post.
Teamsters have multiple pension plans. The only one that I that I have posted negative comments about regarding its' fiscal health is Central States. For example: this anti-Teamster poster believes that Teamster MEPF known as Western Conference is in much better shape than CSPF.
Just because you disagree with my biases doesn't mean my facts aren't facts. I believe I make it pretty clear when stating opinion as I'll use words like "in my opinion", "I believe" or "I think". I have no issue what so ever with sharing opinion and prefacing it as such. Should clear up any confusion about my credibility to those on the fence about such matters. If it's clear to you that you can't believe what I say simply because I said it, then it logically follows that nothing I say will change your mind.
That may or may not be true, I don't know. I have stopped reading the FedEx forum in which some of your posts attack the Teamster's pensions in general not just the CSPF. You have bad mouth the Teamsters for not insisting that Congress change funding rules years ago. Why should they change a system that has been working well for over 50 years?
The government created the CSPF problem not the Teamsters union or the fund's trustees. The Teamsters have been trying for years to have the consent decree lifted. The consent decree which turned control of the CSPF investments to Wall St resulting in billions of dollars in losses........The IRS added rules that forced the pension funds to raise accruals and adjustable benefits or lose the excess funds. Yet you blame the Teamsters for not insisting that the government change the rules. Only 10% of all MEPFs are Teamster funds but you blame the Teamsters. Your bias is obvious to me.
You have blamed the Teamsters union for not renegotiating contracts or work some magic to correct a problem that Congress has created and only Congress can fix.
You are correct, your posts on other threads have led me to believe you are only here to discredit and slander the Teamsters union. I said weeks ago that you had an anti Teamster agenda. You can't unring the bell. I expect nothing positive from your opinions.
Nope. It's not the Teamsters' (organization) job to insist congress change the funding rules. It was the Teamster members' job to insist their representation bargain to ensure the members' needs were met. Instead collectively the group seemed to be too concerned with whether or not Johnny had to wear a dirty safety vest to make a pick up.
Crystal said:
Congress didn't create the problem. Your Teamsters created the problem by promising what they promised at the negotiated contribution rates given the :
: sandwich they've been trying to sell to people not buying. Read: declining membership, too large of pension obligation given contribution levels.Congress didn't create the problem. Your Teamsters created the problem by promising what they promised at the negotiated contribution rates given the ::
Make up your mind because you can't have it both ways. You posted earlier today that the Western States fund was in good shape. There are a lot more Teamster funds that are in good shape. But none of those healthy funds are under the federal consent decree. Unlike the CSPFs all the other funds including the Western States funds have control of their investments and were able to weather the 2008 market losses. They didn't have to pay millions in brokerage fees for the high risk investment losses made by Wall St. firms who are still forced upon them under the terms of the consent decree.
Teamster MEPFs account for only 10% of the total MEPFs in the USA. But according to your logic it's only the Teamsters fault that 150 of those 2,000 funds are in trouble...........I think not
Not sure why I try, but here it goes anyway:
(1) I haven't wavered on my stance.
(2) Read what I post, not what you think I mean. I said specifically "Western States is in much better shape than CSPF" That isn't the same as saying Western States is in "Good shape"
(3) Why do you believe those "healthy funds" aren't under the federal consent decree? I think if you decide to really look into that issue with open eyes, you will see that millions in brokerage fees wasn't/isn't the problem. No matter how convenient the "blame Wall St" mantra.
Crystal said:
No, following my logic it is the fault of the members of those funds that they allowed their representation to negotiate and accept the things they did. In this thread we are talking about the CSPF. If you want to debate why the 149 funds are in trouble we can do that too.