WASHINGTON – Today, Cleveland Iron Workers Local 17 Pension Fund announced that its retirees will be the first in the country to face devastating pension benefit cuts as a result of the Multiemployer Pension Reform Act of 2014, which allows ongoing plans that are severely underfunded to take the unprecedented action of cutting retiree pension benefits. The cuts will go into effect on February 1, 2017, and are the result of a participant vote taken after the U.S. Treasury Department’s December approval of the plan’s application to cut pensions.
“These cuts are particularly unfair and cruel to 336 of the Fund’s retirees who labored for decades constructing Cleveland’s skyscrapers,” said Karen Ferguson, director of the Pension Rights Center. “It is these retirees who will be affected the most – and will see their pensions cut by 30 to 60 percent.” The plan’s participants voted by a 2-to-1 margin in favor of the cuts. This is not surprising since four-fifths of the plan’s participants stand to lose little or nothing as a result of the cuts. More than half of the Fund’s 1,938 participants did not vote.
“Retirees like Walter Overstreet and Larry Burruel performed dangerous work counting on the promise of their pensions and are now worried that they will be not able to afford their medical and other bills. It is simply wrong that after their years of backbreaking work, they have been left out in the cold.”
In December, the Treasury Department approved the Iron Workers Local 17 MPRA application to cut retiree pensions. MPRA requires all plans that have been approved by the Treasury Department to hold a vote of all plan participants to determine whether cuts can proceed.
The Treasury Department approved the Local 17 application based on the assumption that the cuts would ensure that the Fund had more than a 50 percent chance of surviving for 30 years. In our comments on the plan’s application, we noted that Local 17’s collective bargaining contracts do not require new contractors to pay into the Fund. If new money doesn’t come into the Fund and its projections are wrong, participants who voted for the cuts are sure to face future cuts of their own.
The results of the Local 17 vote underscore the urgent need for a comprehensive bipartisan solution to the problems facing severely underfunded multiemployer pension plans. MPRA was a misguided law that did nothing to address the fundamental problems facing the multiemployer pension system. Its cutback provisions must be repealed.
The Treasury Department’s approval of the Local 17 application and subsequent participant vote to cut retiree pensions could open the floodgates to approvals of other retiree cutbacks. Currently, four applications to cut retiree pensions are pending with the Treasury Department and nearly 70 other plans are in “critical and declining” status and eligible to make cuts.
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