WASHINGTON – The Pension Rights Center joins hundreds of thousands of retired truck drivers, spouses, widows and active workers in praising the U.S. Department of the Treasury for rejecting the Central States Pension Fund’s application to cut its retirees’ pensions.
“The Treasury Department decision is a victory for democracy,” said Karen Friedman, the Center’s executive vice president and policy director.“Where the legislative process failed retirees with the passage of the Multiemployer Pension Reform Act (MPRA), the regulatory process worked to protect their interests. The Treasury Department made the legally-sound and morally-right decision that the Central States Pension Fund failed to meet MPRA’s conditions.”
Special Master Ken Feinberg’s letter to the Central States Pension Fund specifies that the U.S. Treasury Department rejected the application because the “rescue plan” failed three key tests required by MPRA: the benefit cuts were not equitably distributed; the notices provided to participants were not comprehensible to an average person; and the investment return assumptions used in the application were not reasonable and did not guarantee the plan’s long-term survival.
“While the Central States Pension Fund has long-term funding problems that must be addressed, this decision is a vindication of what the Center has said all along – the application was unjust and clearly flawed,” said Friedman. “This decision has bought some needed time to find the correct – not simply the expedient – solution to the funding problems with the Central States Pension Fund and other multiemployer pension plans. We commend the Treasury Department for its rigorous analysis and respect for the law.”
In light of the Treasury Department’s decision, the Center is calling on lawmakers of both parties to join workers, retirees and all stakeholders to work together to repeal the provisions of MPRA that allow retiree pensions to be cut and find realistic solutions that save both multiemployer plans and the Pension Benefit Guaranty Corporation.
“I feel as if a huge weight has been lifted,” says Greg Smith whose pension would have been cut by more than 50 percent. “The pension that I worked all those years for will continue to be there for me.”
The rejection of the cuts would not have been possible without the tremendous grassroots effort led by concerned retired Teamsters throughout the country. Upon learning of the possible pension cuts, retirees quickly sprang to action by forming more than 60 regional committees to inform other retirees about the proposed cuts, to urge Congress to consider legislation that would prevent the cuts, and to urge the Treasury Department to reject the Central States application.
The Treasury Department’s decision applies only to the Central States Pension Fund. Unless MPRA’s retiree cutback provisions are repealed, other plans in critical and declining status will be able to apply to make similar retiree pension benefit cuts. Already four other pension plans have filed applications with the Treasury Department to cut retiree pensions and dozens more are eligible to do so.
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