The New York Teamsters Road Carriers Local 707 Pension Fund reportedly has officially run out of money as the federal insurance company has taken over payments to retirees at a reduced rate.
Sadly, the Pension Benefit Guaranty Corp. (PBGC) itself is also running out of cash funds to cover union pensions, its director said Wednesday.
The federal agency’s limited liquidity "is part of the spiraling U.S. pension crisis that threatens to wipe out the retirement savings of more than a million Americans," the New York Daily News reported.
The New York union’s pension fund, covering 4,000 retired truckers across the city and Long Island, went belly up just last month, the Daily News reported.
As it has with 70 other bankrupt union pensions, the PBGC stepped in. According to PBGC officials, the average 707 retiree was getting $1,313 a month from the union pension fund, the newspaper said. Now that the fund is broke and dependent on PBGC’s insurance payouts, the average monthly take home is $570, agency officials said.
But the PBGC only has about a decade’s worth of cash in its coffers, director Tom Reeder warned the Daily News.
“We’re projected to run out of money in eight to 10 years. Many union pension plans are projected to run out in 20 years,” he explained. “There are going to be people in plans who run out of money after we do, and there will be no water in the well.”
PBGC has $2 billion in assets built up over 42 years, Reeder said. Last year, when PBGC was supporting 65 bankrupt plans, it paid out $113 million a month, agency officials said. Local 707 costs PBGC $1.7 million a month, agency officials said.
"All of the critically underfunded pensions are multi-employers plans — meaning they were created by various companies that all employed union workers across the same industry. The Teamsters, predominantly a trucking union, has seen its pension funds devastated by stock market crashes and a shrinking emloyer base," the newspaper reported.
If the PBGC itself were to go belly up, it would have to rely solely on what it earned from incoming premium payments. "Retirees could expect to see their benefits slashed by 80%. In other words, less than one-eighth of the $570 average check PBGC is able to give Local 707 retirees now," the News said.
Ironically, Teamsters 707 and other Teamster pension boards attempted to submit plans that would have cut benefits in order to prolong payments to retirees but those plans were universally rejected by the Obama administration, Zero Hedge reported.
"The Obama administration is in denial about the necessity of cutting pension benefits under the Multiemployer Pension Reform Act of 2014 to try to put distressed multiemployer plans on sounder financial footings and make them more sustainable. It must face reality and order the Treasury Department to stop blocking action," Pensions and Investments online reported late last year.
The Daily News earlier this week also pointed out that the national pension nightmare is far from over.
"Also on the brink of drying up are the pensions for two Teamster locals — 641 and 560 — in New Jersey, union officials said. Plus 35,000 Teamster members upstate who are part of the money-hemorrhaging New York State Teamsters Pension Fund," the newspaper said.
"Bigger than all of New York’s Teamster locals combined is the Central States Pension Fund — another looming financial disaster that could leave 407,000 retirees without pensions across the Midwest and South. And there’s still more beyond that, in various industries, officials say."
(Newsmax wire services contributed to this report).
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