In response: Wall Street, Congress at fault in failure of Teamsters’ pension fund
The Feb. 25 article in the News Tribune, "Report: Teamsters pension fund cuts would affect thousands in (Minnesota and Wisconsin)," was so incomplete it may have misled readers. The article, originally produced by the Star Tribune in Minneapolis,...
The Feb. 25 article in the News Tribune, “Report: Teamsters pension fund cuts would affect thousands in (Minnesota and Wisconsin),” was so incomplete it may have misled readers.
The article, originally produced by the Star Tribune in Minneapolis, ignored how the federal government’s negligence contributed to the dilemma of the Teamsters’ Central States Pension Fund and other multi-employer pension funds.
The federal government broke a promise to members of all multi-employer pension funds, including the Central States Pension Fund. Congress created the Pension Benefit Guaranty Corp. in 1974 to insure private pension benefits with premiums paid by employers. The corporation is a federal agency. Congress and the U.S. Departments of Labor, Treasury and Commerce so badly neglected, mismanaged and underfunded this federal agency that its managers warn the corporation may be insolvent in 10 years.
In 1982, a federal court decided the U.S. Department of Labor should oversee the Central States Pension Fund and that Wall Street financial institutions like Goldman Sachs should manage its assets. The Department of Labor obviously failed in its oversight role over the past 35 years; and forcing the Teamsters union to give up investment control to Wall Street firms was a mistake. After all, even corrupt unions enriched the middle class in the ’50s, ’60s and ’70s; corrupt Wall Street firms have impoverished the middle class ever since.
Further, the article failed to inform readers how the Central States Pension Fund is funded, which may have left readers wondering whether Teamsters deserve to have their pensions cut by up to
60 percent. They don’t. The fund is funded by its members, Teamsters who chose pension contributions over wages. (Employers are indifferent regarding how their costs of labor are divided between wages and pension contributions.) Teamsters earn their pensions.
Today’s retired Teamsters did what they were supposed to do. Those in control of the Central States Pension Fund did not. The fund was financially healthy just nine years ago; its unfunded liability was manageable. If not for Wall Street greed and management dysfunction, the fund could fully meet its future pension obligations even with more retired members than working members. Thus, retired Teamsters do not deserve poverty.
Finally, there was no challenge to U.S. Congressman John Kline’s statements in the article. Yes, we have a “pension crisis”; hundreds of pension funds are on the brink of insolvency. Kline’s solution, the Multi-employer Pension Reform Act, is not only inadequate; it is counterproductive. Kline said opponents of the reform act have failed to propose “a practical alternative.” Opponents did not have an opportunity to propose a practical alternative when Kline slipped the reform act into a budget bill in 2014 without a hearing. The reform act has made it more difficult for proponents of fair pension reform to work collaboratively with pension fund managers, employers, Congress and federal agencies to solve the pension crisis.
The Multi-employer Pension Reform Act is a simpleminded solution: A pension fund has an unfunded liability? Then cut benefits so it doesn’t. Our national pension crisis is complex and multifaceted, and it requires a comprehensive set of solutions. A sharpened hatchet may be one of the necessary tools, but it can’t be the only tool. If it is, then we will bring devastating hardship to tens of millions of pensioners, their dependents and beneficiaries, and their communities. We will further impoverish our middle class, and we will erode our national economy.
The Feb. 25 article could have been educational and constructive. It could have encouraged first discussions toward achieving a consensus on real solutions to our national pension crisis. Instead, it merely invited readers to pick a side in a fight between those who (mis)managed the Central States Pension Fund and those who depend on it for their living expenses in retirement. Such simplistic journalism was a disservice to those who rely on our newspapers to help them develop informed opinions.
Ken Campbell of Shoreview, Minn., is an independent consultant for Campbell Professional Services.