"This Is Going To Be A National Crisis" - One Of The Largest U.S. Pension Funds Set To Cut Retiree Benefits

Tyler Durden's picture

A dark storm is brewing in the world of private pensions, and all hell could break loose when it finally hits.

As the Washington Post reports, the Central States Pension Fund, which handles retirement benefits for current and former Teamster union truck drivers across various states including Texas, Michigan, Wisconsin, Missouri, New York, and Minnesota, and is one of the largest pension funds in the nation, has filed an application to cut participant benefits, which would be effective July 1 2016, as it "projects" it will become officially insolvent by 2025. In 2015, the fund returned -0.81%, underperforming the 0.37% return of its benchmark.

Over a quarter of a million people depend on their pension being handled by the CSPF; for most it is their only source of fixed income.

Pension funds applying to lower promised benefits is a new development, albeit not unexpected (we warned of this mounting issue numerous times in the past). For many years there existed federal protections which shielded pensions from being cut, but that all changed in December 2014, when folded neatly into a $1.1 trillion government spending bill, was a proposal to allow multi employer pension plans to cut pension benefits so long as they are projected to run out of money in the next 10 to 20 years. Between rising benefit payouts as participants become eligible, the global financial crisis, and the current interest rate environment, it was certainly just a matter of time before these steps were taken to allow pension plans to cut benefits to stave off insolvency.

The Central States Pension Fund is currently paying out $3.46 in pension benefits for every $1 it receives from employers, which has resulted in the fund paying out $2 billion more in benefits than it receives in employer contributions each year.

As a result, Thomas Nyhan, executive director of the Central States Pension Fund said that the fund could become insolvent by 2025 if nothing is done. The fund currently pays out $2.8 billion a year in benefits according to Nyhan, and if the plan becomes insolvent it would overwhelm the Pension Benefit Guaranty Corporation (designed by the government to absorb insolvent plans and continue paying benefits), who at the end of fiscal 2015 only had $1.9 billion in total assets itself. Incidentally as we also pointed out last month, the PBGC projects that they will also be insolvent by 2025 - it appears there is something very foreboding about that particular year.

As the Washington Post writes:

Ava Miller, 64, and her husband, Ed Northrup, 68, could see their combined monthly pension income cut to about $3,000 from the nearly $7,000 they receive now, according to a letter they received from Central States in October.


If the cuts go through, Miller, who worked as a dispatcher in Flint, Mich., said they will need to dip into their savings to help cover their $1,300 mortgage payment, heating bills and trips to visit her 84-year old mother. Northrup, a retired car hauler, has started applying for truck driving jobs that could supplement their potentially smaller pension payments.


What makes the cuts more painful, Miller said, is that she took pay cuts so that the company could continue making contributions to the pension.


"I did everything I was supposed to," Miller said, adding that she and her husband made extra payments on their car loan to cut down on their monthly bills after they received letters in October informing them of the potential cuts.

All hope is not lost, however.

Democratic candidate Bernie Sanders has proposed a bill that would repeal the measure allowing cuts, and instead calls for the government to provide assistance to troubled pension funds.

In other words, another bailout.

Which brings us to the current juncture, where we remind everyone that the governments own safety net, the PBGC has itself become insolvent, and according to CNN, projects that more than 10% of the roughly 1,400 multiemployer plans, covering more than 1 million workers fits the current criteria to be able to apply for benefit cuts for participants.

"This is going to be a national crisis for hundreds of thousands, and eventually millions, of retirees and their families. It's going to open the floodgates for other cuts." said Karen Friedman, executive president of the Pension Rights Center.


We can't help but wonder that as more pension funds become insolvent, and more and more participants are forced to take reductions in benefits, whether helicopter money won't soon become a reality for the United States, even before it becomes one in Japan. Especially if it is spun by some opportunistic politicans as the "only hope" for America's workers to preserve some of their retirement savings.

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Cognitive Dissonance's picture

You ain't seen nuttin yet. Wait till they do this to Social Security.

And they will.

eatthebanksters's picture

Brought to you by Barry, Ben and Janet...

0b1knob's picture

Screwed by the Teamsters.


38BWD22's picture




My father-in-law in Peru (95 years old) has been participating in demonstrations for years demanding that the Peruvian government pay the pensions owed to a couple of million people there.

Seems that South America is not much worse than the USA....

JRobby's picture

Soon they will all see the truth" The USA is a 3rd world country. Fucked banana republic. So the riots that are coming will seem normal.


A bunch of old people rioting...should be awesome

Richard Chesler's picture

Feel the burn.


Social security scam right behind it...


Taylor's picture

This is Donald Trump's most shocking statement yet,

However the mainstream media isn't saying a word about it!

What are they really trying to cover up?


Stuck on Zero's picture

Do the union benefits include Euthanasia?

J S Bach's picture

"The Central States Pension Fund is currently paying out $3.46 in pension benefits for every $1 it receives from employers."

I know these guys and gals worked hard all their lives with the naive belief in their retirement pensions, but this numerical discrepency says it all.  It's not there, folks.  The Ponzi scheme always runs its course.  One just has to hope that they're not on the fat end of the pyramid when it comes crashing down.

DontWorry's picture

Pensions are not a ponzi scheme, they are a trust fund.  The companies were allowed to not fully fund the pension.  Now the money isn't there to pay the trust fund beneficiaries.

J S Bach's picture

"The companies were allowed to not fully fund the pension."

I think that roughly defines a Ponzi scheme... not enough money coming in as going out.  Unless policed by a highly moral citizenry (something we surely do not have today)... all social "plans" of this sort will inevitably run out of funds until the suffering sheeple humbly regain the spiritual high ground.  We are still in the downward cycle with the bottom yet to be reached.

Freddie's picture


The Teamsters Pension Fund bankrolled Moe Green's casino.   I am sure the pension money also bankrolled a lot of things including Meyer Lansky isrihell charities.

"I talked to Barzini"

wee-weed up's picture

Where's ol' Jimmy Hoffa when you need him?

SafelyGraze's picture

social security, like medicare, is one of the greatest triumphs of civilization

with love,
barry sanders 

Tom Servo's picture

Maybe these douche nozzles who get paid almost 85k a year for converting oxygen into co2 will be 2 less people that come to florida to fuck shit up for all of us natives for 4 months out of the year.


1300 a month mortgage, when you're retired is just fucking stupid, bet they didn't miss a chance to refi and pull out some home equity....


in conclusion, fuck these people.


ultraticum's picture

Muppets, meet reality.

And these douche nozzles also had a car payment at their advanced age.  Amerika is a nation of mostly economic retards.

COSMOS's picture

Hey but I bet you the Pensions in Israel will be paid in full with loan guarantees made by the USA.

cheka's picture

tom servo has penis envy over a truck driver getting 85k?

says more about tom than the drivers

COSMOS's picture

'Do the union benefits include Euthanasia?'  Not to worry the millions of rounds of ammo bought by the dept of homeland security will make sure that DC is safe from any marauding wheel chair bound senior citizens demonstrating for their pensions, who will be shot to death as the cops will say they feared for their lives being run over.

J Jason Djfmam's picture

Let those Chink kids get their own bennies.

zuuma's picture


No shit! WTF having a huge mortgage in your 60s? No sympathy. Unions are gangsters. That money went up noses and through colons years ago. Whiskey, hookers, Mercedes company cars, you name it. And that's private pensions.

Honest pension? Maybe. But how nice for ZIRP these past 8 years. No yield on "safe" pension-quality investments.

Pubic pensions? Fuck em. I've heard from public employees my whole life how low paid they are. And "if I were in the private sector, i'd be making..." bullshit. Public employees are unemployable. They'd be on the sidewalk with a bag around a quart of steel reserve.

Add to that the perception that savings are unnecessary, so new cars every 3 years, retire at 55 on the public tit, Winnebago.

Not one shit given here for vaporizing pensions.

conscious being's picture

Where's Jimmy Hoffa? Last I heard, he was under the endzone in Giant's Stadium in the Meadowlands, NJ.

Mr. Ed's picture

"...policed by a highly moral citizenry ..." hahaha!

First the citizenry would have to pay attention to what's going on around them.

RichardParker's picture

Companies didn't have any problem takeing pension profits and funneling them into corporate earnings when the gettin' was good.


xavi1951's picture

GO AWAY! Do not promote some guys BS book. I've had 5 websites and they don't cost more than $35 each per year. A website is cheap! ZH members already know what is going to happen without listen to some " Professor" drone on and on about it and then pitch his books for sale....

jwoop66's picture

Wake the fuck up.  Pensions are a huge vote buying /money making racket.   You tell someone that if they will give you money now, you will provide for them thirty/forty years from now.  Even better if you continue to give them money for that thirty or forty years.   


ITS A FUCKING RACKET!!! get it?  You've been had.  Swindled. Hoodwinked.  They stole the money and you aint getting what you think you deserve.   


Now what are you going to do is the question?   Are you going to support the govt/ union solution?  Vote for them and they'll see you get your money....until you don't.... extract yourself from the fraud.


Don't vote for them.  Don't give them any of your money.   Pay off your house and save your own fucking money.

PT's picture

But but but ... stocks always go UP!!!!  Plus the nice salesman assured me that by the time I am old enuff, everyone will be retiring at age 55 so i should donate, errr, I mean invest extra so I can retire at 55 too!  And I NO he woz telling the truth becoz mainstream media was ALSO telling us that everyone would retire at age 55...



... but even at that tender young age, and even though at that stage I classified myself as "naive", I'd already seen enough to know that the promises meant nothing and it was all lies.  Hint 1:  The instant they make it compulsory, there is no incentive for them to perform.

jwoop66's picture

Computer is fucking up.

jwoop66's picture

any way to delete redundant posts?

jwoop66's picture

Ha! downvotes?   I'm a guy having slow computer problems suddenly, and you trash me?!    Glad I ain't drowning.....

booboo's picture

Why is someone pushing 70 paying a mortgage?

83_vf_1100_c's picture

Divorce? Been a renter the majority of their life and thought a sub prime mortgage was their ticket? 50% of the folks out there are on the left side of the IQ bell curve. Don't be shocked at what half or more of the population does.

If you don't have skills at 60 that will make you an independent living and some savings outside the banks and govt programs...start looking for a nice triple wall cardboard box. This shit show is going down. The Mexicans are gonna start flooding the border, in a Southerly direction. So we have that going for us.

cheka's picture

okay people -- there are tens of thousands affected by this

ignore the stupid sh-t about paying a mortgage


JohnG's picture

I have a freind who is 86 serciving a mortgage because she took it to pay for her cocke freak daughters legal fees.  Didn't work, still went to prison, but she owes abt 65K on a 100K property.......

Twee Surgeon's picture

What is a Mortgage and what is it's history would be a better question. Death Grip.....http://www.urban75.net/forums/threads/mortgage-means-death-pledgeor-deat...

Calmyourself's picture

Wait until medicare/medicaid gets seriously triaged, bodies in the street, 4th world here we come.

Pickleton's picture

"Pensions are not a ponzi scheme, they are a trust fund. "


Umm, No.  Given that they're typically funded to ludicrously criminal %s, relying on ever increasing numbers of suckers to pay out the skittle shitting unicorn promises they make, they're PONZI, not a trust.

daveO's picture

The article partially blames the market crash of '08 for the fund's losses. So, the fund only holds up until 2025 if the fake post-2008 market holds up.

greenskeeper carl's picture

That's an important point. How long will they be able to pay out when the markets drop 40-50%?

jwoop66's picture

georgebush done it...

HardlyZero's picture

Parents will have to square-up and move back with kids.

Kids will have to suck-it-down and move back home.

3 and 4 generation households will become popular again.

It will become mainstream trend.


Will Gerald Celente cover this new trend...story might get legs.

WillyGroper's picture

the reunion of the fambly unit would be the best thing EVER for this country.

by the looks of many of these posts division always works...don't look behind that curtain.

we're going to hang seperately if we don't hang together.

JohnG's picture

You should meet my senile, mean, alzheimer's stricken mother.  I realize it's her medical condition and not her fault, but it is very fucking hard to deal with. 

It's taking a huge toll on me and my wife.

I deal with it because she's my mother.

jwoop66's picture

..as people have since the dawn of time.   



Scooby snack for you.  

WillyGroper's picture

Sorry about your mother.

I know, it's almost the hardest thing you'll ever do & death is a tender mercy for all involved.   Been there, Parkinsons with my mother.

At least you have your wife to help you.  I was sandwiched & on call 24/7. 


Detach if you can, it's not your mother. 

You'll have no regrets.