NY Teamsters Pension Becomes First To Run Out Of Money As Expert Warns "Pension Tsunami" Is Coming

Tyler Durden's picture

The New York Teamsters Road Carriers Local 707 Pension Fund has won the unfortunate award for "First Pension to Officially Run Out of Money."  According to the New York Daily News, and a host of angry former truck drivers who've had their pension benefits slashed, the Pension Benefit Guaranty Corp. (PBGC) has officially been forced to step in and take over payments to retirees of the Local 707, albeit at a much lower rate.

Teamsters Local 707’s pension fund is the first to officially bottom out financially — which happened this month.

 

“I had a union job for 30 years,” Chmil said. “We had collectively bargained contracts that promised us a pension. I paid into it with every paycheck. Everyone told us, ‘Don’t worry, you have a union job, your pension is guaranteed.’ Well, so much for that.”

 

“It’s a nightmare, it has just devastated all of our lives. I’ve gone from having $48,000 a year to less than half that,” said Chmil, one of five Local 707 retirees who agreed to share their stories with the Daily News last week.

 

“I don’t want other people to have to go through this. We need everyone to wake up and do something; that’s why we’re talking,” said Ray Narvaez.

Of course, the 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...better that the pensions just run out of cash completely.  Per Pensions & Investments:

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.

 

So far the department, required under the act to approve proposed reductions, has rejected proposals by the Teamsters Central States, Southeast & Southwest Areas Pension Plan and the Road Carriers Local 707 Pension Fund.

 

Ten plans total have applied for cuts, including the New York State Teamsters Conference Pension and Retirement Fund, Syracuse, whose Aug. 31 application is too new to be listed on the Treasury's website.

 

The Road Carriers 707 application stated that the plan projects it will become insolvent in February — only about five months away — absent suspension of benefits.

 

As desperate as the plan's financial situation appears to be, the Treasury denied the application.

And while the Local 707 pension was the first to dry up, it certainly won't be the last...

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.

 

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.

Teamster

 

Meanwhile, under the maximum benefits provided by the PBGC, many former Teamsters, like Ray Narvaez, said their monthly retirement checks have been slashed by two-thirds.

Then Narvaez, like 4,000 other retired Teamster truckers, got a letter from Local 707 in February of last year.

 

It said monthly pensions had to be slashed by more than a third. It was an emergency move to try to keep the dying fund solvent. That dropped Narvaez from nearly $3,500 to about $2,000.

 

“They said they were running out of money, that there could be no more in the pension fund, so we had to take the cut,” said Narvaez, whose wife was recently diagnosed with cancer.

 

The stopgap measure didn’t work — and after years of dangling over the precipice, Local 707’s pension fund fell off the financial cliff this month. With no money left, it turned to Pension Benefit Guaranty Corp., a government insurance company that covers pension.

 

Pension Benefit Guaranty Corp. picked up Local 707’s retiree payouts — but the maximum benefit it gives a year is roughly $12,000, for workers who racked up at least 30 years. For those with less time on the job, the payouts are smaller.

 

Narvaez now gets $1,170 a month — before taxes.

Of course, as the Central States Pension General Counsel notes, the real "pension tsunami" will come when the massive "municipal and state plans go down next."

The same crisis now hitting Local 707 has been stewing among numerous Teamster locals around the country for the past decade, he said, and that includes in upstate New York.

 

The trucking industry — almost uniformly organized by Teamsters — has suffered enormous financial losses in its pension and welfare funds due to a crippling combination of deregulation and stock market crashes, Nyhan said.

 

“This is a quiet crisis, but it’s very real. There are currently 200 other plans on track for insolvency — that’s going to affect anywhere from 1.5 to 2 million people,” said Nyhan. “The prognosis is bleak minus some new legislative help.”

 

And it’s not just private-sector industries that are suffering, he added.

 

“Municipal and state plans are the next to go down — that’s a pension tsunami that’s coming,” he said. “In many states, those defined benefit plans are seriously underfunded — and at the end of the day, math trumps the statutes.”

We're looking at you Illinois...

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NugginFuts's picture

BULLISH! BAILOUTS FOR EVERYONE!

Can't let Captain Rubberhose run out of pension money!

SomethingSomethingDarkSide's picture

Hiking Rates into failing pensions?  We've got a regulator for that!

NidStyles's picture

Public Unions are a criminal enterprise. I don't care if the criminals get their hedges clipped.

TeamDepends's picture

But, there's still checks in the checkbook!

Countrybunkererd's picture

That is perfect!!

don't worry we got this.  signed, old yeller. 

tmosley's picture

Raising interest rates to something about like what the market would set them at, say 20-30%, would fix quite a lot of things in this country.

Loads of upheaval, sure, but it's better than just continuing to eat the seed corn until its gone and everyone starving to death as a result.

Countrybunkererd's picture

zero percent interest rate is like a speed boat creating a MASSIVE wake as it zips across the water.  The needed rise in interest to normalize what they did will kill the engine and that massive wake will overtake the boat.  But, we can put on life preservers and hope the boat floats or as you said "eat the seed corn" and we all die.

Escrava Isaura's picture

Every retirement scheme will fail because it is based on “forever” growth, so, every pension fund is a fraud. In the mean time, these funds are living larger of the worker’s savings. As long as they can get away, who can blame these funds.

 

krispkritter's picture

 "I didn't see this coming!" Stevie Wonder

Implied Violins's picture

"I saw this coming."

Ray Charles, RIP.

nuubee's picture

“I had a union job for 30 years,” Chmil said. “We had collectively bargained contracts that promised us a pension. I paid into it with every paycheck." 

So you worked at a job for 30 years and what,you expect other people to pay for your and everyone in the same situations next 30 years? Fuck off and die.

Sorry boomers, your bill is coming due. Lay in your bed.

Mustafa Kemal's picture

"you expect other people to pay for your and everyone in the same situations "

I dont think he expected anything but a return on the investment. Without ZIRP most of these problems would not appear. As for your compassion

" Fuck off and die."

Good luck. You and yours are sure gonna need it.

30 years and $12K per year, nice. Somebody made out like bandit and it sure wasnt him or probably you. Can you guess who?

nuubee's picture

A return on the investment requires people treating their retirement as an investment to begin with. You can't hand money over to union officials and expect to be taken care of 30 years later when the financial situation has changed and the people who promised you a house in the bahamas are all dead. They paid into a ponzi scheme and got what they deserved from it.

Hard times create strong men: (Great depression generation)

Strong men create good times: (WW2 generation)

Good times create weak men: (WW2 generation births Baby Boomers)

Weak men create hard times: (Baby Boomers come of age)

stizazz's picture

Cute, but half a cigar. The truth is the American CURSE is relentless.

http://biblicisminstitute.wordpress.com/2014/07/17/is-america-cursed/

greenskeeper carl's picture

How much money was he forced to pay into this Union as a condition of employment? Might he be in a better situation if he had kept that money? This seems like a case study in why unions suck. All they'd pis funnel money from the bottom to the top.

philipat's picture

Thank you to The Fed. Pensions will no longer exist beyond this decade except for the 1% and Senior Federal Gubmin workers because even State and Local schemes are now going under (although are more likely to get bailed out) It's only fair...

xythras's picture
xythras (not verified) philipat Mar 1, 2017 4:06 AM

They should pray hard to GOD EMPEROR TRUMP, maybe he'll pull out a magic trick.

Wait a minute.. are they from NY City, unionized. Well, they voted democrat and they are fans of illegal aliens.

SCREW THEM. 

Illegal Immigration Has Dropped 27% Since Trump Took Office.

http://dailywesterner.com/news/2017-02-28/illegal-immigration-has-droppe...

 


LowerSlowerDelaware_LSD's picture
LowerSlowerDelaware_LSD (not verified) xythras Mar 1, 2017 11:33 AM

xythras!... You're hitting the wrong vote button with your 10 self up-voting accounts. Fire your up vote accounts, fast!

BTW - your spam article link has nothing to do with the ZH article that you are commenting on.

Antifaschistische's picture

These schemes are always some variation of "I paid in my $100 per/paycheck for 30 years, now where's my $4000 per/month pay check for the next 30 years"

No matter how you slice it, eventually math wins.

PS.  Ray, you look like a healthy guy.  you've probably got 12 good driving years left in you.  If you longhaul come visit us in Tx, I'll buy you a beer.

 

Anon2017's picture

The PBGC guarantees much lower benefits for multi-employer plans than for single employer plans for workers making the same wages and working for the same period of time. Historically, the Teamster Union pension funds were much more corrupt than most. Now the chickens have come home to roost.

Offthebeach's picture

The company one keeps. You join a "crew" that shakes down extorts companys to use "crew" labor. The drivers were all fine and fat with that. The crew top top "leadership" has a organized crime problem. Because of that, you pension is taken over by the same oxygen thieving dolts that take care of indian reservation, pubic housing, and fixing highways. Ding ding ding. What a surprise.

Wild Swings's picture

So now that we're in hard times, it is the Millennials who must step up and be strong men? HA! Good luck with that one!

Chief Wonder Bread's picture

<<Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth.>>

BarkingCat's picture

It won't be them. Most don't even qualify as men in the traditional sense.

It will be their children but I feel very sorry for them.

In the past the older generation thought the younger ones morals and useful skills.

The millennials got short change because those that supposed to teach them had disregarded the knowledge themselves.

Never mind Mad Max, time to watch Lord of the Flies again....mentally most of boomers and later are still children.

AssN9's picture

fiat currency opens the doors to every possible corruption conceivable which might also have something to do with it.

Elco the Constitutionalist's picture
Elco the Constitutionalist (not verified) AssN9 Feb 28, 2017 11:32 PM

To true. Usury leads to fiat, and fiat leads to socio-economic collapse.

Christianity failed because it failed to stave off the Jew usury system.

Tired of Bending Over's picture

Yes, in fact, not only did Christianity fail to "stave off' the Jew usury system, it got in bed with it.

hibou-Owl's picture

He paid in for thirty years, what has the stock market and bonds done in thirty years?????
Someone got their fingers in the till. Pension funds should be rolling in cash.

chubbar's picture

I think there are regulations that control the type and quality of assets that pension managers can buy for the fund. That being said, look at the dogshit the dallas pension fund bought so maybe that isn't true or it was plain fraud.

That was the scam with the AAA rated MBS. The banks took subprime loans and packaged them into MBS that were rated AAA, using tranches and MERS as tools to act as cover for this dogshit. Those were peddled to the pension funds that needed AAA rated securities, so that pensions were the ones who lost big in that disaster.

Manthong's picture

Well, the good news is that deep state is going to get a buzz cut.

Hopefully,  Well, um.. the Federal .gov did not protect my dear ladies >30 year pension with the IAM, but the magic negro fully funded the funded the UAW for votes …. F the Negro……../

Refuse-Resist's picture

This time around we have 'strong womyn' and pajama boy.

We are so fucked.

Buck Johnson's picture

I have to agree.  It wasn't a true investment anyway, they just paid money to the union on promises that a ever increasing retirement amount at the end will be their retirement.  As you said it was a ponzi scheme and eventually every municipality will feel the sting and be hit.  Those Baby Boomers who said I got mine so fuck everybody else including my kids are see themselves getting fucked at an age where they have no money. 

 

http://www.nytimes.com/2010/12/23/business/23prichard.html

Mike in GA's picture

Union leadership, especially Teamsters, donated heavily to The Democrats for all those decades.  Wonder how many hundreds of millions these truckers paid in to see Obama elected?  

But those dollars aren't going to waste, nosirree!

 

JJJr gits him a piece of the democrat plantation goodies - thank you, truckers.

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&...

Oldwood's picture

Private Unions are doomed because they are not "currently" supported by taxpayers and are still tied to a dying economy. Public unions are a different story as they are on the front row of the debt/money printing machine.

The entire retirement/investement scheme is flawed and will fail, including government. We boomers understand that SS is failed as well and realize that our supposed "benefits" will evaporate under COLA and means testing.

Let us see the same rules applied to all government employee pensions, having them means tested as well.

BeanusCountus's picture

Spot on. It's coming. No one should be exempt. Any cuts to social security should also be appled to all federal government employees. Period. They will claim otherwise, but it's all one pot.

rosiescenario's picture

Just a bit of collateral damage from our Fed. Too bad, but the Wall Street elites needed to be covered. We couldn't afford to have large central banks, such as GS, suffer. The black swans are coming home to roost and they will be mostly found in the Dem urban centers that elected Obama. This is true on the east coast as well as the west.

 

As a CA resident, out here we have Calpers with both tits in the wringer. Some of our public employees are in for a shock. I have no sympathy for the public employees that gamed the retirement system....they are going to get what they deserve.

Meat Hammer's picture

CalPers divested itself from all gun-manufacturer stocks after Sandy Hoax in order to make a libtard political statement, literally costing their pension funds millions of dollars, and their pensioners bleated their approval.

Public pensioners voted for every shockwave that is headed their way. Fuck. Them. All.

WorkingFool's picture

The fucking DemoRATs that's who.  Where do you think all the dues go?  Hundreds of millions of dollars in campaign contributions.  Fuck them and fuck you

Bobbyrib's picture

Without ZIRP, they would be able to pay him $48,000 per year? His union told him he would be able to retire in 30 years and receive $48,000 per year. I live in New Jersey and the teachers will be in a similiar financials state within a decade. You shouldn't promise what you can't deliver.

PacOps's picture

Yeah. It goes down to the lobbiest (brokers) that wrote the legislation restricting what "public money" could be invested in (their gigs), that the legislators passed (campaign contribution incentives) and the rest is history.

I checked out a few states and the regs are very similar. Hmmmmm ...

lasvegaspersona's picture

The Social Security MAXIMUM is about $42k per year (about $3500 per month). It is paid to those with 40 quarters at the max rate ($118,000 per year Soc Sec income).

How fire dept guys and police captains walk away with $250,000 per year is a real mystery. I guess they are better than private sector people who max out Soc Income....but nearly 6 times mo betta...?

MisterMousePotato's picture

Hey, Ray? And all you other union fucks?

Fuck you. No. Seriously, fuck you.

For decades, I have fallen asleep praying all you union fucks would die of bleeding rectal cancer:

http://theunionnews.blogspot.com/2008/03/teamsters-will-pay-for-beating-...

rosiescenario's picture

The mystery is soon to be solved when the pensions discover they cannot pay out retirement benefits at anywhere near these ridiculous levels.....just another example of the Dems promising things that can never be delivered.

LeftandRightareWrong's picture

Stock market crashes?  The indexes are at all time highs.

BarkingCat's picture

Social Security is supposed to be supplemental.

It is not supposed to be the entire montly amount that people live on.

That's only small part the problem. 

biff_rapper's picture

They worked a job for 30 years getting paid jack schitt, slaving doing hard work while clowns calling themselves cee-ee-ohs could slink around bilking their companies out of millions.  Wealth disparity is no joke.

TheReplacement's picture

Yeah and they acted like good little brownshirts every time someone tried to make a buck on their own.  They lived the high life relative to the poor bastards they intimidated and beat up.  Let's not forget all those who ended up paying higher taxes because the unions always supported higher tax candidates.

They can have their karma and eat it too.  Lifes a bitch and they acted like bitches.

Bobbyrib's picture

What exactly is "getting paid "jack schitt"? Can you give us some numbers, rather than generalizations? I don't believe Teamsters got paid jack shit. I believe they extorted New York state for billions of dollars and raised the cost of living for everyone in the state.

The Gun Is Good's picture

I've seen NYC "teamsters" in action at the Javitz Center. 15-minute breaks every hour. Wouldn't stoop (literally) to so much as pick up a roll of gaffer tape off the floor. Reeeeal hard workers, they were /sarc/. Not sayin' they're all the same, but there is a real culture of resentment of hard work. (I'll try to extract a bit of pity from myself for these guys... but....)

Tejano's picture

Boomer here. And I've got my pension right here. It's all shiny and stuff. Sometimes I take a bit out and spread it on the floor and play pirate 'cause I'm just a stupid lazy boomer. You, on the other hand are doomed. Glad I'm not you but good luck anyway.