Major Teamsters pension fund to slash recipients' benefits 
No wonder Tom Minerath is angry. 
Sixty-eight years old and retired since 2007, the Town of Merton man is about to have about $20,000 taken away from his annual pension — money he earned, money that was promised him, money guaranteed in contracts negotiated by one of the country's strongest labor unions.
"I'm going to make it through this, but it's just not right," he said. "It's just not right."Which probably sums up the feelings of more than 270,000 people, including thousands in Wisconsin, who have been told by the financially troubled Central States Pension Fund that their pension payments must be cut, in some cases by
50% or more. 
It's a breaking wave in a financial tsunami created in significant part by a change in government policy more than three decades ago that set in motion overwhelming economic forces.
But where the federal government stepped in to prop up giant investment banks after the 2008 crash — a financial debacle the banks helped cause — no bailout is in sight for Minerath and other retired Teamsters truckers. Barring a huge change in congressional sentiment, they'll have to do the bailing themselves.
"It's going to take our living wage, comfortable living wage, and make it non-livable," said retired driver Thomas Botic, 69, of Pewaukee, who recently got notice that his $2,800-a-month pension would be sliced to $1,400. "And at (almost) 70 years old, I don't feel like going out and finding a new job.
"It doesn't sit well with me, that's for sure."
Many of the deepest cuts are being dealt to retirees who worked 30 years and earned relatively large pensions — on the order of $35,000 annually or more — that have let them retire comfortably, but not lavishly.
"I'm not taking Hawaiian trips or all-inclusive to Jamaica or Mexico," said Minerath's brother, Joe, a 73-year-old Cudahy resident facing a roughly 50% reduction in his $2,600-a-month pension. "I've got an all-inclusive trip to Cudahy. That's it."
And the size of the pensions notwithstanding, many retirees feel betrayed. They say they gave up higher pay and benefits in exchange for a good pension, and because it was promised to them, they stuck with their jobs.
"The pension," said Kenneth Stribling, 63, of Milwaukee, who also has been told his payments will be cut in half, "was the pot of gold at the end of the rainbow."
The pot is anything but gold now. As of Jan. 1, 2014, Central States' $35 billion in liabilities was more than double the value of its assets, and the gap had grown by $3.5 billion since 2011.
The plan's troubles, which have been building for years if not decades, were the key impetus for a fundamental change last year in federal rules governing pensions.
Formerly, plans could not reduce benefits once they were earned. As long as a plan had money, it had to pay the pension promised.
But with Central States careening toward insolvency, Congress last December passed legislation — hastily and secretly, critics say — that rewrote the rulebook.
The new law applies to "multi-employer" pension plans — which, unlike the more common single-employer plans, cover more than one company's workers under contracts with unions.
Prevalent in trucking and some other industries, such plans cover about 10 million people in the U.S.
Central States, based in suburban Chicago and covering a large swath of the Midwest and South, is one of the biggest multi-employer plans, with more than 400,000 working and retired participants.
The thinking behind the Multiemployer Pension Reform Act of 2014 is that if deeply troubled plans such as Central States can't reduce payments to their pension recipients, the plans will go broke, leaving pensioners with nothing.
Hidden in a spending bill
Passed as part of a $1.1 trillion spending bill, the densely written, 161-page act went unread by many in Congress, Bob Amsden said.
Amsden, 63, of Franklin, is a retired Teamster — his pension would be sliced by 55% — who is active in a drive by Central States retirees to fight the planned cuts. They've been making their case with a website and by lobbying members of Congress to support legislation such as the Keep Our Pension Promises Act introduced by Sen. Bernie Sanders, the Vermont independent who is seeking the Democratic presidential nomination.
"People are going to lose their houses, they're going to lose their cars," and pension recipients in other plans are in danger, too, Amsden said.
About 1.5 million people are in multi-employer plans that are severely underfunded, the Pension Benefit Guaranty Corp. has said. The federal agency insures those plans, but only up to $12,870 a year. Single-employer plans, meanwhile, are insured up to $60,136 a year.
"The government really made multi-employers stepchildren," said Chris Tobe, a pension investment consultant in Louisville and former trustee for the Kentucky public pension plan.
Meanwhile, the PBGC's multi-employer program itself has a huge funding deficit. Before last year's legislation was passed, the agency said the program faced a 90% chance of going broke by 2025.
The anger felt by retired Teamsters has many blaming the executives and trustees at Central States.
"The mismanagement of the fund runs so deep and so far," Amsden said. "We were better off when (the late Teamsters president Jimmy) Hoffa had it under control with the Mafia."
Allegations surfaced decades ago that the fund had links to organized crime, the U.S. General Accounting Office said in a 1985 report on the Labor Department's oversight of Central States.
The Labor Department had sued former pension fund trustees for alleged mismanagement that included the fund's troubled loans in the 1970s to the owners of Las Vegas hotels and casinos. In 1982, the department entered a consent decree that established a court-appointed special counsel to keep an eye on the fund and its investments. The decree remains in effect, and the special counsel continues to file quarterly reports with a federal judge in Illinois.
The role of deregulation
While questions have long been raised about the way Central States is managed, the most important reason for the pension fund's precarious financial situation is the deregulation of trucking and the sweeping changes it brought, two scholars who have long studied the industry said.
"Deregulation explains 90% of the problem," Michael Belzer, of Wayne State University, said in an email. "Well, that's not precise, but it conveys the meaning."
Stephen Burks, of the University of Minnesota, Morris, said by email that though there undoubtedly have been compounding circumstances, "it was indeed deregulation that created the underlying problem."
In 1980, with deregulation just beginning, Central States, which depends heavily on the contributions of trucking and shipping companies, had four working Teamsters for every retiree. Today, the situation is reversed: It pays benefits to five retirees for every worker.
From 1935 through 1979, Burks said in a 2012 paper, the government restricted entry into the interstate trucking business, specified where firms could operate and to some extent controlled shipping rates.
Deregulation ended the restrictions, and thousands of new carriers flooded the industry, driving down rates and driving many of the legacy companies, with their well-paid union drivers, out of business.
Union representation plummeted — along with the number of workers and companies participating in the Central States fund.
In the late 1970s, as many as 80% of truck drivers were union-represented, Belzer said. Today the figure is about 10%.
At the same time, Central States over the years "was being systematically underfunded," said Jean-Pierre Aubry, assistant director of state and local research at the Center for Retirement Research at Boston College.
"The contributions were definitely under what was required to fund the system," he said.
Much of that, he said, stemmed from the position Central States found itself in as unionization in the trucking industry declined: With fewer and fewer firms participating in the plan, you theoretically could seek greater contributions from the remaining companies, but that would encourage them to leave, too.
When firms do leave, they're supposed to pay their share of the plan's unfunded future liability. But Aubry said it is "notoriously difficult" for pension funds to collect what they truly have coming.
Pension-cutting plan filed
On Thursday, Central States filed its pension-cutting plan with the Treasury Department, which has 225 days to approve or deny it. Pension fund participants get to vote, but Treasury has the final say.
One widely questioned aspect of the plan is that individuals' cuts vary widely. Retirees 80 and older would see no reduction. Those 75 to 79 would be cut, but less so than their younger counterparts.
More than 9,000 retirees would have their pensions slashed in half. That's the maximum — except for the 28,000 people who aren't yet 80 and who worked at companies that reneged on their obligations to the pension fund. By law, their pensions must be cut nearly to the level guaranteed by the PGBC.
Amsden said he had spoken with one of those people — fittingly known as "orphans" — who is facing a 70% reduction.
"None of these cuts make any rhyme or reason," Amsden said.
Thomas Nyhan, executive director of Central States, disagrees. Except for the treatment of "orphans," which was written into the pension reform act over Central States' opposition, he said, the plan uses a formula that essentially imposes the biggest cuts on those who have had the most generous pensions — sort of like progressive taxation in reverse.
The plan trustees concluded that was fairer than a uniform, across-the-board reduction, he said.
But complaints about the unfairness of another type of differential treatment are "spot on," said Jay Youngdahl, an attorney who has long represented union workers, and a former senior fellow with the Initiative for Responsible Investment at Harvard University.
"Fundamentally, the Central States problem, the single biggest thing, is they didn't get bailed out, when the Goldman Sachses and the JP Morgans got bailed out," Youngdahl said.
"And they should have gotten bailed out."
Tom Minerath (right) at his Town of Merton home, with fellow Teamsters (right to left) Kenneth Stribling of Milwaukee, Pat Wenneshiemer of Muskego and Tom Botic of Pewaukee. They are facing 50% pension cuts.[attachment deleted by admin]
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