Multiemployer Pension Plans Face Uncertain Future
A devastating confluence of events is threatening the viability of hundreds of multiemployer plans.
By Frances Denmark
Thomas Nyhans job keeps getting tougher. As executive director of the Central States Southeast and Southwest Areas Pension Fund, Nyhan is responsible for making sure that 454,000 retired Teamster truck drivers receive their monthly pension checks. Last year, Nyhan paid out a whopping $2.7 billion in benefits due to Central States retirees and their beneficiaries. The problem is, with only 65,000 active truck drivers contributing to the pension plan and only $19.1 billion in its coffers down from a high of $26.8 billion in 2007 it is just a matter of time before the Rosemount, Illinoisbased fund executive can no longer write those checks.
Its like a tsunami coming off the shore you can see it, says Nyhan.
But shrinking assets tell only half the story at Central States. On the other side of the collectively bargained plan sit the employers, mostly small trucking companies about 2,000 at last count as well as two very large ones, YRC Worldwide and ABF Freight System. Trucking companies both large and small that signed on to Central States to provide benefits for their drivers are being reamed by cutthroat competition, mostly from nonunionized employers that do not offer a unions generous array of benefits. Escalating pension contributions threaten to put already suffering companies like YRC, which has been teetering on the brink of bankruptcy since 2007, over the edge. Last August, during negotiations with the International Brotherhood of Teamsters, the union granted the Overland Park, Kansasbased trucking company an 18-month reprieve from paying into Central States. According to trucking industry experts, ABF Freight, the biggest unit of Arkansas Best Corp., has requested similar treatment. ....