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Thomas Nyhan’s 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, Illinois–based fund executive can no longer write those checks.

“It’s 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 union’s 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, Kansas–based 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.

Hitchhiker's Guide to Taft-Hartley The Central States fund is not alone in its struggle to provide retiree benefits. In mid-2009, after the previous year’s devastating market rout, the 385 largest multiemployer pension plans, including Central States, represented an estimated $250 billion in assets, down from $392 billion at the end of 2006, according to the Washington-based National Coordinating Committee for Multiemployer Plans. But there are also hundreds of smaller plans. In total, the Pension Benefit Guaranty Corp. counts 1,500 multiemployer plans and 10.1 million union member retirees and participants in its insurance program.

A devastating confluence of events — economic, sociological and regulatory — is threatening the retirement security of millions of union workers while creating financial hardship for tens of thousands of employers. Market losses, growing unemployment, diminished union membership, pension regulation that backfired and rich benefits negotiated in halcyon times are creating a potent mix that is choking the viability of hundreds of multiemployer plans, the name given to union-sponsored pension funds, also called Taft-Hartley plans. Labor industry leaders warn that unless drastic measures are put into place — a painful blend of benefit cuts, increased employer contributions and legislative action — the unionized labor force, which represents 20 percent of all defined benefit participants, is on the fast track to becoming a colossal taxpayer burden.