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At that point, attorney Storke says, “the Teamsters and staff started thinking about legislative relief.” Projections showed that the WCTPT would return to health given enough time. The fund created a scenario-projection program to test various funding, investment return and return-smoothing combinations. The findings pointed to the need to extend fund loss amortization beyond the 15 years stipulated by the PPA, with additional smoothing.

In September 2009, WCTPT officials packed up their scenario slide show and took it to Washington. With help from lobbyist Fechner, they tried to educate congressional staffers about the WCTPT and multiemployer plans. “If other Teamster plans fail, it’s going to affect us,” says Storke, who spent lots of time in Washington in 2009 and early 2010, often accompanied by Mack, Dodge or Sander. In the Teamster community, if one employer can’t fund pension obligations, that can affect other plans for employees who work for the same company.

The lobbying resulted in the Pension Relief Act of 2010, which spread fund losses further into the future. But longer-term solutions were needed. In response, NCCMP began a series of meetings that produced a three-pronged plan, called “Solutions not Bailouts,” created to preserve plans, remediate problems and design new kinds of funds.

The WCTPT’s trustees have been hoping that improving financial markets will keep them comfortably in the green zone. “If someone had told me 40 years ago that the first thing I would do when I got up in the morning is look at the markets, I would have accused them of being a capitalist swine,” chuckles Mack.

The $35 billion portfolio is overseen by a 14-member investment committee cochaired by Robert Wrightson, a 40-year veteran of corporate finance at Consolidated Freightways, now known as Con-way. His Teamster co-chairman, Rome Aloise, who was appointed as a trustee in 1998 by Mack, his brother-in-law, is a contract negotiator for the national Teamsters. He replaced Mack as a vice president and as Joint Council 7 president when Mack took the pension job, and he’s also secretary-­treasurer of Teamster Local 853 in San Leandro, California. “Under ERISA and the formation of the Taft-Hartley Act” — the enabling legislation for multiemployer plans — “you’re legally required to take off your employer-employee hat when working together on the pension trust,” Aloise says, adding of employers: “In their mind, it’s their money. But in our mind, it’s our members’ money.”

Although he represents employers, Wrightson is quick to defend pensions. “I’m a big believer in defined benefit plans,” he says. “It gives the employee much more security as he looks toward retirement.” His fellow employer trustee, Joseph Hodge, has been on the committee for 21 years because, he says, “I see the value of having consistency in this pension plan.” Hodge, who retired in 2005 as Coca-Cola’s regional director of human resources for California, Nevada and Arizona, used to negotiate 22 separate contracts with Teamster units. The WCTPT, he says, is “a very well-run business model in which the union trustees and employer trustees take their fiduciary responsibility very seriously.”

As the fund’s investments grew in complexity, the trustees at the end of 2012 gave consultant Biller discretion to hire and fire managers. It’s a move that’s becoming common, says Seth Almaliah, a multiemployer investment consultant with Segal Rogers­casey in New York. “We mostly listened and rubber-stamped his decisions,” says Mack, adding, “We had a lot of discussion on what oversight has to be.” Biller and the investment committee steered the fund to an annualized 8.4 percent return over the 20 years ended in December 2013. That helps when the fund’s professionals defend the 7 percent return assumption used to determine the present value of future liabilities, a calculation familiar to multiemployer and public pension funds that are not required by law to use a bond rate.

This has led to a debate between single-employer actuaries and those in the multiemployer and public pension arena. Jeremy Gold, an independent consulting actuary based in New York, is an outspoken defender of using the single-employer discount rate — a measure based on the corporate bond rate mandated by the Governmental Accounting Standards Board — to determine future liabilities. WCTPT fund administrator Sander disagrees, pointing to the perpetual nature of the fund, its long-term returns above 7 percent and its employers’ staggered labor-agreement renewals. Gold counters: “Today’s Teamsters are getting the benefit of a guarantee they didn’t pay for. There’s a real risk transfer.” He contends that young union members will be saddled with future liabilities that aren’t paid for.

Moody’s Investors Service and other rating agencies side with Gold. Whereas the WCTPT reported a 90 percent funded ratio at the end of 2012, Moody’s, using the bond calculation, reported a 66.7 percent ratio.

The fund’s ten-year return of 6.2 percent compares a bit less favorably with the Wilshire Trust Universe Comparison Service (TUCS) average of 6.65 percent for all Taft-Hartley plans. Its healthy 15.6 percent performance for 2013 beat returns for all master trusts in TUCS but was overshadowed by the 17.82 percent return by its Taft-Hartley brethren, many of which are failing despite impressive performance.

Still, the WCTPT has been able to meet its pension obligations with room to spare. In 2013 the fund paid out $2.4 billion in pension benefits to retirees, took in $1.4 billion in contributions — a 3.5 percent increase over 2012 — and earned $3.4 billion in investment income.

TODAY A DEBATE RAGES over the future of multiemployer plans. The House Committee on Education and Workforce is writing a new bill, following a raft of hearings. Proposals have been floated to make wholesale changes to the way retirement benefits are structured. Some plans may remain intact; others, desperate to remain solvent, may have to slash benefits.

“This is not something that is being treated as politics as usual,” says the PBGC’s Gotbaum, who has twice testified on multiemployer plans. “Plans are doing what they can to preserve themselves: raising contributions and cutting current and future benefits.”

The politics are tangled. The committee chairman, Minnesota Republican John Kline, is nearly finished writing a bill that would repeal the long-sacrosanct anticutback rule in ERISA and allow trustees to reduce benefits to keep plans solvent.

That might seem draconian, but the situation is critical. Take Central States, the second-largest Teamster fund. It has $18.2 billion in assets, receives $700 million in annual employer contributions and pays out $2.8 billion a year to retirees. Executive director and general counsel Thomas Nyhan testified before Congress in October that a benefit cut is the only way to salvage something for all the plan’s members. Pointing to adjustable benefits in the Netherlands, Denmark and elsewhere, he asserted that the U.S. is the only country with a pension anticutback rule that forbids earned benefits from being reduced.

Nyhan’s testimony echoed NCCMP director Randy DeFrehn’s campaign to adjust benefits rather than wait until the last dollar is spent. DeFrehn argues that it’s better for a fund heading toward insolvency to cut pensions by 10 percent than to wait until it fails. “If plans could act early and reduce benefits marginally to remain solvent, why does it make sense to become insolvent?” he asks. As former North Dakota congressman Earl Pomeroy famously said, “A haircut is better than a beheading.”

Kline’s bill would allow green-zone plans to extend their loss amortization period while letting those in the yellow zone make benefit adjustments before it’s too late. DeFrehn stresses the need to eliminate disincentives to employer participation. “We’ve almost preserved [multiemployer plans] out of existence because current rules are so tight employers don’t want to sponsor them anymore,” he says.

Opponents of the bill believe the government should bail out underwater pensions just as it saved the banks in 2008 through the Troubled Asset Relief Program. Some national labor organizations, including the International Brotherhood of Teamsters and the International Association of Machinists and Aerospace Workers, resist a future in which pension cuts are possible. “It’s a government problem, everybody’s problem,” says IAMAW president R. Thomas Buffenbarger. “We can force this government to take action.” But even Buffenbarger has had to compromise: In January he signed off on Boeing Co.’s replacement of its defined benefit pension with a defined contribution plan.

The PBGC’s Gotbaum has his own idea — he wants more money in his agency’s coffers. “We analyzed what it would take if there was benefit adjustment authority,” he says, speaking of the part of the Multiemployer Pension Plan Amendments Act that allows benefit adjustments to plans near insolvency. The PBGC estimates that this could help some 600,000 retirees whose plans would otherwise fail. But, Gotbaum says, that would still leave more than a million without help. His solution: Pay the PBGC 2 percent of the money going to multiemployer plans so it can bail out 2 million retirees.

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