William B. Cassidy | May 27, 2010 5:41PM EDT
The Teamsters union’s Central States pension fund faces insolvency within 10 to 15 years unless Congress acts to stabilize the fund, its executive director said this week.
Responsibility for benefits paid to employees of failed companies should be transferred to the federal Pension Benefit Guaranty Corp., Thomas C. Nyhan told a Senate committee.
“I urge Congress to enact the ‘qualified partition’ proposal this year,” Nyhan said at a May 27 Senate Health, Education, Labor and Pensions Committee hearing.
Sen. Robert Casey, D-Pa., is sponsoring a bill that would allow “qualified partition” of multiemployer plans, and Nyhan and others urged Congress to pass that bill.
The Central States fund is one of the largest multiemployer plans in the country, covering nearly 342,000 retirees and their survivors and 81,000 active employees.
The fund faces an “unprecedented financial crisis” caused by consolidation in the trucking industry and the worst recession in decades, Nyhan said.
More than 40 percent of the fund’s benefits are paid to “orphaned” employees of defunct companies, he said, and responsibility for those benefits rests with surviving companies.
That is putting stress on companies such as YRC Worldwide, he added, that must support the benefits of thousands of retirees who never worked for its businesses.
An increase in contributions as the number of retirees grows could force more and more of those surviving employers out of business, leaving the fund insolvent, according to Nyhan.
More than 600 trucking companies that contributed to the fund in 1980 are gone, he said, noting that of the top 50 employers in the fund in 1980, only four are still in business.
The PBGC yesterday approved the partition of a smaller Chicago-area multiemployer fund into two sections, creating a new plan for employees of defunct companies.
--Contact William B. Cassidy at wcassidy@joc.com.
