The U.S. Treasury Department has rejected a plan that would have drastically cut the pensions of more than a quarter million retirees around the country, including 15,000 here in Minnesota.
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Central States said the changes were needed to insure the future of the pension fund. The cuts would have seen previously-promised monthly pension checks cut by 40 to 70 percent. That’s why I’m glad the Department of Treasury recognized something I’ve been saying for a long time now: these proposed cuts were ill-conceived and unfair to the men and women who earned their pensions.
Noted mediator Kenneth Feinberg, who had handled the September 11th Victim Compensation Fund, ruled that the pension fund’s proposal failed to meet legal standards set by a controversial 2014 law that makes cuts possible in severe cases.
Feinberg, after reviewing the 8,000-page Central States application to reduce benefits, attended town halls in eight states, including OH, to discuss the Central States plan.
It also means Central States remains on a path to run out of money in about a decade at which point it will be unable to pay any benefits. Its failure could threaten the solvency of the Pension Benefit Guarantee Corporation, should it be forced to cover the Central States pension obligations.
The decision could dim the chances for multiemployer pension funds to avoid insolvency by slashing benefits.
“The submission is based on certain flawed assumptions based on investment strategies”, Feinberg said.
“We believe the rescue plan provided the only realistic solution to avoiding insolvency”, the fund said.
As a member of the Senate Labor and Pensions Committee, Franken said he heard from many Minnesotans who feared that pension cuts won’t just severely affect their quality of retirement, but may also force them out of their homes. Another bill would give retirees and workers more power to approve or reject cuts proposed for their plan.
Third, the fund is required by law to notify participants of the cuts in a way that’s easy to understand. The October notices, Feinberg said, were not.
Central States officials said they were disappointed in the decision. “It is not easily understandable”, he said.
The Treasury Department had to announce it’s ruling by Saturday. In Sioux Falls, sign-holding pensioners have rallied at the offices of Senators Mike Rounds and John Thune and at the office of Rep. Kristi Noem, calling for a repeal of MPRA. Under the law, Central States could resubmit. “Because the application that was submitted did not meet the requirements of federal law”.
Central States must decide how to proceed, Feinberg said.
Nyhan said Central States is still considering its next step.
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In any event, despite longstanding questions about how Central States is run, the most important reason for the pension fund’s precarious situation is the federal government’s deregulation of trucking, scholars who study the industry have said.
