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Law360 (June 10, 2020, 7:25 PM EDT ) A new report indicating the Teamsters' pension fund lost $557 million in the first quarter of the year is yet another distress signal to Congress to protect retirees' pensions in the next coronavirus relief package, according to the self-described reform organization of the International Brotherhood of Teamsters.
The 385,000-member Central States Pension Fund is on track to become insolvent by 2025 as the number of active participants and employer contributions fall and the amount of benefits payouts skyrockets, according to its internal financial report released by the Teamsters for a Democratic Union on Tuesday.
According to the fund's March financial report, its assets dropped from $12.3 billion in December to $11.7 billion by March due only in part to the novel coronavirus, a stark contrast to the $76,614 increase from the same time last year.
The fund paid $711 million in benefits in the first quarter but took in only $156 million in employer contributions, with a total shortfall worth about $2 billion per year, the report said.
"These facts make it imperative that our union, locals, members and retirees work to win passage of federal legislation which protects the earned pensions of Teamsters and all workers," the TDU said in a statement. "This is especially true in this crisis period of a pandemic and a deepening recession."
The organization added its voice to growing calls for Congress to enact legislation through the next coronavirus relief package to protect against retirees losing their financial livelihood.
The Emergency Pension Plan Relief Act — which was included in the Heroes Act coronavirus relief bill that passed the House in May before stalling in the Senate — would allow struggling multiemployer pension plans to more easily transfer certain liabilities to the Pension Benefit Guaranty Corp. Still, the PBGC projects that its own multiemployer pension insurance program will become insolvent in 2025.
Senate Republicans, who have also been working on a proposal that would take similar action on multiemployer pension, should come to the table to negotiate a bipartisan solution, Central States said in a video encouraging its participants to push their members of Congress to support retirement security measures.
The TDU slammed the House's decision to add the so-called Grow Act to the Heroes Act, saying the legislation would allow for multiemployer plans known as "composite plans" that aren't subject to the PBGC's premium requirements or guarantees.
"It would only apply to plans that are well funded, including the Western Conference of Teamsters Fund," the TDU said. "The GROW Act, which was tacked onto the bill at the last minute ... should be taken out."
--Additional reporting by Danielle Nichole Smith and Emily Brill. Editing by Adam LoBelia.
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