When Teamster’s Local 707 (truck drivers in NY) bankrupt pension was taken over by the U.S. Pension Benefit Guarantee Corporation, the 4,000 current retirees had their pension payments cut by an average of 67%. These retirees are in their 60s and 70s, and now find themselves: declaring bankruptcy, skipping meals, delaying doctor appointments and needed medicine. One of them picks up returnable cans by the road for what he calls his new retirement fund – a bag of recyclable cans and bottles.
Consider the pension arithmetic for this union: how can a group of people work for a maximum of 30 years, and expect to receive nearly the same amount of income, plus cost-of-living-increases, for an additional 30 years? No fervent political promises can afford arithmetic that doesn’t add up. This is the reason that pension plans have disappeared over the last 30 years.
There are a few pension plans going bankrupt all the time, and many can be underfunded for a long time but still be sound with steady returns and additional funding. However, according to the federal Pension Guaranty Corporation, there is large wave of over 200 pension plans across the country currently headed toward insolvency; possibly affecting two million people. The Government Accountability Office reported that if there were a large number of corporate pension insolvencies that they had to take over, these imperiled pensions would be forced to cut their payments by 94%. Plus, municipal and state pension plans are the next pensions moving toward a fiscal cliff.
It is never too late to take immediate action to shore up your own retirement, outside the control of other people, governments, and companies who cannot make good on their promises. Teamster’s Local 707 retirees are learning that promises, without sustainable financial backing, aren’t worth anything. Some of these Teamsters are moving in with family or going back to work, but all are financially struggling with the pension crisis that is becoming more widespread.