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According to Social Security’s Trustees, in 2034, all Americans who receive retirement benefits from Social Security will have their pension payments slashed by 21%.
But before that happens 18 years from now, U.S. truckers will test drive even larger retirement benefit cuts from their pensions if the U.S. Treasury department has its way, as Mike Shedlock describes:
407,000 private sector workers are about to lose most of their pensions.
I first wrote about this on April 21, in One of Nation’s Largest Pension Funds (Truckers) Will Reduce Benefits or Go Broke by 2025.
The Central States Pension Fund, which handles the retirement benefits for current and former Teamster union truck drivers across various states applied for reductions under that law.
Currently the plan pays out $3.46 in pension benefits for every $1 it receives from employers. That’s a drain of $2 billion annually.
The plan filed for 60% cuts in pensions. The Treasury Department has the final say. The verdict came in today: “cuts not deep enough”.
Consequently, the director of the Central States Pension Fund, Thomas Nyhan, has gone on record to confirm that unless the U.S. government bails out the fund, the pension benefits for current and future retirees from the Teamsters labor union will be cut to “virtually nothing” when the fund runs out of money in less than 10 years time.
What is happening in this case is significant because whatever action is ultimately taken with respect to the failing Teamster-mismanaged pension fund will also set the likely path that will be followed by countless local and state governments for handling their unsustainably generous pension benefits for government employees. How the situation is managed will also impact the Social Security program, which is on a similar path where it will no longer be able to sustain the generous payments it is making today to its beneficiaries.
Retirement experts are watching Central States as a pivotal test case, the first to seek cuts for current retirees under the Multiemployer Pension Reform Act of 2014. Some say the move signals a turn toward making the problems of America’s festering pension systems into a personal crisis for individual pensioners.
David Certner, legislative counsel for AARP, warns that it threatens to create “a blueprint for companies and (pension) plans to do something similar.”
One estimate puts the funding shortage for all multiemployer pension plans at $140 billion, including up to $50 billion at the most critically short plans. The same painful reality confronts many state and local pension plans that collectively are $1 trillion short of covering what they will owe in pensions.
Sooner or later, things that cannot continue will stop. The question that must now be resolved is to what extent will regular Americans who have had absolutely no part in the mismanagement of the pensions of Teamsters and government employees will be burdened to bail them out.