An unhappy period for many current and retired upstate New York Teamsters is winding down — and just starting — with big pension cuts possible as soon as Oct. 1.
The New York State Teamsters Pension Fund is rapidly running out of money, so its trustees in August 2016 sought to slash payouts, first gaining federal authorization and then seeking union members' approval.
Roughly 35,000 active and retired Teamsters have until midnight on Wednesday to vote to approve or reject the cuts, which would mean a 29 percent reduction in pension payments for most retirees and 18 percent for active Teamsters.
Two things may skew the vote: Every ballot not returned is counted as a “yes” under federal law, and even if the “no” votes somehow win out, the U.S. Treasury Department can override the referendum and allow the cuts to take effect anyway.
“What I’m hearing is there’s going to be a lot of people voting no,” said Tom Baum, who was appointed the representative of retirees as the struggling pension fund sought a way out of its problems. However, he didn’t know if all those “no” votes would make a difference. “The way the system is set up under the MPRA law, it’s kind of rigged.”
The federal Multiemployer Pension Reform Act of 2014 allows trustees for pensions like the Teamsters’ — those funded by multiple companies that employ union members — to cut benefits up to 69 percent if they can show that they will be unable to pay promised benefits 15 or 20 years in the future.
John Bulgaro, president of Teamsters Local 294 in Albany and co-chairman of the pension fund’s board of trustees, said the fund’s problems are rooted in deregulation of the trucking industry in 1980.
“It took good jobs and replaced them with jobs not as good,” he said. “Good companies got put out of business. That’s what we got from deregulation: Less jobs, less people putting in the pension funds.”
Then in the 1990s, Bulgaro said, the federal government barred pension funds from building up more than 100 percent funding, and taxed those that did, eliminating the ability to create a cushion for a rainy day. The rainy day — a rainy season, really — came in the form of the housing crisis, credit crisis, slow-motion stock market crash and the Great Recession a decade ago.
(The New York Times reported in December 2016 that The New York State Teamsters Pension Fund also was using investment vehicles that carried high costs and incurred avoidable losses; the fund disputed that, but the Times noted the fund's returns have been less than the stock market as a whole since the recession.)
Bulgaro noted that the pension fund for Teamsters Local 707 in New York City went insolvent after it was denied cutbacks under MPRA.
“We could be in that situation. That’s a good lesson for us, if something’s not done,” he said. “Here’s the big issue: We’re bleeding a significant amount each month. The longer that continues, the less money there is to work with.”
Above and beyond the pain of pension cuts is the perceived fairness of the cuts' distribution. Future retirees would see a much smaller reduction than current retirees. Current retirees over age 80 or those receiving a disability pension would see no cuts; those age 75-79 would see a smaller cut than their younger counterparts. No one who’s getting a cut is happy about it; some ask why they’re taking a bigger cut than someone in another group.
Fred Miller, of Rotterdam, a retired Teamster who worked 30 years at UPS in Latham, has calculated he’ll lose $17,940 a year under the revised plan.
Now 68 years old and a cancer survivor, he’s been pursuing a long shot: avoiding the cuts by converting his regular Teamster pension to a Teamster disability pension, since he’s essentially unemployable, needing innumerable bathroom breaks per day.
He’s petitioned the Teamsters and the Treasury Department to make the switch, to no avail. The Teamsters don’t want the expense, and the feds have not responded to him.
“I think I’m beating a dead horse,” he said. “But if I didn't try, I’d be kicking myself in the butt.”
Miller’s attorney, James Tuttle of Clifton Park, said Miller is in a tough spot.
“What we asked them to do was change the definition of a disabled retiree to include anyone who is retired and is disabled,” he said. “It’s certainly reasonable to distinguish between disabled retirees and able-bodied retirees.”
Miller said he gained approval for Social Security disability payments quickly and on his first attempt, with no legal help. This, Tuttle said, indicates Miller has a legitimate disability, because Social Security's definition of disabled is being unable to do any paying job, unlike other disability review protocols, which define disabled as inability to do the same job one had when injured.
Miller’s chances of saving his full pension may hang on technicalities.
“We’re looking [to see] if there’s any legal challenges to the voting procedures,” Tuttle said.
Miller, a former shop steward, said there are disabled retirees worse off than he is, and he sees their treatment as a dishonorable way to break a commitment.
“It’s not that I’m stabbing [John Bulgaro] in the back but there’s got to be a righteousness. There’s got to be a sense of honor.”
Bulgaro and Baum say there are a lot more people who would qualify for the switch Miller wants to make than Miller is acknowledging. The Teamsters eliminated their disability pension five years ago, and there is no provision in MPRA for retroactively moving people into it now, they said.
Baum, who like Miller is a Rotterdam resident and union official retired from the Latham UPS facility, said he’s not happy with any part of the situation, but the alternative would be pension fund insolvency, which would be worse for almost all pension recipients, present and future.
The federal Pension Benefit Guaranty Corp., which is facing a monetary shortfall of its own, would take over funding of The New York State Teamsters Pension Fund if it went insolvent and would cut pensions a lot more than 29 percent, Baum said. (PBGC is now funding pension payments to about 4,000 Local 707 retirees at less than half their previous levels, on average.)
Baum’s grudging support for the cuts, predictably, gained him a lot of criticism.
“As I got into it, I found out that I was set up to be the target. I’m not a thin-skinned guy. ... You can’t believe the response,” he said, adding that for a while, he was having to turn his phone off daily to give it time to charge.
“People are very disappointed,” he said. “There’s no trust. A broken promise is devastating.”
Those who were not attacking Baum personally as the messenger attacked his message.
Compounding the emotion is that very few in the rank and file realized what was happening until they got the notice about proposed pension cuts.
“We’re truck drivers; we’re not lawyers,” Baum said.
But there’s nothing else on the horizon that gives him hope for saving the pension fund. The proposals for stop-gap measures — like the low-interest federal loans Bulgaro would like to see — are “dead in the water,” Baum said.
“In 2027 we go insolvent,” Baum said. “In my heart of hearts, I can’t let this happen. So my position is, I'll take the  percent for the retirees. But do I like it? Not one bit.”