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FREQUENTLY ASKED QUESTIONS
How do I communicate with Central States Pension Fund to ask questions and get up to date information
about the rescue plan?
Due to the complex nature of the Multiemployer Pension Reform Act of 2014 (MPRA), as well as the need to respond
promptly to the many questions we get daily about individual health and pension benefits, the Central States Pension
Fund call center is not equipped to answer questions on this matter. The best way to stay informed about this issue is to
visit our website, www.CSPensionRescue.com, where we will continually post updates and answers to frequently asked
questions. We have also established a toll-free telephone number (1-800-323-7640) that will feature a recorded message
about MPRA and the current status of our pension rescue planning. We will update this message and our website as
needed to ensure that you have access to the most current information. Critical information and periodic updates will be
sent to all Central States Pension Fund participants via U.S. postal mail. You can submit any questions you may have via
the website or by writing us at: Central States Pension Fund, Pension Rescue Information Center, P.O. Box 5127, Des
Plaines, IL, 60017-5127.
How did the Fund become so severely underfunded?
A variety of factors led to Central States Pension Fund’s dire underfunding problem:
The
deregulation of the trucking industry in the 1980s resulted in the loss of more than 13,000 employers that used
to contribute to the Fund. The challenges in our industry continue today and we’ve experienced the loss of many
employers even in the past five years.
any employers went bankrupt or out of business without making their full contributions to the Fund. About half of
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all benefit payments currently go to these “orphaned” retirees, whose employers never fully paid the Fund to cover
their pensions. Since 2008, Allied Systems, Hostess Brands and Leaseway/E&L Transport went bankrupt, leaving
the Fund short $1.7 billion. Recently, employers such as YRCW have substantially scaled back their contributions
and many other employers have withdrawn completely.
Baby Boomers are retiring in record numbers and the union workforce has been steadily declining for years. As a
result, the Fund currently has more than three times as many retirees as active members. For every $3.46 that the
Fund pays out in pension benefits, only $1 is collected from employers, resulting in an annual shortfall of $2 billion.
That math simply doesn’t work.
dditionally, two major recessions torpedoed the U.S. economy since 2000, driving down the Fund’s investment
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assets and pushing many contributing employers into bankruptcy.
If action is not taken soon to address this funding problem, by 2026, Central States Pension Fund will run out of money
and be unable to pay any benefits to current and future retirees.
What is the Multiemployer Pension Reform Act of 2014 (MPRA) and what does it have to do with benefit cuts?
Until late last year, there was no path forward to fix the problem of underfunded multiemployer pension funds in a
comprehensive way. That changed this past December when the Multiemployer Pension Reform Act of 2014 (MPRA)
was signed into law. MPRA allows trustees of severely underfunded multiemployer pension funds — like Central States
Pension Fund — to develop rescue plans that may include benefit reductions for both active workers and retirees, in order
to save the funds and continue paying benefits for years to come.
What is the timeline for development of the rescue plan and implementation of benefit changes?
At this time, the specifics of a rescue plan have not yet been decided. Our Board of Trustees is considering how pension
benefit reductions could be implemented fairly. We expect that sometime this summer, we will be able to share with you
specific information about a rescue plan and how it would impact your pension benefits. By law, any rescue plan we
develop must be reviewed and approved by the U.S. Department of the Treasury and then voted upon by you, our Fund
participants, before being implemented. However, it is important to note that the final decision about benefit reductions
rests with the U.S. Department of the Treasury. As a result of this process, the soonest that any changes could be
implemented would likely be early 2016.
If benefit cuts go into effect under a rescue plan, can you guarantee that the Fund will remain fully funded
forever and no further cuts will be needed in the future?
The Multiemployer Pension Reform Act of 2014 requires that any pension rescue plan developed must ensure that the
pension fund will never go broke. However, nothing is guaranteed because the Fund is still dependent upon factors (i.e.
number of active participants, retirement rates, investment returns, etc.), which fluctuate over time. The Trustees will take
these factors into account as they work on a pension rescue plan. Our goal is to protect your retirement and the financial
well-being of the Fund by developing a fair rescue plan that will allow us to provide benefits to our participants for years
to come. While this would not be the first time we have made benefit modifications to protect and secure the Fund, our
rescue plan will be designed to ensure that it is the last.
How much money does Central States Pension Fund need to save through the rescue plan to survive?
It’s not a question of how much money needs to be saved, but rather what must be done to ensure that the Fund has the
necessary resources to pay benefits to our participants and beneficiaries well into the future. As we mentioned above, for
every $3.46 that the Fund currently pays out in pension benefits, only $1 is collected from contributing employers, which
results in a $2 billion annual shortfall. Our pension rescue plan will be designed to correct this imbalance, so we do not
continue to pay out more in benefits than we take in through contributions and investment earnings. What rescue options are the Trustees considering? Is there anything other than benefit reduction being
considered?
While benefit reduction is the primary action being considered, the Trustees are also reviewing options that could be
implemented to minimize the impact of benefit cuts such as changes to contribution rates, as well as new benefit level
requirements for retirement.
How does Central States Pension Fund compare with other pension funds in terms of investment returns?
Central States Pension Fund’s average annual investment return since 1980 is 10.8 percent, which is in line with returns
of other comparably sized funds. Over the past 10 years, our investment returns have averaged 7.07 percent, which is
above the 6.9 percent average for pension funds of similar size. What is the Pension Benefit Guaranty Corporation (PBGC) and what is its role? If it is supposed to be
a back-stop for failing pension funds, what happens if it goes broke?
The Pension Benefit Guaranty Corporation (PBGC) is a federal agency that was created to insure pensions and cover
payments in the event that a pension fund runs out of money. When PBGC assumes pension payments, they are
automatically reduced from the full benefit. With more than 200 pension plans covering 1.5 million people projected to fail,
many within 10 years, PBGC is also expected to run out of money. If that happens, pension benefits would be reduced to
essentially zero—no Central States Pension Fund participant would get any meaningful pension. Congressional leaders
have repeatedly said that if PBGC goes broke, it will not get a bailout.
Why is the U.S. Department of the Treasury involved in decisions about our pension benefits?
The U.S. Department of the Treasury and Department of Labor together oversee the Pension Benefit Guaranty
Corporation. Congress appointed the Treasury Department to review all multiemployer pension fund rescue plans related
to MPRA because of the probability that the failure of multiemployer pensions funds would wipe out PBGC funds.
If my benefits are cut, I may need to get a job to support myself, but I understand there is a rule restricting me
from getting a Teamster job. Can that policy be changed? Central States Pension Fund recognizes that a reduction in pension benefits will impact our retirees’ financial status.
The Trustees understand that some retirees may want or need to re-enter the workforce, and we are currently considering
changes to the Fund’s re-employment rules.