New York Teamsters’ Pension Fund Runs Out Of Cash
The New York Teamsters Local 707 pension fund has officially run out of money, making it the first pension fund of its type to dry up the way it did.
The fund, which supported the retirement plans of 4,000 retired Teamsters on Long Island, ran out of cash as of February. The union was forced to turn over its fund to the Pension Benefit Guaranty Corporation (PBGC), an independent federal agency, according to the Washington Free Beacon.
“We have guys on Long Island who are losing their houses,” former trucker Edward Hernandez told the New York Daily News.
Hernandez, 67, went from receiving a $2,422 monthly check to $721 after taxes in recent months. The PBGC picked up pension payouts after multiple stopgap measures failed, but the maximum benefit paid out by the agency is $12,000 per year, significantly less than what some of the members were promised during their working years.
The PBGC was created in 1974 in order to protect pension benefits in private-sector defined benefit plans, which typically pay a set monthly amount at retirement. The federal agency pays the benefits outlined in a retiree’s pension plan required by law.
The trucking industry has been hit hard due to deregulation and market forces, according to the New York Daily News. As many as 200 other plans are on track to run out of money, which will affect up to 2 million retired Americans.
“This is a quiet crisis, but its very real,” Thomas Nyhan, executive director and general counsel of the Central States Pension Fund told the New York Daily News.
“Only 7 percent of current retirees and beneficiaries will receive their full plan-promised benefit amount,” the PBGC said in a press release Wednesday. The agency said it would provide $1.7 million to Local 707 retirees each month.
The PBGC said that the poor financial condition of the Local 707 Fund is the result of several trends.
“They include a steady decline in the number of participating employers and aggregate employer contributions, increases in plan benefit levels that were not adequately funded, and investment losses suffered in the 2008-2009 financial crisis,” the PBGC said in the statement.
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