A pension fund that covers hundreds of YRC Worldwide Inc. employees in the New York City area faces insolvency in a matter of months.
The $30 million Road Carriers Local 707 Pension Fund provides retirement benefits to several companies’ employees, though YRC Worldwide accounts for about 60 percent of its 750 actively working participants.
“We’re expected to go insolvent sometime in February 2017,” said Kevin McCaffrey, fund manager of the Local 707 pension fund.
YRC Worldwide officials in its Overland Park headquarters declined to comment. The company participates in several pension plans that were set up to cover drivers and other related workers across various employers.
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Road Carriers Local 707 covers trucking company employees in the metropolitan New York City area, excluding New Jersey, McCaffrey said. The pension fund covers those workers.
Their fund is in a financial crisis that is similar to, but more immediate than, the one facing the massive Central States Pension Fund.
Central States recently sought federal approval to cut benefits for thousands of retirees, many by half or more, as a way to save the $16 billion pension fund from insolvency. The U.S. Treasury rejected Central States’ proposed rescue and the pension plan said it expects to run out of money in less than a decade.
The Road Carriers plan already had cut benefits for its 3,000 retired participants in February this year by more than 30 percent. McCaffrey said the cuts were mandated under federal law when a pension enters the 12-month window in which it expects to become insolvent.
The pension fund sought additional relief through early financial assistance from the Pension Benefit Guaranty Corp., which backs private pension plans that pay its premiums. The pension plan also sought approval from the U.S. Treasury to reduce benefits for many of its 3,000 retired participants to extend the fund’s ability to pay benefits well into the future, though at a lower level.
PBGC rejected the Road Carriers’ proposal last month as unrealistic, which led the U.S. Treasury to reject the proposal it received. Their denials left the fund on a path to run out of money in February.
At that point, the PBGC “would begin providing financial assistance to enable the plan to pay benefits at PBGC guarantee levels,” a statement from the guarantee program said. Benefits for multi-employer pension plans are limited to less than $13,000 a year. Road Carriers’ proposals sought to maintain individuals’ benefits at levels higher than the guarantee.
“We are not satisfied with the reasons we received from PBGC,” McCaffrey said, adding the fund may seek reconsideration of its plans.
McCaffrey said YRC Worldwide has been hiring and plans to hire more workers that would be active in the fund and bring in more contributions from YRC Worldwide.
Other severely underfunded multiemployer pension plans are seeking federal approval to cut benefits to avoid collapse. New Jersey resident Gary LeVan has gotten two notices that his pension will be cut.
Last December, he received a letter saying his earned benefits from the Teamsters Local 469 Pension Plan would be cut by 40 percent in an effort to prevent the fund’s collapse in 2029. Three months later, he received a second letter saying mounting problems meant the cut would be 45 percent.
“It’s a shame what’s going on. It’s criminal,” said LeVan, 59. “I want to retire this year.”