People who work all of their lives and then retire, plan diligently and bank on receiving a fixed income that will enable them to live a comfortable life. There isn’t a lot of wiggle room for unexpected expenses or extravagances.
That’s why hundreds of people turned out Tuesday at Bartle Hall to protest a controversial 2014 law, allowing pension cuts by half or more covering Teamsters and other unions such as the International Association of Machinists. Recipients of the Central States Pension Fund have a right to be outraged over seeing a large chunk of their promised retirement income possibly vanish as soon as July 1.
Rep. Emanuel Cleaver, a Kansas City Democrat, brought noted mediator, Kenneth Feinberg, to Bartle Hall to hear testimony from people on the proposed cuts in the fund. The U.S. Treasury appointed Feinberg special master to decide by May whether the proposal from the Central States Pension Fund meets the 2014 law. The public forum in Kansas City was the last of seven.
The Central States Pension Fund covers 400,000 participants, 220,000 of them retired, The Kansas City Star reports. The cuts proposed are the first test under the law. Others are expected to follow because many pensions are terribly underfunded.
In letters to retirees, Central States has explained that without the cuts, the fund will run out of money in 2026. “We simply can’t stay afloat if we continue to pay out $3.46 in pension benefits for every $1 paid in from contributing employees,” the letters explained to retirees facing funding reductions.
Central States Pension Fund covers workers and retirees in 37 states and at different companies, including some that no longer are in business. More than 43,000 retirees spent most of their lives working at companies that failed to meet their business obligation to pay into the fund. Those retirees will be among the hardest hit but the cuts.
That will have a devastating effect on many pensioners. Some explained at the hearing that if the cuts go through they will have to come out of retirement with hopes as senior citizens of receiving minimum wage work. That would put them in competition with younger workers who have been protesting in recent years for an increase in the minimum wage.
People entering the workforce or starting new jobs no longer can expect traditional pensions. They would be lucky to be offered 401 (k)s or other defined employee-funded retirement savings account.
Cuts in promised pension is not what should await anyone who has worked all of his life only to have the financial rug snatched from under him. Cuts in pensions are as emotional and politically electric as any talk of cuts in Social Security or Medicare.
Cleaver explained that the law was passed in 2014 as an add-on to a budget bill with no committee debates or hearings. He is seeking alternatives because the proposed cuts put $3 billion in Missouri pensions at risk. He also said he wants an investigation into how the Central States Pension Fund has been handled.
Poorly is the only word that comes to mind. Some area retirees facing cuts shared their notification letters with The Star. They ranged from a current check of $3,000 being reduced 60.7 percent to $1,179.79 and a $2,523.13 current pension check dropping 39.9 percent to $1,515.68. Among the 16 examples that were shared, the average monthly pension loss was more than $1,400.
Retirees age 80 or older won’t see their benefits cut, the pension fund has said. Those age 75 to 80 will be hit with smaller cuts than retirees under age 75.
Retired workers are justifiably angry and scared. Their future remains uncertain unless some equitable solution saves the pension funds and their years in retirement.