Retired Teamsters — who fought off a plan to slash their pension checks beginning this week — have won a second victory: a federal investigation of their troubled Central States Pension Fund.
The Government Accountability Office formally accepted requests from both houses of Congress to investigate the pension fund’s investment activity, said Charlie Jeszeck, director of education, workforce and income security issues at the GAO.
“We hope they really get after it,” said Tom Schwarzenberger, a retired Teamster and member of the Missouri-Kansas City Committee to Protect Pensions. “I think they’d have to go clear back to 1982.”
Central States reached a consent decree with the federal government in 1982 in an effort to end organized crime’s influence over how the fund’s money had been invested. The decree continues to give the U.S. Department of Labor the power to vet the pension fund trustees’ candidate to oversee investments of the fund.
Many of the 400,000 participants in the Teamsters pension plan, including 220,000 in retirement, have questioned how its investment activity contributed to the fund’s shortfall, spreading blame across the pension fund management, the Teamsters union and the federal government.
Jeszeck said the Department of Labor would be asked to provide information but would not be active in conducting the investigation.
“This is a GAO operation,” Jeszeck said. “GAO takes this issue very seriously. A lot of people are involved.”
He said the investigation has begun with the assignment of some staff but still needs to develop the inquiry’s methodology and set the questions it will investigate.
Rep. Emanuel Cleaver, a Missouri Democrat, was among several members of Congress to sign a June 20 letter seeking a GAO inquiry. Cleaver, in an emailed statement, welcomed the GAO’s acceptance of the inquiry request.
“Thousands of hardworking individuals vested millions of dollars into their pension funds and now face dramatic cuts. If there was any mismanagement of those funds, make no mistake, we will get to the bottom of it,” Cleaver said.
An earlier request to the GAO had been led by Sen. Charles Grassley, an Iowa Republican.
The June 20 letter set out eight issues to investigate. Among these were questions on whether investment decisions were free of conflicts of interest, how the fund allocated its investments, how investment strategies responded to employer withdrawals and industry deregulation’s impact on the fund.
Central States has said it will run out of money within 10 years and would need $11 billion to close its financial shortfall. It had proposed cutting current retirees’ benefits, many by half or more, as a way to keep the pension fund solvent and capable of paying benefits well into the future.
Those cuts were to have begun with retirees’ pension checks this month. Instead, the normal checks for the full amount arrived on schedule after noted mediator Kenneth Feinberg rejected Central States’ proposal.
“There was rejoicing when you stop to think of what it could have been, cut in half or anywhere between 50 and 70 percent,” Schwarzenberger said.
Central States’ proposed cuts were possible under a controversial 2014 law that Teamster retiree groups have targeted to overturn.