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“This Is Going To Be A National Crisis”

pension cuts

This is not the first, and it won’t be the last, case of pensions that were promised but are now being reneged on. Be they public or private pensions, the contributions for most pensions are woefully inadequate. The new law shifts the burden for the pensions, by default, to the taxpayer. This is by design. Social Security was supposed to be a pay as you go situation, but that was a joke, just as most pension plans are a joke. If it seems too good to be true, then it’s not true. I feel sorry for retired folks, but then again, they swallowed the lie, and planned on a comfortable retirement, all because of the lies. – Shorty Dawkins, Associate Editor

This article comes from zerohedge.com

One Of The Largest U.S. Pension Funds Set To Cut Retiree Benefits

A dark storm is brewing in the world of private pensions, and all hell could break loose when it finally hits.

As the Washington Post reports, the Central States Pension Fund, which handles retirement benefits for current and former Teamster union truck drivers across various states including Texas, Michigan, Wisconsin, Missouri, New York, and Minnesota, and is one of the largest pension funds in the nation, has filed an application to cut participant benefits, which would be effective July 1 2016, as it “projects” it will become officially insolvent by 2025. In 2015, the fund returned -0.81%, underperforming the 0.37% return of its benchmark.

Over a quarter of a million people depend on their pension being handled by the CSPF; for most it is their only source of fixed income.

Pension funds applying to lower promised benefits is a new development, albeit not unexpected (we warned of this mounting issue numerous times in the past). For many years there existed federal protections which shielded pensions from being cut, but that all changed in December 2014, when folded neatly into a $1.1 trillion government spending bill, was a proposal to allow multi employer pension plans to cut pension benefits so long as they are projected to run out of money in the next 10 to 20 years. Between rising benefit payouts as participants become eligible, the global financial crisis, and the current interest rate environment, it was certainly just a matter of time before these steps were taken to allow pension plans to cut benefits to stave off insolvency.

The Central States Pension Fund is currently paying out $3.46 in pension benefits for every $1 it receives from employers, which has resulted in the fund paying out $2 billion more in benefits than it receives in employer contributions each year.

As a result, Thomas Nyhan, executive director of the Central States Pension Fund said that the fund could become insolvent by 2025 if nothing is done. The fund currently pays out $2.8 billion a year in benefits according to Nyhan, and if the plan becomes insolvent it would overwhelm the Pension Benefit Guaranty Corporation (designed by the government to absorb insolvent plans and continue paying benefits), who at the end of fiscal 2015 only had $1.9 billion in total assets itself. Incidentally as we also pointed out last month, the PBGC projects that they will also be insolvent by 2025 – it appears there is something very foreboding about that particular year.

Read more here.

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Shorty Dawkins

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2 comments

  1. I doubt that any of the many million, perhaps billions, skimmed off were buried with Jimmy Hoffa. Let’s look at organized crime folks, various politicians and bureaucrats and assorted corporations that knowingly involved themselves with using pilfered union funds and grab some of their loot to feed into the pension system.

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