BINGHAMTON, N.Y. — Thirty-five thousand New York Teamsters Union members may have to sacrifice a portion of their retirement income to bail out their pension fund.
Current retirees will possibly see almost a third of their monthly payment wiped out next year. Those still working can count on their projected pension benefits being trimmed by 20%.
Based on financials provided to retirees and obtained by the USA TODAY Network, the plan has barely 50% of the assets needed to cover projected benefits for covered employees as of 2015 — $1.58 billion in assets with a projected liability of $3.22 billion.
To save the plan from possible insolvency, plan administrators are asking participants to make a sacrifice that they say will benefit all.
"Our fund remains severely underfunded and cannot be saved unless we take additional and immediate action," reads a letter from trustees to plan participants. "We are determined not to allow our fund to deteriorate to a point where the fund cannot be saved."
Retirees over age 80 would be held safe from the cuts, while those between 75 and 79 would see cuts on a sliding scale.
Among those covered by the pension fund are drivers for United Parcel Service and many New York-based trucking and transportation services companies.
"I don't know what people are going to do," said Armand Gavazzi, a UPS retiree from Vestal with 23 years of service. He expects to have his monthly income trimmed by $500 to $600 if the pension cutbacks are approved.
Any pre-retirement planning done by Teamster members is now shot, Gavazzi said, with the prospect of a nearly one-third of their pension checks wiped out.
"It just bothers everyone," Gavazzi said.
Of the nearly 35,000 enrolled in the program, nearly 12,000 are active employees, 16,000 are retired and 6,800 are retired or are vested in the pension but have yet to collect benefits, according to union numbers.
Pension benefits under the Teamsters plan vary based on wages over the course of employment and years of service.
A 2014 federal law allows multi-employer pension funds facing insolvency to cut pension benefits. The cuts, however, have to be approved by both current and prospective pension beneficiaries and the Treasury Department. Last year a similar move by the far larger Central States Teamster pension plan was rejected by the federal government.
The 2014 law "gave these multi-employer funds more leeway to cut back rates," said Michael Dambra, assistant professor of accounting and law at the University of Buffalo School of Management.
Plan trustees say the plan was undermined by "historic market losses" in 2000 and 2008, a declining active union population and "an exodus of contributing employers."
From 2000 to 2015, the Standard & Poor's 500 Index, a general measure of stock market performance, posted four down years. Between 2000 and 2002, the S&P fell 37% and declined another 37% in 2008. But over the broader time frame from 2000 to 2015, the index rose 133%, according to a database maintained by the Federal Reserve Bank of St. Louis. From 2000 to 2015 the cumulative total return on 10-year Treasury Bond is 143%.
A Teamster contingent is challenging the cutbacks, questioning whether pension trustees were looking out for the best interests of plan participants.
"Support is gaining," said Mark Greene, a 28-year active employee of UPS based out of Kingston and a leader of the opposition.
His group, Teamster Alliance for Pension Protection, is commissioning a review of the pension fund to determine if the trustees were performing their fiduciary responsibilities in guiding the fund with a responsible and conservative investment policy.
A phone call to Mark May, secretary treasurer and principal executive officer of Teamsters Local 317 in Syracuse, was not returned.
If the cuts aren't instituted, pension fund trustees fear the pot of cash would soon run dry, leaving younger plan participants without a retirement cash flow.
"It's a little bit of a cop-out to say they haven't been able to recover from 2008, 2009," Dambra said.
Cuts, if approved, are scheduled to go into effect on July 1.
Union representatives have been conducting meetings across the state with plan participants in preparation for next year's cuts.
"If we wait to take action, we will be forced to make even larger cuts later, and run the risk that the fund will end up paying no pensions at all," the letter to plan participants said.