Congress Must Act to Protect Retirement Security

It’s also a tragedy that many older workers in Detroit can’t afford to retire. That means fewer jobs available to younger people who need work.

 

Our country is experiencing a crisis in retirement security. It’s a crisis that affects retirees, older workers and every person who depends on a wage or a wage-earner to live. It’s a crisis that jeopardizes our economic recovery.

 

Right now, many pension funds don’t have enough money long-term to provide the secure retirement promised to millions of Americans. The largest U.S. pension funds had only 79 cents for every dollar owed to current and future retirees at the end of 2008. Median 401(k) account balances for workers in their 50s were less than $60,000 even before the stock market plunged.

 

That’s why an estimated 40 percent of wage earners recently said they plan to delay retirement.

 

The stock market crash and the global economic crisis are two big reasons for the troubles facing U.S. pension funds. A third is the Pension Protection Act of 2006. The act greatly and unnecessarily accelerated the funding requirements for plans and has hastened the funding crisis that threatens most private pension plans and the companies that contribute to them.

 

Rep. Earl Pomeroy, D-N.D., is responding to requests from unions and from management to stabilize pension plans. His goal is to pass manageable and predictable funding rules that will stabilize plans and shield employers from unsustainable obligations. He also is proposing that the Pension Benefit Guarantee Corporation assume the pension obligations for certain retirees who worked for companies that have gone out of business without making sufficient contributions to cover the benefits their employees earned. The PBGC already guarantees the obligations of single-employer pension plans.

 

Multi-employer plans such as the Teamsters Central States Fund are not well understood. They are set up as trusts and operated by joint management-labor boards of trustees. They are not controlled by unions and are required by law to be completely independent of the contributing employers and the unions representing their participants. Their trustees are legally required to act solely in the interest of the plan participants.

 

Many current and retired Teamsters are covered by the Central States Fund. The Fund was severely weakened after 1980 by deregulation of the trucking industry. Deregulation drove 700 trucking companies out of business. Many employees who had earned pensions were left high and dry. The workers of the defunct companies became the obligation of the fund and the surviving businesses.  Meanwhile, the bankrupt companies paid little or nothing to cover the benefits earned by their employees.

 

Now, the surviving trucking companies may have to close their doors because they can’t afford their legal obligations to contribute to the fund. Tens of thousands of jobs would be lost, something this country–and Michigan–can ill afford.

 

Rep. Pomeroy deserves our thanks and support in his effort to avert a further weakening of our economy. His work will likely inspire critics who will complain about bailouts for unions. It is nothing of the kind. Rep. Pomeroy is seeking to provide the retirement security that employees have earned throughout their entire working lives. He is trying to strengthen companies that invest in our economy and in our jobs.

 

We need to work together to avert the crisis in retirement security. Together we can prosper. Divided we will fail. 

 

 

Mr. Hoffa's letter originally appeared in The Detroit News on October 14, 2009.