Teamsters Retain Consultants to Review Central States Pension Fund

Teamsters Retain Consultants to Review Central States Pension Fund

November 12, 2002

(Washington, D.C.) – In response to reports of the decline in the value of assets of the Central States Pension Fund, the Teamsters Union announced today that it is taking the extraordinary step of retaining the services of outside consultants to perform a combined independent investment and actuarial evaluation of the Fund.

The Union has retained two nationally recognized and respected firms, Independent Fiduciary Services (IFS) and Watson Wyatt Worldwide, to perform an independent assessment of the asset allocation approach and the actuarial condition of the Central States Pension Fund.

The Central States Pension Fund is a multi-employer pension fund, and under federal law the Teamsters Union itself has no control over the management or investment strategy of the Fund. The Fund continues to operate under court and government supervision as the result of a 1982 Consent Decree. Under the terms of the Consent Decree, the Fund’s named fiduciaries—who are ultimately responsible for investment strategy and the overall investment program—must be approved by the Federal court after appropriate notice to the U.S. Department of Labor. The current designated named fiduciaries are J.P. Morgan and Goldman Sachs. Employer and employee trustees are prohibited from making any investment decisions.

The Central States Pension Fund is cooperating with the review.

According to General President James P. Hoffa, the decision to seek an independent analysis of the Fund has been taken, “because we cannot sit on the sidelines while the retirement benefits of our members are undermined by falling financial markets. The International Union must have the information necessary to ensure that we can take whatever action may be necessary to help preserve and protect our members’ pension benefits.”

According to Teamster General Secretary-Treasurer Keegel, “The bad investment climate along with the bankruptcy of Consolidated Freightways makes it imperative that the Union do its own independent evaluation of the Central States Pension Fund.”

Although many pension funds are suffering in the current climate, the Central States Fund suffers from the added handicap that the number of retirees drawing benefits from the Fund significantly outnumbers the active participants for whom contributions are being made. This makes investment returns particularly critical for Central States and means that the current bear market has hit the Fund particularly hard.

General Secretary-Treasurer Keegel said: “While we cannot tell the federal government, the trustees, or the Fund’s named fiduciaries what to do, we owe it to our members to fully assess what the real story is.”

Says General President Hoffa, “The Teamsters Union will do everything possible to get to the bottom of the issues at Central States and provide a frank and clear view of the situation to our members. The IBT will then be in a better position to consider all appropriate action to preserve the retirement security of our members and their families.”

Founded in 1903, the International Brotherhood of Teamsters represents more than 1.4 million hardworking men and women throughout the United States and Canada.