The U.S. Treasury rejected the Teamsters Central States Pension Plan’s proposal to cut retirement benefits on Friday. Although the decision stops the pending pension cuts, the pension is still seriously underfunded and is likely to become bankrupt within the next 10 years. Central States told Congress that they need $11 billion to prevent insolvency and meet long-term commitments. They have lobbied for financial support in 2009 and 2010 unsuccessfully. They are hoping Congress will be more receptive with the recent coverage of the fund’s problems and the upcoming elections.
The Teamsters pension fund holds the retirement money for 407,000 trucking industry workers and retirees across the country. It is the largest of the severely underfunded multi-employer defined-benefit pension plans across the country. Defined-benefit plans guarantee a certain amount of monthly income for retirement, putting the investment risk on the plan provider. Unlike 401(k) plans, which make no guarantees and allow employees to choose their own investments.
Click here for an article by the Star Tribune that has more information on the Teamsters Central States Pension Plan.
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