By Jake Rossen
By Jesse Marx
By Michelle LeBow
By Alleen Brown
By Maggie LaMaack
By CP Staff
By Jesse Marx
As it turns out, Jackson's was a bad bet. He's had his 30 years in since last year, but needs to bring in $12,000 a year above his $3,000-a-month pension until the house is paid off. And he can't figure out how to retire without violating a Central States rule governing what jobs retirees can take. Jackson has asked several times, but he can't get the fund administrators to give him hard and fast answers as to what he might be allowed to do once he retires.
"I wrote a letter saying, 'Do you mind if I do X,'" he says, hoping to take advantage of his master's degree. "And they came back and said, 'That's fine, but let us know before you get started.' They wanted to know the hours worked and the job classification." The letter spelled out the kinds of jobs that were generally all right if done for 80 hours a month or less: convenience store clerk, school district bus driver, gas pump operator--hardly the kinds of posts Jackson was considering.
"So then I wrote and asked about being a real estate agent. They said, 'Okay, but you have to contact us with the specifics first.'" And the specifics, Jackson knew from experience, were where things tended to get fouled up. His colleagues had gotten similar letters, and had taken jobs that were "probably" okay, only to learn that they'd violated the terms of their pension. Some even owed Central States massive refunds.
Teamsters who retire at young ages must agree not to work more than a certain number of hours a month or in industries or jobs in the union's core businesses. Originally, the reemployment rule was created to make sure people retiring didn't take jobs away from union members. It's not uncommon for pension funds to have these rules, but as Central States' administrators have grown more concerned about the state of the fund, they have begun to interpret the rule more broadly.
One of Jackson's former co-workers went to work at a golf-supply store, only to be told that he could work just in the front half of the store, not the back room. One started a lawn-cutting service, but was told to close the business when it showed a profit. Another, in another unit, was told he couldn't be a Wal-Mart greeter.
In response, some of Jackson's cohorts took jobs off the books, working for cash. Others, like him, decided to hang on and bide their time until the question of the fund's solvency is decided, as well as a class-action lawsuit filed on behalf of some pensioners who ran afoul of the reemployment rules.
"I can't take the risk," Jackson says. "Not just for the reemployment rule, but is the money going to be there? The whole point of the Central States thing is to keep you working for so long, because they want to keep your payment coming into the system." As a result, he's in the ironic position of hoping UPS is able to convince Congress to give it a sweetheart deal that would allow it to abandon the pension plan.
Massive though the shift of dollars to 401(k)s was, another 1990s change in the system proved less visible but no less fundamental. The public once believed that pensions were funded by money that otherwise would have gone into the paychecks of Young and his brethren. But as the pension became an anachronism, corporations began to complain that their pensions were albatrosses, and no one blinked--least of all in Congress.
Even following decades of steady loosening of the arcane laws governing retirement funds, it's hard for a company to just ditch its pension. In the past, pensions usually died only when a company went out of business. Legally, however, companies have always had the right to "terminate" a pension, provided they ante up enough money for the fund to pay out every nickel promised to date. In the case of UPS and Central States, that's billions of dollars.
In recent years, an increasing number of corporations have attempted to kill off the last of the pensions by arguing that they'll be bankrupted by either funding them or coming up with the payment to step away from them. The success of these gambits rests on convincing lawmakers and federal regulators that the pension is too sick to save.
Too bad, then, that by the end of the '90s most pension funds were fat and sassy. For its part, Central States was so replete that a select few Teamster bargaining units began paying pensions of $5,000 and $6,000, even to fiftysomething retirees with "30-and-out" contracts like Young's. At the same time, Teamster leadership did something previously unheard of: They negotiated contracts that allowed a number of employers not to pay into pensions on behalf of large numbers of workers.
During its most recent round of bargaining with UPS, in 2002, there was no talk of increasing UPS's contributions to the fund. By that point Central States was already in trouble, and, with trustees reporting back to both parties, it's reasonable to assume that each side knew there was a shortfall. At the very least, critics assert, Teamster leaders were well aware that the number of retirees was eclipsing the number of dues-paying members. Nonetheless, union leadership called the deal the best contract ever.