The Check's in the Mail

How a once-mighty union sold out thousands of workers on the eve of retirement

If UPS pulls out, Central States really would end up in dire straits. More than half of its current contributions come from UPS. If the fund went bankrupt, members would receive payments from a federal agency, the Pension Benefit Guarantee Corp. Their checks might amount to one-third of what they're currently entitled to, however.

In April, Congress approved a bill allowing many large employers with pensions hit hard by the stock market crash to postpone making catch-up contributions for two years. The White House had opposed extending the same break to multi-employer funds, which tend to serve union members. But Senate Republican Whip Mitch McConnell of Kentucky convinced the Bush administration to agree to add a provision benefiting Central States, but no other multi-employer fund.

(For the Teamster rank and file, there's one more ugly caveat: Congress agreed that during the grace period, Central States can't increase benefits. So the cuts the fund managers ordered last fall can't be reversed for some time to come.)

Raoul Benavides

At the time of the vote, unnamed Republican officials told the Associated Press that McConnell was acting on behalf of UPS, Kentucky's largest employer. Next on its agenda, UPS quickly announced: "long-term reform."

There's reason to think they'll get it, too. In the 2004 election cycle alone, UPS has donated $1.5 million to candidates for federal office. That's more than any other group or company in the transportation industry. It's as much as the big three automakers combined, and about twice as much as Northwest, Delta, and all of the other large airlines combined.

The Pension Rights Center's Ferguson is quick to call the market crash a convenient excuse. "They're using it as a pretext," she says. "This legislation is exhibit A. They wanted to reduce employer contributions to free up money for other things. It's seizing any pretext to cut back on retirement pay. And it's totally unfair to the longtime, loyal employees who played the game by the rules. It's just callous disregard."


Beefy, baseball-capped, and middle-aged, Bob Rich (not his real name) is slumped miserably over a cheeseburger in the front booth of the Monticello Perkins. He retired a few months before the Perfect Storm hit, and because the law says a retiree's pension can't be reduced, he thought he could ride the crisis out. He was wrong, and the way he sees it, he played by the rules for the better part of a lifetime only to find the rules changed just when he finally needed something for himself.

Rich is talking about bad faith, and being depressed, and how angry he is at the labor union that was supposed to protect him and see to it that he wasn't destitute in his old age. He's gained 40 pounds in the last few years. He has a bad back and an unusable shoulder. If there's anything redeeming about his experience, it's that he's scared his two sons into putting their noses to the grindstone. They're well on their way to a matched set of engineering degrees from North Dakota State University.

In 1997, Rich tore his rotator cuff and had to give up his job as a driver with a Teamster trucking company. In the hope that he would recover, his employer let him work in the office for another two years. But when it became clear that Rich's work restrictions were permanent, he had to leave the job. At that point he'd been paying into Central States for 28 years. Thanks to a provision for people in his situation, he was able to "buy" the last two years of his pension. He gave the fund $9,500, retired, and expected that in two years he'd start receiving monthly payments.

But in the meantime, he needed to get a job--no mean feat for a disabled trucker in a small town. Complicating things was the reemployment rule attached to his pension, the one that placed restrictions on work by retirees to make sure they wouldn't be competing with union members.

After months of looking, Rich found a job routing freight for a local manufacturer in July 2000. It paid nearly $35,000 a year and had family benefits. He wrote to the pension fund to ask whether the job fell within the parameters of the reemployment rule. He didn't hear anything, so he went to work.

Fourteen months later, and two months after he was supposed to start drawing his pension, he heard back. Central States wanted him to quit. He appealed, a process that took six months. He lost, and in January 2002, he quit the job and began receiving his $3,000 a month pension. In addition to losing health coverage for his family and his new salary, the tussle cost him $18,000 in lost pension. To add insult to injury, the union health plan had begun charging for health care for himself and his wife. His kids weren't covered at all, so he had to find a catastrophic plan to cover them.

Rich needed another job. He got an offer to drive the van for the kidney dialysis unit at the local hospital. He was to load the van, drive it to an outlying community, unload it, wait for the ride-along dialysis technician to finish her work, and drive everything back to the hospital. Central States said no, but, oddly, volunteered that it would be okay for him to work as a groundskeeper at a golf course, or for a government agency.

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