Leaders of the
The fund, called the
A separate union pension fund for retirees outside southeast
Last week, the union submitted its application to the
Yet even if a majority vote to reject the proposed cuts,
The proposed pension cuts were first reported by Crain's
Pummeled by recessions, fewer work hours
Union leaders say that little could have been done that hasn't already been tried to avert the future pension crisis.
The pension fund suffered investment losses in the early 2000s recession and even bigger losses in the 2007-09 recession. Then, amid changes in the
Work hours exceeded 14 million per year in the early 2000s, bottomed out at about 5.7 million in 2010 and are only back to about 8 million hours, according to the union.
"The decline in hours was much more severe, and the recovery much slower, than trustees had predicted," the union says in its
In 2013, in one attempt to avert a crisis, pension trustees raised the minimum retirement age for full pension eligibility to 62. Eligibility had been based on a point system that considered age and years of service.
"That was part of the problem. We had people retiring at 50, 51, 52 years old," said
Barnwell, who became a pension trustee six years ago, said he didn't know whether criminal matters that involved the pension fund in the 2000s had any effect on the fund's current trajectory.
A former chairman of the pension fund's board,
The investment manager was convicted of embezzling
And the consultant pleaded guilty to promising to give Mabry a kickback in connection to the pension fund's
In the end, the casino proved to be a good investment, according to Barnwell.
"I believe it was actually a moneymaker for the pension fund, but I was not a trustee at the time," he said.
The union is seeking to reduce its pension payouts under a relatively new process created by a 2014 law for multi-employer pension plans that are projected to go insolvent in less than 15 years.
The carpenters fund is classified as a multi-employer plan because multiple companies hire the union's workers and make contributions toward their pensions.
Nationwide, 28% of all participants in pension plans are in multi-employer plans. Most pension plans are just for one employer.
To try and save their pension fund -- and comply with federal law -- the carpenters' trustees raised the fund's contribution rate for companies hiring their members to nearly
"The pension fund was essentially 'taxing itself out of existence' by increasing the hourly pension contribution level ever higher," the
A union representative told the
However, in aggregate, the proposed cuts would pare the pension fund's average monthly benefit 13% to
Union leaders say the proposed cuts are still less drastic than what would occur if they allowed the fund to run out of money and become eligible for a bailout from the federal
The corporation has maximum guaranteed limits for beneficiaries of multi-employer plans, such as
But even that backstop is no longer assured.
Without a federal intervention, the
Cuts would not hurt everyone
Under the proposed cuts to the carpenters fund, pension benefits earned prior to 2007 would be slashed by 16%, and the fund's deferred vested participants would see 26% cuts.
Pension benefits earned after 2007 wouldn't be affected, as that was the year the fund's monthly multiplier benefit was reduced to 1%, meaning that each
Members who are 80 or older or have disability-based benefits would not see cuts. Those between ages 75 and 80 would see smaller cuts.
Unlike some public-sector workers with pensions who do not pay withholding taxes, the retired carpenters are eligible to receive
In 1997, the pension fund's trustees boosted the monthly multiplier to 4.3% because the plan was more than 100% funded and therefore in danger of triggering
However, the pension fund ratcheted back the monthly multiplier after its market returns got battered in the wake of the early 2000s recession.
The carpenters union workers are among the 17% of private-sector workers in the
About 65% of private-sector workers have access to a defined-contribution retirement plan, such as a 401(k).
Pensions are more common among unionized public-sector employees.
"A big reason for the shift was to reduce the liability that companies incurred that went on their balance sheets for the defined-benefit plans," he said.
Legislation seeks to help multi-employer plans
Pensions are generally considered a more secure retirement system for workers because the money is guaranteed to come in like an annuity payment, no matter how long the retiree and his or her spouse live. By comparison, the money in defined-contribution plans can run out.
In July, the
The legislation, which was cosponsored by eight
A version of the bill is still pending in the
"We bailed out the financial industry, we bailed out the auto companies, it's hard to say we shouldn't bail out these folks, if we follow that same sort of logic," Masters said.
Net market returns for the
Sources: Pension plan trustees
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