Teamsters whose pension benefits were cut could see some future relief under a proposal backed by Sen. Charles E. Schumer.
Schumer and several other Democratic senators are backing legislation that would create a remedy through the Treasury Department.
Starting in October, many Teamsters workers and retirees covered by the New York State Teamsters Conference Pension and Retirement Fund had their benefits cut by as much as 29 percent.
"For years, these plans offered New Yorkers a nest egg in their retirement," Schumer said. "But today, everything has changed, with pension plans being slashed and with the risk of future, deeper cuts."
New York State Teamsters Conference fund officials said the cuts were a painful but necessary to step to prevent the fund from running out of money within a decade. In Western New York, about 8,400 active and retired Teamsters are covered by the fund, among more than 28,000 members across Upstate New York. It operates as a multi-employer pension plan, meaning multiple employers pay into it.
Around the country, 114 of these multi-employer pension plans, covering more than 1.3 million workers, are underfunded by $36.4 billion and expect to become insolvent within the next 20 years, according to Cheiron, an actuarial consulting firm. That grim forecast has prompted some to call for the federal government to step in to prevent workers from losing their pension benefits.
The Butch Lewis Act, introduced by Sen. Sherrod Brown of Ohio on Nov. 16, would create the Pension Rehabilitation Administration, as an office of the Treasury Department. The new agency would allow financially troubled pension funds to borrow money in order to remain solvent.
The PRA would sell Treasury-issued bonds to financial institutions, to provide money for the loans and to cover the cost of running the office. The office would lend money to the plans for 30 years, at low interest rates, around 3 percent.
Schumer said the pension plans that borrow money from the PRA would be prohibited from using the money to make "risky investments" and would have to submit progress reports every three years.
The PRA is designed to prevent devastating benefits cuts to workers and retirees at pension funds facing long-term trouble. It could also help funds that have already imposed cuts on their members reduce the size of those cuts in the future. But it wouldn't retroactively restore benefits lost since October.
George Harrigan, president of Teamsters Local 449, said he believes the legislation has a good chance of passing if it is attached to a spending bill, rather than voted on as standalone legislation.
Harrigan said it's an issue that needs to be dealt with because it has broad implications for the economy. "It's not a situation isolated to just a couple of Teamsters pension funds," he said.
If a large number of pension funds fail, the lost benefits will take a toll on the economy, Harrigan said. "It could cause severe damage. It has to be reckoned with."
Thirteen Democratic senators have backed the Butch Lewis Act. Twenty-four members of the House of Representatives from New York state signed a joint letter to congressional leaders, urging action on the pension issue without specifically mentioning the Butch Lewis Act.