Pension cuts could hit South Dakotans

A proposed cut to a massive multistate pension fund could hit nearly 1,000 South Dakotans in the pocketbook.

Cuts to the Central States Pension Fund could trim retirement payments up to half or more about 400,000 people nationwide, most of whom are truck drivers and former truck drivers.

Not all members will be affected equally. Those who already are retired and older pensioners will lose less than younger workers and those with 20 or fewer years of membership.

There are 1,317 members in South Dakota who receive $9.4 million in benefits annually. Of those members, 988 would see reduced benefits.

In early October, every member got a letter outlining what its pension rescue plan would mean for them individually. The plan pays out $2 billion more each year than it takes in, according to Central States' website, so failure to act could mean a loss of all pension benefits in the future.

The U.S. Treasury Department has 225 days to review the plan from the date the plan was submitted, Sept. 25.

Members will be able to vote for or against the program, but the 2014 Multiemployer Pension Reform Act requires the Treasury Department to override the vote and implement the plan or request changes to it.

In Sioux Falls, about 150 unionized employees of YRC Freight will see the impact.

"I can't imagine anybody locally that's impacted more than my office," said YRC owner Rick Hoogendoorn said.

The fund covers Teamsters, and for years was the pension of choice for unionized truck drivers. As union operations closed, however, the plan lost contributors as former union members moved on to non-union jobs.

The so-called "orphans" – pension members who stopped contributing after their union employers went bankrupt but still had a pension promise through Central States – are likely to be the hardest hit.

"After deregulation, a lot of the union companies fell by the wayside," Hoogendorn said. "They weren't contributing to the fund any longer, but people are still taking out the benefits."

In South Dakota, there are 83 "orphans" among the plan members and 630 people who've retired. Twenty-two orphans and 399 retirees will see reductions, according to James Chase, a spokesman for Central States.

Retiree Cal Plienis, 74, of Sioux Falls, worked 25 years for United Parcel Service, paying in to Central States for his retirement. He's been retired for more than a decade, living off his pension. His letter said his income would be cut in half in July under the rescue plan.

He took a part-time job two years ago, worried that UPS's decision to start its own pension plan was a sign of "the writing on the wall." The letter about the impending pension cut confirmed his fears.

"When they decide that all of the sudden we're going to take half of your income … what do you think that would do to your lifestyle?" Plienis said. "I'm not going to starve, but now we have to look at 'can we afford this.'"

Teamsters President James P. Hoffa wrote a letter to Central States last month urging the fund to avoid "draconian" cuts to pension plans.

Hoffa was opposed to the 2014 legislation that made it possible to impose cuts in the face of a negative vote from members and wants Congress to pass Vermont Senator Bernie Sanders's "Keep Our Pension Promises Act," which would use general fund dollars to cover benefits. The bill is funded by limiting the assets that can be protected by real estate transfers and by estate tax modifications.

"Before moving forward with a proposal to implement benefit cuts, I urge you to please work with us to find fair and responsible alternatives," Hoffa wrote.

If the rescue plan is approved, the first cuts could take place as soon as July.