"They drove their pension plan into bankruptcy and want us to pay for it"
ALEXANDRIA, Va., March 19, 2013 /PRNewswire-USNewswire/ -- Today, The Taxpayers Protection Alliance criticized the International Brotherhood of Teamsters for numerous financial mistakes, missteps and blunders that resulted in the Teamsters Central States Pension Fund being $14 billion in debt and headed towards bankruptcy.
Already facing a $34 billion deficit, the Pension Benefit Guaranty Corporation (the government entity created to help current and future retirees if their pensions go bankrupt) could be exposed to $14 billion more with the Central States Pension Fund being $14 billion underwater.
David Williams, President of The Taxpayers Protection Alliance said, "With the Teamsters Central States Pension Fund $14 billion in debt, and the government agency designed to help Central States current and future retirees is $34 billion in debt, this can only one mean one thing – more taxpayer bailouts."In 2008, The Wall Street Journal reported that Teamsters President Jimmy Hoffa asked Congress to include pension plans like Central States in any bailout. The story of the Central States Pension Fund reads like a financial horror story, with bad decision after bad decision leading to a nightmare for taxpayers. Consider the following examples:
- The Congressional Research Service (CRS) reported that Central States decided to invest in stocks in spring of 2000 while the Western Conference of Teamsters Pension Plan took a more cautious approach with its contributions and invested in Treasury Bonds. The result, according to The New York Times , was that Central States lost $2.8 billion while the Western Conference added to its bottom line by gaining $834 million. Because of this decision, the Central States' unfunded liability, the difference between its assets and its obligations, reached a staggering $14 billion. And most importantly, the Teamsters Fund " had to reduce benefits for the first-time in its 49-year history."
- During this time, the Central States Pension Fund reported a $77 million loss on an "unsecured loan." When pressed on the failed investment by an employee at a local union, a pension fund official revealed that loan was actually stock the Fund had purchased to back a Russian bank that went belly-up.
- In February of 2008, the Central States Pension Fund received a $6.1 billion withdrawal penalty from UPS and promptly invested a majority of its funds in the S&P 500 instead of safer investment vehicles. The result: the Pension Fund lost every single penny of the $6.1 billion on the way to losing more than $9 billion in 2008.