DETROIT — Marsha Rarick, 66, worked 21 years driving a truck and hauling cars, mostly Jeeps out of Toledo.
Rarick, who retired at the end of 2016, is collecting around $2,400 month from a Teamsters pension plan that’s set to run out of money in a few years. She found herself Friday in a packed union hall at Teamsters Local 299 in Detroit fighting for her pension check.
“I’m worried it will be cut altogether,” said Rarick, who lives in Toledo.
“I worked really hard, and now to lose the pension I was working for would be really devastating,” she said.
Plenty of pensions created through collective bargaining agreements between a union and several employers in a given industry are on the verge of crashing. Many of these multiemployer plans cover union workers in construction, retail, mining and transportation.
“I’ve been retired 20 years. Now they want to take it away. What happened to the promise?” asked Robert Glass, 78, who lives in Westland, Michigan.
Glass, who drove a truck for Airborne Express at Detroit Metro Airport, said he went to work every day for 38 years, did what he was supposed to do and hoped one day to have a secure retirement. He now collects about $3,500 a month in a pension but worries that check could be cut if the Teamsters fund runs out of money.
Up to 1.5 million Americans — or a bit more than one in 10 — participating in multiemployer plans are at risk and covered by pensions systems that could run out of money.
Pension plans ended up in financial distress for several reasons. The stock market fallout in the early 2000s — followed by the financial crisis in 2008 — hurt investment returns. Some investments were mismanaged. Many plans recovered but a significant number did not. Some companies went out of business, leaving behind unfunded benefits. Pressures of deregulation in the trucking industry continued.
About 130 multiemployer plans are expected to run out of money over the next 20 years, according to the Pension Benefit Guarantee Corp.
The Pension Benefit Guaranty Corp. is providing financial assistance to 78 such insolvent multiemployer plans — and the numbers are expected to grow.
The PBGC doesn’t take over multiemployer plans in the same way it deals with insolvent single-employer plans. Instead, the agency sends financial assistance to multiemployer plans so they can pay benefits at the level the PBGC guarantees.
The multiemployer guarantee is not indexed for inflation — so the payout to retirees remains the same year to year. It does not vary based on the retiree’s age. It will vary based on the retiree’s length of service. The guarantee is based on a complex formula prescribed by federal law.
The PBGC is projecting that its insurance program that offers some relief for those covered by insolvent multemployer plans will itself be insolvent by 2024 or 2025. The likelihood the PBGC program for those plans will have enough money after fiscal year 2026 is now less than 1 percent, according to a PBGC report in May.
“If the PBGC multiemployer program is allowed to become insolvent, the only money available to provide guaranteed benefits will be incoming premiums. Only a small fraction of the current, very modest guarantee will then be funded,” said W. Thomas Reeder, director of the PBGC at a House committee hearing last November.
He said the result would be catastrophic for retirees, their families and current and former workers.
On Friday, a town hall was held in Detroit to draw support for a pension fix, bringing together hundreds of retirees and active union members; politicians, including House Democratic Leader Nancy Pelosi and U.S. Rep. Debbie Dingell, D-Dearborn; and union leaders such as Teamsters General President Jim Hoffa and Gary Jones, the new president of the UAW.
Dingell is part of the bipartisan, 16-member Joint Select Committee on Solvency of Multiemployer Plans, which has a statutory deadline of Nov. 30 to provide recommendations to address the looming pension crisis.
“Failure is not an option,” Dingell said before the event. “You see this room? These are people’s lives.”