Treasury Department Rejects Proposal to Cut Retiree Benefits

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Treasury Department Rejects Teamsters’ Central States Proposal to Cut Retiree Benefits

Proposed cuts would have slashed members’ income by 50% or more

By

Timothy W. Martin

May 6, 2016 2:07 p.m. ET

 

The Treasury Department on Friday rejected a proposal by the Teamsters’ Central States Pension Fund to cut pension checks for 200,000 retirees, according to people familiar with the matter.

It is extremely rare for retirees to ever see reductions in their pension benefit. The proposed cuts would have slashed some members’ income by 50% or more.

Central States represents about 400,000 truckers, construction and other types of service workers. Central States only has about half of the money it needs to meet future obligations, with $17.8 billion in assets versus liabilities of $35 billion.

The decision was made by Kenneth Feinberg, the star mediator, who judged whether Central States’ application to avoid insolvency followed the law and made reasonable assumptions about investment returns and membership contributions. Write to Timothy W. Martin at timothy.martin@wsj.com