Cleveland Iron Workers vote to approve pension cuts: Iron Workers Local 17 becomes first plan to cut retiree pensions
For Immediate Release
January 27, 2017 - Pension Rights Center
WASHINGTON – Today, Cleveland
Iron Workers Local 17 Pension Fund announced
that its retirees will be the first in the country to face devastating pension
benefit cuts as a result of the Multiemployer
Pension Reform Act of 2014, which allows ongoing plans that are severely
underfunded to take the unprecedented action of cutting retiree pension
benefits. The cuts will go into effect on February 1, 2017, and are the result
of a participant vote taken after the U.S. Treasury Departmentfs December approval
of the planfs application to cut pensions.
gThese cuts are particularly unfair and cruel to 336 of the
Fundfs retirees who labored for decades constructing Clevelandfs skyscrapers,h
said Karen Ferguson, director of the Pension Rights Center. gIt is these
retirees who will be affected the most – and will see their pensions cut by 30
to 60 percent.h The planfs participants voted by a 2-to-1 margin in favor of the
cuts. This is not surprising since four-fifths of the planfs participants stand
to lose little or nothing as a result of the cuts. More than half of the Fundfs
1,938 participants did not vote.
gRetirees like Walter Overstreet and Larry Burruel
performed dangerous work counting on the promise of their pensions and are now
worried that they will be not able to afford their medical and other bills. It
is simply wrong that after their years of backbreaking work, they have been left
out in the cold.h
In December, the Treasury Department approved
the Iron Workers Local 17 MPRA application to cut retiree pensions. MPRA
requires all plans that have been approved by the Treasury Department to hold a
vote of all plan participants to determine whether cuts can proceed.
The Treasury Department approved the Local 17 application
based on the assumption that the cuts would ensure that the Fund had more than a
50 percent chance of surviving for 30 years. In our comments
on the planfs application, we noted that Local 17fs collective bargaining
contracts do not require new contractors to pay into the Fund. If new money
doesnft come into the Fund and its projections are wrong, participants who voted
for the cuts are sure to face future cuts of their own.
The results of the Local 17 vote underscore the urgent need
for a comprehensive bipartisan solution to the problems facing severely
underfunded multiemployer pension plans. MPRA was a misguided law that did
nothing to address the fundamental problems facing the multiemployer pension
system. Its cutback provisions must be repealed.
The Treasury Departmentfs approval of the Local 17
application and subsequent participant vote to cut retiree pensions could open
the floodgates to approvals of other retiree cutbacks. Currently, four
applications to cut retiree pensions are pending with the Treasury
Department and nearly 70
other plans are in gcritical and decliningh status and eligible to make
cuts.