Union pension will need bailout

SUBHEAD: Teamsters' Central States Pension Fund is under funded and won't meet obligations required by government.

By Tyler Durden on 12 May 2016 for Zero Hedge -

Image above: Teamsters protesting failure of pension funding. From original article.

Over the past few months, we have covered the unfolding saga (here and here) of the Central States Pension Fund, which handles retirement benefits for current and former Teamster union truck drivers across various states including Texas, Michigan, Wisconsin, Missouri, New York, and Minnesota, and is one of the largest pension funds in the nation, all the way through Kenneth Feinberg's rejection of the proposal to cut benefits on behalf of the Treasury.

When the proposal was rejected, we said that the final resolution will be in the form of an inevitable taxpayer-funded bailout
If the Treasury won't allow any pension cuts, and the government created safety net won't be there to keep the benefits flowing, how will the cash continue to flow to members? With the precedent now set by the Treasury that no cuts will be allowed, the answer will likely come in the form of a massive bailout.
As it turns out, that is precisely what fund director Thomas Nyhan believes as well. Nyhan said the rejection means the CSPF likely won't be able to offer another proposed fix without getting funding from Congress, either directly or through the Pension Benefit Guaranty Corp.

However with the PBGC also on its way to insolvency, and unable to shoulder the additional burden in world of zero and negative rates, that leaves us with... drum roll please... the US taxpayers, aka Congress, footing the bill.
"There are only two solutions. Either the plan receives more money or has to have fewer benefits. I'm hopeful that come probably 2017, we can actually all get to work on something that can provide a solution. If there is no legislation at any time, we're going to end up going to insolvency." Nyhan said. 
The full-court press is now on, as now everyone involved is calling on congress to step in. Visitors to CSPF's website this morning were greeed with a banner directing to a rescue plan website.

Before you could enter the rescue site a pop-up message is shown, simply saying that since congress effectively shut down the proposal, they can now stand up and pass legislation to bail the fund out.
"Central States strongly urges these members to act now to pass legislation that protects the pension benefits of the over 400,000 participants of Central States Pension Fund"
With the Treasury denying the possibility of pension cuts, the ball is now in Congress' court to initiate a bailout.

When it does, because it will, the flood gates will be open for the rest of the insolvent funds to come knocking with their hands out, and we can formally welcome the arrival of helicopter money - whether Yellen wants it or not - in the United States.

What follows is Tom Nyhan testifying before congress back in 2013, laying it out in very plain terms that without funding, or significant benefit cuts, the game is over.

"Unless the fund substantially reduces its liabilities, or receives a large influx of assets, it's projected become insolvent within ten or fifteen years, and at this point our options are very limited."
Nobody listened, and now - in this bold new age of pension fund crushing zero and negative interest rates - it is game over.

Image above: Thomas Nyham testimony egards to the Central States Pension Fund before the House Subcommittee on Health, Employment, Labor, and Pensions. From (https://youtu.be/xWJAmJFcWC0).


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