General Discussion
In reply to the discussion: I gotta rant on the pension cuts in the funding bill, it made my 77 year old mom cry! [View all]NewDeal_Dem
(1,049 posts)That is the situation confronting the Central States plan, which was notorious in the 1960s and 70s for being used as a slush fund for organized crime. Since then it has operated under federal court supervision and with the help of professional fund managers. Yet that has not been enough to overcome demographic and other trends that have weakened its finances.
http://www.washingtonpost.com/business/economy/congressional-leaders-hammer-out-deal-to-allow-pension-plans-to-cut-retiree-benefits/2014/12/09/4650d420-7ef6-11e4-9f38-95a187e4c1f7_story.html
Many pension funds followed strategies that involved high fees for Wall Street companies while producing financial returns that trailed plain vanilla investment strategies, said Jay Youngdahl, a fellow with the Initiative for Responsible Investment at Harvard University. Central States appears to be a prime example, he said. Before cutting benefits, we need to examine what exactly has happened.
Financial firms came to manage the Central States Fund thanks to a 1982 federal consent decree that stripped the Teamsters of its power to oversee retirees money. In recent years, the decree divided a portion of the pension assets into low-cost index funds, and gave the rest of the funds assets to firms including Morgan Stanley, Northern Trust, JPMorgan Chase and Goldman Sachs.
Doesn't sound to me like the union is running it, and hasn't for a long time. And as I read elsewhere, the main reason the central states plan is having problems is that UPS was allowed to buy out of the plan and then the stock market tanked.