WASHINGTON (AP) — The Treasury Department on Friday rejected an effort by the Teamsters Central States Pension Plan to cut benefits for 270,000 retired workers starting in July.
Treasury Secretary Jacob Lew said in a letter to members of Congress that while the decision blocks the pending pension cuts, it does not resolve the issue because the pension plan remains severely underfunded and is projected to become insolvent within the next 10 years.
The review was conducted by Kenneth Feinberg, the outside attorney selected by Treasury to review the case under a law passed by Congress in 2014.
That law, known as the Kline-Miller Multiemployer Pension Reform Act, set up requirements for cutting benefits for hundreds of thousands of retirees covered by underfunded multi-employer pension plans as a last ditch means to stave off insolvency. Before the cuts can go into effect, they have to pass a review by Treasury which has the power to block the cuts if they do not meet certain requirements.
Lew said the rejection of the proposed cuts was based on Feinberg's findings that the plan failed to demonstrate the reductions would keep the pension plan from becoming insolvent or show they were being equitably distributed.
Teamsters General President Jim Hoffa praised Feinberg and Treasury for the decision, saying it protected thousands of retired workers from "massive cuts that would destroy so many lives."
Senate Minority Leader Harry Reid, D-Nevada, said the rejection of the initial application would protect 270,000 retired truck drivers, warehouse workers, dock workers and their widows and spouses across the country "all of whom faced brutal and immediate cuts in their promised pension benefits."
Reid said that millions of other retired workers receiving benefits from multi-employee pension plans that were underfunded remain at risk and it is incumbent on Congress to overhaul the current law.
Sen. Rob Portman, R-Ohio, also praised the Treasury action, saying he hoped that all sides would now "re-engage on a more thoughtful plan to address the Central States pension crisis."
This story has been updated to correct the name of the plan to Teamsters Central States Pension Plan, not Teamsters Central State Pension Plan.