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Participants balk at proposed Central States pension cuts

Participants balk at proposed Central States pension cuts

Hundreds of participants in one of the nation's biggest multiemployer pension plans are voicing their concerns about the financially troubled Central States, Southeast and Southwest Areas Pension plan's proposal to cut benefits.

“Please help save my husband's pension. He worked hard and was promised his pension … Our income is being decreased by over 60%. We cannot meet our bills on this decreased amount. Please help,” Vonda Pope of Coldwater, Michigan, wrote to the Treasury Department.

Her comment is among more than 800 letters that participants have sent to the federal agency that has the final say on the plan's' proposal to cut benefits to prevent its insolvency. Earlier, the financially distressed plan, which has more than 400,000 participants, reported that it had $35 billion in liabilities and just $17.8 billion in assets at the end of last year.

Those cuts are allowed under a 2014 law that permits such reductions with regulatory approval to prevent multiemployer plans from becoming insolvent. Earlier, the Central States plan said cuts would be necessary “to prevent a real risk” of a total loss of benefits.

The law also allows participants to comment on proposed benefit cuts. The comment period for the proposed cuts to the Central States' plan ends Dec. 7. Treasury has until May 7, 2016, to decide on the proposal that would cut, according to Central States, benefits for 272,600 of the plan's 407,000 participants.

Nearly all comments posted as of Tuesday opposed the cuts.

“How can this happen to dedicated 30+ year employees who believed in the American dream and trusted Central States and the Teamsters. We are forced to live in an RV because of a 60% cut in pension benefits,” wrote Lebanon, Missouri, residents Lewis Harding and his wife. “Please help us recover what we were promised and have based our golden years on.”

“This law affects hundreds of thousands of retired people who have worked their whole lives only to have their hard-earned pensions stripped from them in a underhanded deal with no advanced notice, no public debate and no debate in the House and Senate,” wrote Robert Davinroy of Florissant, Missouri.

Some suggested phasing in any reductions.

“A 50% reduction might be easier to withstand spread out over a few years,” wrote William Simmons of Fort Myers, Florida.

Others warned of broader economic consequences.

“Cutting pensions will have an enormous impact on our economy and more people will end up relying government assistance because their pension was cut,” wrote Andrea Odegaard, whose letter did not include her location.

So far, Central States is the only multiemployer plan to notify Treasury of its intent to cut benefits under the 2014 law. Other financially distressed plans, though, are expected to do so next year, experts say.

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