News 4 Investigates: Obscure legal change could mean pension cut - KMOV.com

News 4 Investigates: Obscure legal change could mean pension cuts for millions

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(Credit: KMOV) (Credit: KMOV)

ST. LOUIS, Mo (KMOV.com) - Imagine working your entire life only to discover your retirement benefits might be slashed in half.  Even worse, the fate of hundreds of people’s retirement benefits loomed in the hands of a man they had never worked for. 

Meet Mike Sargent and Mike Flett.  Both Mike’s worked hard at the Chrysler Plant in Fenton for years as Teamsters, earning a pension managed by Central States Pension Fund in Chicago.

There were no problems until earlier this month when both men received a note in the mail saying their pension would be slashed to $1,500 beginning July 1st.  For Sargent, his fund would be decreasing my more than half.

Central States is saying the cuts need to be made otherwise they will run out of money due to declining membership and a turbulent stock market. A recently passed bill might allow Central States to make their desired changes.

The Kline-Miller Act, passed in 2014 as part of a spending bill, was not debated, but would allow managers of pension funds to temporarily or permanently reduce the pension amounts given out.

One man, Ken Fienberg, who oversaw the 9/11 Victim Fund, will ultimately decide if the cuts proposed by Central States will be allowed.

John Murphy, Eastern Regional Vice President for the Teamsters, said it is not a done deal, but attempts to prevent the cuts seem futile.  He sees the only remaining solution as to use federal assistance to shore up the fund.  If not, the burden will fall on taxpayers as more retirees will have to rely on government assistance programs.

In all, Central States Pension Fund overseas the pensions of 400,000 active and retired teamsters.  Central States was the first pension fund to apply to cut funding, but three more have since filed as well.  So even if the Central States cuts do not affect you directly now, there is a good chance that another pension fund could apply for cuts in the future.

The treasury has until May 7 to decide if the cuts will be allowed.

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