Tuesday, December 20, 2016

Charlotte Negotiations Update 12-19-2016

Hi everyone,
  I thank you for the opportunity to adress some things that are being told to you that frankly aren't true or
are based loosely on the truth. Yes, there are several things that have been tentavely agreed to but we have MUCH
more to go through. Wage scale and medical benefits were only agreed to UNTIL WE HAVE A CONTRACT. At that point
our pay and medical benefits will be what is in the contract. You have been led to believe that we have agreed to
the same medical benefits and pay while we will be under contract which frankly, is NOT TRUE. The statement whether
we are Teamsters or not in those two centers is a false statement because we have elected the Teamsters as our
legal bargaining agent. So in this case, ALL DRIVERS will be represented by the Teamsters and enjoy the benefits
of a contract and representation from our Teamsters local.
  As far as the statement made that "the only other big compensation item left to negotiate is retirement/pension
benefits....", that also is false and quite misleading. Here are several items that have to be negotiated:
1. Seniority.
  We are going to negotiate and set seniority for both the city and road. No more holding runs for their favorites
and city routes should be bid by seniority, not just a start time.
2. Electronic surveilance
  We don't think the electronic log/camera system should be used to discipline drivers. We also don't think there
should ever be a camera on the driver. We are professionals and as such should be treated so... how would managers
like a camera looking at their activities all day? Hint- they wouldn't like it.
3. Disability
  The current short/long term disability doesn't offer enough time nor does it offer the job protections that it
should. They have made it clear we have been given more than what is minimally necessary. That is not good enough
and as the largest LTL in the country we earn better.
4. Medical Insurance
  We already know we can get better insurance through the Teamsters. Our medical insurance has skyrocketed since
2007 and could be much better. Blaming the raises on the ACA is just plain false. Self insured companies have complete
control over deductibles, out of pocket maximums, coverage percentage and the actual cost to the employee. To say
it has happened due to anything but them choosing to make it so is just frankly not true. We can do MUCH better and
we will show people just how much better soon enough. But by comparison our pilots who are union negotiated an
insurance which is far superior to ours and the company agreed to it. Their buy-up medical plan offers ZERO
deductible with 100 PERCENT COVERAGE. Thats a FACT.
5. Retirement
  This also has to be negotiated. Despite the fact the company chooses to talk about the central states penion fund
we will NOT be a part of this fund. We have many choices here but just remember we can actually have an opportunity
to negotiate what we will have, in other words, we will have a VOICE.
6. Job Security
  The basic right to have representation at the workplace is very important to us. Gone will be company "policy"
and we will have a contract that not only we have to abide by, but so will management! A contract that we all will
have access to and one that cannot be changed on a whim. As soon as our election was certified we had the legal
right to union representation. Gone are the days where management could team up on a driver. We are no longer
at-will employees who can be terminated for any reason. You will have Weingarten rights for representation even
without a contract! Jobs have already been saved by this.
  This all comes down to some simple questions:
1. Has your job security increased over the years?
2. Has your retirement gotten better over the years?
3. Has your medical insurance for you and your family gotten any better?
  It is my opinion that NONE of these things will EVER happen if we choose to depend on the good will of a
corporation. All three of the above questions have been a resounding NO in my opinion. The ONLY way we can get better
for ourselves and better for our families is to form OUR union and work to get a contract that insures that our voice
is heard loud and clear. In my opinion YOU matter, YOUR FAMILIES matter and we frankly EARN better.

Take care brothers,

Friday, November 11, 2016

XPO Logistics Workers Near Philadelphia Choose Teamster Representation

Workers Want Decent, Affordable Health Care and Retirement Security
Drivers at XPO Logistics in suburban Philadelphia voted for Teamster representation today, propelling a nationwide campaign where XPO workers are standing together and forming their union to win fairness and respect on the job. The vote was 37 to 13.
The 52 drivers at the former Con-way Freight join workers in Miami; Laredo, Texas; Vernon, Calif.; Aurora, Ill.; and in North Haven, Conn. who have already voted for Teamster representation. In addition, 777 workers at Parsec, Inc., in California, who handle XPO freight, voted to join Teamsters Local 986 this week. Hundreds of XPO trucks come in and out of the Parsec yard each week.
"Three victories at XPO in less than a month (Aurora, North Haven and King of Prussia) show that the workers are building momentum in their quest for fairness, strength and a real voice at one of the world's largest transportation companies," said Tyson Johnson, Director of the Teamsters Freight Division. "We will continue to stand with XPO workers across the country who demand positive change."
"Despite the company sending in its high-priced union busters, the workers stood strong, boldly and united in their fight for a better future," said Michael Bonaduce, President of Teamsters Local 384 in Norristown, Pa. "Now, the fight for a strong contract begins."
"This is a great day for us and we urge our co-workers across the country to stand bravely to win dignity, respect and fairness by banding together," said Bill Strouse, a road driver and 23-year employee. "We need to have a voice on the job so that management will listen to our concerns."
The workers are also seeking affordable and decent health care, retirement security and better working conditions. XPO is the second-largest freight brokerage provider and second-largest less-than-truckload carrier in North America.
Founded in 1903, the International Brotherhood of Teamsters represents 1.4 million hardworking men and women throughout the United States, Canada and Puerto Rico. For more information, please visit www.teamster.org.

Tuesday, October 18, 2016

Former Con-Way Drivers Say Things Got Worse After XPO Buyout, Agree To Unionize

On Thursday, 200 employees from two XPO Logistics Terminals voted in favor of union representation by the International Brotherhood of Teamsters.
74 drivers from Aurora, Illinois will become the first Teamsters at XPO since it acquired Con-way. 127 warehouse workers from New Haven, Connecticut will become the first warehouse workers at XPO to unionize in the U.S.
Both facilities are former Con-way Freight locations which XPO acquired for $3 billion last year.
The former Con-way employees are alleging unfair treatment and are unionizing to stand up for worker’s rights by telling the company, “Enough is enough.” Tyson Johnson, director of the Teamsters Freight Division explained, “The workers are tired of being mistreated and not having a say in their work lives.”
An XPO spokesperson said in a statement on Thursday that the number of employees choosing to unionize is small in relation to the actual total number of XPO U.S. employees. The company is looking into the election process to determine if it is lawful.
The spokesperson said,

Thursday, October 13, 2016

Back to back Victories!

Congratulations to the in XPO warehouse workers in North Haven, CT and the XPO freight drivers in Aurora, Illinois who voted to join XPO freight workers from Miami; Laredo, TX; and Vernon, CA. 

Sunday, October 2, 2016

Feds: XPO/Con-way Must Bargain With Teamsters

XPO Went to U.S. Court and Lost
A federal court has denied XPO/Con-way’s efforts to set aside the workers’ decision to form their union as Teamsters, which means the company needs to recognize the Teamsters as the workers’ bargaining representative.
The company can still appeal to the U.S. Supreme Court, but it has not done so in similar cases. The company had asserted that there were numerous problems with the election, but the court denied the company’s frivolous claims.
“The workers in Laredo formed their union as Teamsters way back in September 2014, so this is very welcome news,” said Frank Perkins, President of Local 657 in San Antonio. “The company has tried to do everything to delay and frustrate the workers, but for over two years they have remained strong and united in their fight for a more secure future and a voice on the job.”
Perkins said he hopes to sit down with the company soon to negotiate a contract that will address the workers’ needs.
“As our XPO campaign continues to gain momentum, we are pleased with this decision because Laredo got the campaign started,” said Tyson Johnson, Director of the Teamsters Freight Division. “We demand that the company gets serious about negotiating a contract in Laredo. These workers have waited far too long.”

Wednesday, September 28, 2016

Fred Smith to step down from president role at FedEx

WMCTV : Fred Smith to step down from president role at FedEx


Fred Smith to step down from president role at FedEx
WMCActionNews5.com Staff
Sep 26, 2016 04:15 PM
MEMPHIS, TN (WMC) - FedEx Corporation named its next president.

FedEx founder and Chief Executive Officer Frederick Smith will vacate his role as president of FedEx Corporation at the end of 2017. Smith will not be leaving the company. He will remain as FedEx Corporation CEO and chairman of the board.

Starting January 2018, FedEx Express CEO David Bronczek will take over the role of president of FedEx Corporation. FedEx also created a new position, Chief Operating Officer, in what business experts say could hint at a succession plan, according to Bloomberg Technology.

Smith is 72 years old. He founded FedEx in 1971 in Memphis. His possible retirement has been subject of much speculation for years. His ultimate plans are still unknown.

Additionally, FedEx announced that Executive Vice President of Market Development and Corporate Communications T. Michael Glenn will retire at the end of 2016.

Glenn, 61, led the company's marketing, sales, customer service, and communications groups for more than 20 years.

"Mike Glenn is a thirty-five year veteran of FedEx, and without a doubt the most brilliant marketer I have ever met. His passionate leadership, strategic vision, and intellect have transformed the FedEx portfolio and brand and immeasurably improved global commerce," FedEx Corp. chairman, president and CEO Frederick Smith said. "While this is a tremendous loss for FedEx, I commend and admire Mike for this decision as he transitions his focus full time to his family."

Chief Information Officer and Co-CEO Robert Carter will become the new CEO of FedEx Services on January 1, 2017.

Bronczek also will replace Glenn as chairman of the Revenue Management Committee starting January 1.

Copyright 2016 WMC Action News 5. All rights reserved.

Monday, September 26, 2016

Put Up Your Sign!

Bring the Teamsters to Fed Ex Freight

Here are representatives of our 4 Union Terminals. That came today to Memphis Tenn. at FedEx World Headquarters for the annual shareholder meeting to ask Fred Smith questions you have never had the opportunity to ask except at your local level.

Sunday, September 25, 2016

Fedex has been pushing for 2 years now on how bad of shape central state pension fund was in. That part true, what they fail to tell is why and how.
Well here is a quick snap shot of the fedex plan. So why is our plan $5.3 billion short. Why are we paying out more than we take in. There is nobody in freight running to the gate to retire anytime soon. This plan has only been around for a few years so no one has enough time in it to retire, so where is it going.
Wall st. And Goldman Sachs killed central states pension fund WHO IS KILLING OURS? Freddie gets $25mil. In retirement and another guy gets $19Mil. SMH. They are beating us down with our healthcare and the pension fund and all of you are ok with this SMH.
Know this Freddie can do what ever he wants with this. What Freddie says goes.

Sunday, September 18, 2016

My Yearly Disappointment 2016

It's that special time of the year where FedEx shows us how much we really mean to them. I recently received my annual Pension Statement and unsurprisingly, it is a complete disappointment.

After 14 years at FedEx, my monthly pension will be a measly $178.37 a month. To put that in perspective, my Viking pension (which was the company I worked at for 15 years before they were taken over by FedEx) will $ 648.58 a month. Now, keep in mind that my Viking pension was frozen once FedEx took over so it hasn't grown since then.

How is it possible that a small business like Viking could afford that kind of pension but a corporate giant like FedEx can't even give me enough to cover my grocery budget? 

FedEx boasts that they "strive to develop mutually rewarding relationships" with their employees. What is mutually beneficial about us working hard to make this company profitable while they refuse to fairly compensate us? 

Friday, September 9, 2016

Teamsters Call on FedEx Shareholders to Reject Outdated Executive Pay Structure

Letter to Investors Urges “No Vote” Due to Critical and Persistent Weaknesses in the Company’s Pay Practices
Kara Deniz
Email: kdeniz@teamster.org
Phone: (202) 624-6911
(MEMPHIS, Tenn.) –Today, the International Brotherhood of Teamsters mailed a letter to FedEx Corp. (NYSE: FDX) shareholders urging a vote against the board’s “Say on Pay” proposal at the September 26, 2016 annual shareholder meeting.
The letter challenges FedEx’s reliance on a two-decade old approach to long-term pay, arguing that it is overly generous and ill-equipped to delivering long-term value in the current environment.
In the letter, Teamsters General Secretary-Treasurer Ken Hall details how FedEx executives benefit from lowballed earnings-per-share (EPS) growth targets that have remained unchanged for over two decades. This is even as analysts routinely project higher EPS growth for FedEx and investors increasingly question whether earning-per-share is an appropriate measure, particularly in capital intensive industries such as freight.
“It is ludicrous to think that an effective compensation plan can be operating under the same performance assumptions as two decades ago,” Hall said. “That’s an eternity in the worlds of both executive pay and freight. This Compensation Committee appears to have put its core responsibilities on autopilot.”
The letter also criticizes the FedEx Board’s Compensation Committee for increasingly aggressive adjustment of earnings measures used in its pay plans. Over the past two years, half a billion dollars of legal costs incurred from the company’s operational and employment practices at FedEx Ground have been excluded in the calculation of incentive payouts.
“If the long-term incentive plan is to support long-term value, it follows that it should fully internalize expenses associated with the operational and strategic decisions of the current management team,” Hall said.                          
Over the past three years, CEO Fred Smith has received nearly $45 million in compensation, more than 300 times that of the median FedEx employee, based on salary data from PayScale, Inc.
The International Brotherhood of Teamsters represents 1.4 million hardworking men and women throughout the United States, Canada and Puerto Rico. For more information, please visit www.teamster.org. Follow us on Twitter @Teamsters and “like” us on Facebook at www.facebook.com/teamsters.

Thursday, August 11, 2016

New Contract at Ralphs, Vons and Albertsons

Wages, Pensions and Health Care Benefits Improved

A majority of Teamsters working as drivers, warehouse workers and in dairy and manufacturing at grocery companies Ralphs, Vons and Albertsons in Southern California have ratified a new five-year agreement. The contract raises work standards and compensation for the more than 2,000 employees represented by Teamster locals throughout the region.
“Our members voted to ratify this new agreement because it improves wages, health care benefits and retirement security,” said Rick Middleton, Teamsters International Vice President and chief negotiator. “We bargained for several months with the companies to reach terms that included improvements that our members would want. All the planning and time involved with bargaining was well worth it.”
On Oct. 7, a tentative agreement was reached with the grocery companies after three months of negotiations. In September, members voted overwhelmingly to strike after the contract expired. Teamster members received solidarity from the broader labor movement in Southern California ahead of the ratification vote, which took place Oct. 16-18.
“It was a challenging process, but we were able to hash out an agreement to raise work standards and compensation for all of our members at Ralphs, Vons and Albertsons,” Middleton added.
“We are proud that our members at Vons, Ralphs and Albertsons will continue to have the security of a union contract,” said Steve Vairma, International Vice President and Director of the Teamsters Warehouse Division.

Tuesday, July 19, 2016

Weingarten Rights

These protection right's are given to the four terminals that voted for teamsters representation. And they don't pay any UNION DUES yet.

What are the rest of you waiting for?

Tuesday, July 12, 2016

Stronger Unions Will Save The Middle Class, Labor Secretary Says “The more you strengthen collective bargaining, the more you strengthen the middle class,” said Tom Perez.


3 days ago
Shane Ferro Business Reporter, The Huffington Post

Labor Secretary Tom Perez speaks in Washington on Oct. 23, 2014.
More collective bargaining agreements are the key to building a stronger middle class, according to Secretary of Labor Tom Perez.

Speaking to The Huffington Post on Friday, Perez said he is optimistic about the continued positive trend in job growth after a massive 287,000 jobs were created in June. But he still thinks there’s lots of slack in the labor market that is holding back wage growth.

One of way to boost that wage growth is to unionize, he said.

Perez participated in the discussions between Verizon and the Communications Workers of America back in May, which helped resolve a 40,000-worker strike. Verizon owns AOL, which is the parent company of HuffPost.


“Those are really good middle-class jobs,” he said of the Verizon workers’ jobs. “The more you strengthen collective bargaining, the more you strengthen the middle class. You get that through either unionization, or a workplace culture where workers have a strong voice at the table.”

At this stage in the economic recovery, the problem isn’t necessarily that unemployment is too high — it’s been below 5 percent for months — but that workers who do still have jobs aren’t seeing more in their paychecks. According to the latest jobs report, released Friday, average hourly wages grew just 2.6 percent over the last year.

Sluggish wage growth can be a sign that there is still room for improvement before employers really feel the market pushing them to pay workers more.

“That’s not nearly where I want it to be, it’s not where workers need it to be, but it’s headed in the right direction,” said Perez.

The overall strength of the economy also obscures some serious variation in unemployment rates when you break down the labor force by race. The unemployment rate is 4 percent for whites and 3.5 percent for Asians. By contrast, it is 8.6 percent for blacks and 5.8 percent for Latinos.

This isn’t a new phenomenon: The unemployment rate has reflected structural racial inequality for years. However, Perez said these disparities could be reduced through both immigration reform and raising the federal minimum wage. 

He noted that the majority of those who will benefit from California’s new state-wide minimum wage hike will be Latinos.

Perez’s name has been floated as a possible vice presidential pick for presumptive Democratic presidential nominee Hillary Clinton’s campaign. He declined to speculate on the rumors.

Wednesday, July 6, 2016

FedEx Pilot's Retiree Medical Benefits

The fedex pilot retirees have health insurance from the company and its way better than what we have right now as active drivers.... Go figure.....

Thursday, June 23, 2016

Opinion: Losses under Goldman, Northern Trust accelerated Teamsters cuts By Elliot Blair Smith Published: Apr 6, 2016 10:38 a.m. ET

Lack of contributions not sole contributor to Central States woes
This is the second of a two-part series on the Central States fund. The first part looked at the organizations that looked out while financial markets wrecked the investment.

One of America’s most battle-hardened pension funds was flying high last decade with large bets on stocks, lower-rated bonds and real estate. But even during the best of times, the Central States Pension Fund needed to draw down at least $1.2 billion a year in capital to pay for overhead and Teamsters union drivers’ benefits.

And when the global financial markets crash struck in 2008, an astonishing $11.8 billion—or 40% of the plan’s total investments—disappeared that year alone. What remained and was recovered afterward couldn’t cover the fund’s long-term obligations.

Today, the Treasury Department is weighing Central States’ application to cut the retirement benefits of two-thirds of the plan’s more than 400,000 American workers, retirees, dependents and survivors who’ve have waited a lifetime for them.

The pain unfolding at the Central States fund is a cautionary tale for all Americans because it underscores the reality that no social safety net is secure.

Also read: How the Teamsters pension disappeared more quickly under Wall Street than the mob

Pension administrators in Rosemont, Illinois, made the benefits-slashing proposal under a law they themselves helped get Congress to pass. Norman Stein, a senior policy advisor at the Pension Rights Center in Washington, says House legislation authorizing the reductions was passed with “no committee vote or debate” in December 2014, as part of a much larger funding bill, and that any Senate amendment “would have resulted in a closure of the federal government.” In a letter to Treasury Secretary Jacob Lew opposing the plan, Stein argues “it is unlikely” the measure “could have survived any open and transparent legislative process.”

More to the point, plan administrators and the government presented the problem almost exclusively in terms of insufficient pension contributions, and not the sometimes-woeful management of the depleted portfolio last decade.

Central States’ investments lost 29.81% in value during 2008 compared to the median loss for all Taft-Hartley Union plans of 20.46%; and a median loss of 26.37% at all Taft-Hartley plans with assets greater than $2 billion, according to data prepared for MarketWatch by Los Angeles-based Wilshire Associates.

And that doesn’t capture the bigger picture.

The pension’s two investment fiduciaries—Goldman Sachs & Co. GS, +3.05%   and Northern Trust Global Advisors NTRS, +3.10%  —each underperformed their benchmark returns in at least three out of four years from 2006 through 2009, while exercising broad discretionary authority as the result of a decades-old consent decree between the fund and the government. Before resigning in July 2010, Goldman underperformed in eight out of the last 14 quarters for which information is publicly available.

So to pay benefits and bills, the pension had to sell more assets each year, accelerating the decline and deepening the inevitable cuts. In 2008, it liquidated investments at a net loss of $2.4 billion, filings with the Labor Department show.

In a statement, Central States’ Executive Director Thomas Nyhan said, “The financial stress that the fund is currently experiencing results from the loss of 13,000 companies due to trucking deregulation, a declining union workforce, growing imbalance of retirees versus active workers, bankruptcy laws which hinder the fund’s ability to collect withdrawal liability assessments, as well as the market turndowns in 2000-2002 and 2008.”

Nyhan said, “It doesn’t make any sense to draw conclusions about the overall performance of the named fiduciaries by looking at the investment returns of one year.” And he pointed out that the $1 billion by which the Central States fund underperformed its self-selected peers in 2008 “was recouped in 2009” when it exceeded its peer median “by roughly $1 billion.” Still, the plan recovered little more than of half of what it lost overall the previous year, and less after the forced sales.

“Even skilled and prudent asset managers incur losses, and no asset manager or process can guarantee gains during every period during every set of market conditions. They were particularly challenging market conditions during 2008,” Goldman Sachs spokesman Andrew Williams said in a statement. He said that Goldman Sachs produced overall positive returns from August 1999 to July 2010.

Northern Trust spokesman Douglas Holt said that a focus on the years 2006-2008 “neglects the fact” that the investments overseen by his firm beat their benchmarks “by greater amounts during the years before and after, in 2005 and 2009.” He also said that “the investment losses of 2008 were fully recovered and are not the primary reason for the plan’s funding gap.”

While Northern Trust did outperform its benchmark in 2009, this did not offset the losses from its underperformance in 2008. Instead, it took more than two years for Northern Trust to recoup its losses, and nearly four years—until 2012—for the fund as a whole to recover all investment losses.

By then, it was too late. The plan’s actuary projected for the first time in 2009 that the fund would become insolvent in little more than a decade. And last year its actuary at the Segal Group certified to the Treasury Department that the Central States fund was “in critical and declining status.”

By then, it was too late. The plan’s actuary projected for the first time in 2009 that the fund would become insolvent in little more than a decade. And last year the actuary, Segal Consulting, certified to the Treasury Department that the Central States fund was “in critical and declining status.”

To be clear, Goldman GS, +3.05%   and Northern Trust NTRS, +3.10%  did not invest the pension’s money directly. Rather, they hired and oversaw the outside managers who did so, serving as an added layer of oversight for the plan along with the non-union administrator, federal regulators at the Department of Labor, and a special independent counsel appointed under a 1982 consent decree to end mob influence at the Teamsters.

Goldman Sachs took over responsibility for $10 billion, or half, of the Central States pension’s assets, in 1999. “Goldman Sachs questions everything. Nothing is assumed. Nothing is status quo. The firm continually strives to do things more efficiently and to improve performance,” Central States CFO Mark Angerame was quoted as saying. Goldman referred to the appointment as “one of the largest fiduciary mandates of its kind.”

Northern Trust came aboard a few years later.

Call it bad timing but “when the stock market crashed in 2000, the Central States pension fund had big bets on technology and telecommunication stocks, energy trading companies and foreign stocks. Some of these stocks became nearly worthless,” The New York Times reporter Mary Williams Walsh wrote in 2004.

“Many rank-and-file Teamsters,” Walsh added, “complain that their questions about the pension fund have been met with bromides about unforeseeable market forces, and about an unusual convergence of stock market losses and low interest rates that is always described as ‘the perfect storm.’ ”

Central States Executive Director Nyhan chastised Walsh and the Times for, among other things, reporting on a questionable Russian investment. In a two-page rebuttal, he argued that the “total loss was $9.” Similarly, when I wondered why the pension bought a $250,000 Iraq bond while the U.S. government was fighting a war there, Nyhan replied “the discussion of the Iraq note is sensationalism at best.”

Nyhan told me that “based on many of your questions, it appears you do not fully comprehend the issues and have pre-conceived notions. In addition, you have taken a portfolio comprised of thousands of securities and selected a few underperformers to suit your apparent view.”

To its credit, the Central States fund outperformed the top tier of its self-selected peers in the three-year period through the first half of 2007.

Yet facing pressure even then to improve plan finances or see the fund collapse, about two-thirds of the portfolio was in stocks, according to the special independent counsel’s quarterly reports filed in federal court in Chicago.

This was an aggressive bet compared to most Taft-Hartley union pensions whose median portfolio consisted of less than half equities, according to data prepared for me by the Wilshire Trust Universe Comparison Service

The fund also owned about $1.4 billion in bonds rated below single-A—a 141 percent increase in the lower-grade debt over just three years—and at least $270 million in mortgage bonds issued by Bear Stearns, Countrywide Financial, IndyMac Bank, Lehman Brothers, Washington Mutual—and dozens of other fated real estate lenders and bundlers—according to filings with the Labor Department.

Since these troubled securities overlapped with the pension’s holdings of the same companies’ stocks, it meant even greater concentrations of leveraged assets.

Nyhan initially denied my request for more detailed information on the pension’s real estate portfolio, stating that the fund had “no physical real estate assets” and was only 1.6% invested in real-estate investment trusts at the end of 2007. He added that the fund’s records “do not segregate mortgage-backed securities from other fixed income, but a review of our holdings does not indicate a concentration of these types of securities.

Later, Nyhan provided more information. Subprime mortgage securities were a small component of Central States’ portfolio but they nearly doubled to $45 million under Northern Trust in the market collapse year of 2008 even as subprime assets under Goldman’s oversight fell to $29.2 million from $112.9 million.

Getty Images
Bear Stearns stocks and bonds were in the Central States portfolio.
Without Nyhan’s assistance, I scanned dozens of pages of securities listings in the fund’s annual reports, finding that as of December 2007 Central States held:

• 39 Bear Stearns bonds—32 of them already carried at a loss—and 46,500 shares of Bear Stearns stock that also were under water;

• 47 Countrywide Financial bonds, all but three of which had dipped into loss territory, and 496,225 Countrywide shares written down 60% in value;

• 25 Lehman Brothers bonds, 19 of them valued below cost, and 312,525 shares of Lehman stock held at a slight gain nine months before its bankruptcy;

• 33 Washington Mutual bonds, 27 of them valued at less than cost, and 654,225 shares of Washington Mutual stock carried at a 56% loss nine months before it became the largest bank failure in U.S. history.

• A $19.5 million investment in the Olympus Real Estate Fund L.P. marked down by 97%, on its way to being valued as worthless, and a $4.6 million stake in the Starwood Opportunity Fund IV L.P. written down by 78%.

And that was before the reckoning next year, when Goldman Sachs reported a 42% loss on real estate investments for the fund in just the fourth quarter of 2008, and Northern Trust recorded a 34.28% loss on real estate.

By comparison, Taft-Hartley Union plans as a whole absorbed a 9.28% quarterly loss on real estate, and large plans — like Central States — with more than $2 billion under management reported 10.71% declines, according to Wilshire.

“This fund knew it was in long-term trouble,” says Terrence Deneen, a retired executive at the government’s Pension Benefit Guaranty Corporation in Washington. Until 2010, he worked with union-oriented pension plans such as Central States.

Under an agreement with the Internal Revenue Service to defer a statutory funding-deficiency notice, Central States also began imposing—and collecting—higher pension contributions from employers in 2007.

That December, the fund received a $6.1 billion lump-sum payment from one of its biggest employer participants, the United Parcel Service, arising from a negotiated agreement that allowed the Atlanta-based package handling company to cease making contributions. It was the worst possible moment to get the money.

The greatest financial crisis since the Depression was getting under way.

Central States told me there “was no separate accounting” for the UPS fund, and could not specify how much of the payment might have been lost. But two of the special independent counsel’s court reports—filed 10 months apart—outline investment allocations, and percentage investment returns, for the UPS payment.

From these disclosures, I estimate that $1.8 billion, or 30%, of the $6.1 billion to support union drivers’ future retirements evaporated in 12 months.

Moreover, because the UPS obligation “was calculated near the peak of the market, it did not capture the growth in the unfunded liability that occurred with the onset of the financial crisis,” according to Alicia Munnell, director of the Center for Retirement Research at Boston College.

Goldman resigned as a fiduciary in mid-2010 under what Nyhan describes as “a mutual decision” with “no acrimony between the parties.” Central States and Goldman Sachs declined to provide me with a copy of the resignation letter.

Increasing fees
Goldman Sachs and Northern Trust each had charged increasing sums for their work in four previous years, peaking in the abysmal 2008, and then declining after Goldman’s share of the portfolio lost 36.99% in value (and another 8.32% in the first quarter of 2009); and after Northern Trust saw a 38.02% annual loss (followed by a 7.71% first-quarter decline). Goldman spokesman Williams said the firm’s fees peaked at $6.5 million in the pension’s worst year because it invoiced Central States five times in 2008, after billing it only three times in 2007.

All told, Central States paid Goldman $25.2 million from 2005 through 2009, and Northern Trust $16 million, according to annual filings with the government.

Williams also said that the Goldman and Northern Trust performances look worse than they should because they had to make outsize investments in stocks—hit particularly hard in 2008—to meet the fund’s overall target allocations. After 2007, the two firms actively managed only 60% of the fund’s assets. The balance was held in passive stock and bond accounts that also suffered losses.

With Goldman’s departure, the $5.4 billion that remained under its control was transferred to Northern Trust. And the pension’s overall investment-management fees fell—not solely due to the now-depleted size of the fund.

Pension staff attributed an 18.5% decline in investment-management fees in the first quarter of 2011—for a savings of $2.9 million—“to the fund’s reversion to the single named fiduciary model as well as an increased allocation to indexed investment accounts, as opposed to accounts under active management by compensated investment managers,” the special independent counsel reported.

Overall, Central States recorded a 7.1% average return for the decade through December 2014, narrowly outperforming the 6.9% median return of its peers. The plan underperformed again last year, recording a -0.81% decline against its 1.38% benchmark, the special independent counsel reported this month.

That brought the fund’s operating deficit from 2005 through 2015—including investment returns, benefits payments and overhead—to $13.6 billion.

The proposed benefit reductions Treasury is reviewing will average only 22%, according to the special independent counsel. And that seems modest given that, in percentage terms, the unfunded liability is more than twice as large. But some pensioners who are just reaching retirement age will see their benefits halved.

Nyhan told me the “rescue plan” of slashing pensioners’ benefits is “a gut wrenching exercise” and “an emotional issue for our participants.” And he said “we challenge anybody opposed to the rescue plan to put forth a viable alternative.”

My view is that passing the buck—especially somebody else’s—is not the complete solution. Central States’ investment record merits scrutiny, as well.