On press call, White House highlights bailout of Central States Pension Fund

The Biden administration highlighted a $36 billion bailout of the Teamsters Central States Pension Fund this week, ensuring that the estimated 19,000 Minnesota union workers who are vested in the multiemployer pension plan will receive their full benefits.

Prior to the bailout, the union workers with a Central States pension would have had their benefits reduced by an average of 60%, according to the White House. This would have affected over 350,000 union workers and retirees nationwide — the majority of whom are Teamsters — who are vested in Central States. 

“Just think about what that feels like to a worker heading into retirement when they find out that their monthly benefit that they’ve worked so hard for (is) going to be cut to less than half of what they planned for,” said Lisa Gomez, assistant secretary for employee benefits security in the Department of Labor, during a Wednesday press briefing. “With this relief, union workers and their families are finally able to breathe a huge sigh of relief.”

The multiemployer plans ran into trouble when companies withdrew, which meant the plans had to pay out benefits without taking in new revenue. The Star Tribune reported in 2019 that companies sometimes failed to pay their withdrawal penalties. A Republican proposal from that year headed up by Sen. Charles Grassley, R-Iowa, would have meant a 19% reduction in benefits for many pensioners.  

The funding comes from the American Rescue Plan, which passed Congress and Biden signed in 2021. With the additional tens of billions, the Central State Pension Fund estimates that it will be able to fully pay pensions for about two to three million employees through 2051.

The White House said the Central States Pension Fund was the largest multiemployer pension plan facing economic hardship. The fund has long been strapped for cash, with an insolvency date previously forecasted for 2026.