Pension chief warns of 'very difficult' cuts after Treasury rejection

Pension chief warns of 'very difficult' cuts after Treasury rejection
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The head of the Central States Pension Fund is warning of the potential for "very, very, very difficult" pension cuts after the Treasury Department blocked a last-ditch effort to ward off insolvency.

Central States, which includes Teamsters members, is weighing whether to submit another rescue plan to the Treasury Department for reconsideration, but Thomas Nyhan, the fund's executive director, warned it would be “much more severe than our original plan.”

“As time goes on, the benefit cuts have to get larger,” Nyhan told reporters Monday.

“Right now, it would be a very, very, very difficult plan — if we come up with one — requiring very severe benefit reductions, much more severe than was in our original plan,” he added.

The Treasury Department last week rejected Central States's rescue plan, which called for cutting benefits by an average of 34 percent. 

Without a change of heart by the Treasury Department or congressional action, Central States will run out of money in a decade, Nyhan warned. The longer the pension fund waits to cut benefits, the bigger the problem becomes, he added.

Central States has not yet decided whether it will submit another rescue plan to the Treasury Department. Another option is congressional action.

Nyhan called on Congress to “step up to the plate” and bailout the pension fund but admitted that is unlikely in an election year.

“There are only two solutions,” Nyhan said. “Either the plan receives more money or has to reduce benefits.”

“It’s time we sit down with members of Congress and begin a constructive dialogue to find a solution to this pension crisis,” he added.

But Nyhan doesn’t expect lawmakers to address the problem in the middle of an election year.

“We’re sort of stuck between a rock and a hard place here,” Nyhan said.