Local 707's once booming pension fund runs out of money
Teamsters Local 707 used to have its logo prominently adorned of building that housed its Long Island headquarters. It now rents the third floor.
(DAVID WEXLER/FOR NEW YORK DAILY NEWS)
The teamsters logo, two horses over a carriage wheel, once dominated the facade of Local 707’s glass Long Island headquarters.
Now the union rents space on the building’s third floor. Only a small poster in the window tells visitors they’re at Local 707’s official home. “We used to own the building, the pension fund did,” said Kevin McCaffrey, 62, a teamster who heads the union pension fund. “We sold that, because of this crisis.”
McCaffrey has watched Local 707’s pension fund sink deeper into debt over the past 20 years — until the 2008 stock market crash sent it into a death spiral.
Like many union shops in the private sector — especially trucking, the teamsters bread-and-butter — Local 707 is a victim of bad timing and industry deregulation, experts say. The New York State Teamsters pension fund and the Central States Pension Fund are also teetering on the brink of insolvency.
Local 707 thrived in the 1980s — and its teamster workforce paid into a pension that was maintained by multiple employers with trucking enterprises.
The idea of a centralized pension plan initially worked well. No single company had to bear the brunt of pension payouts, and workers could move to different companies within the plan and not lose their accrued pension.
But deregulation in the 1990s chipped away at the multiple-employer plan foundation. With each industry contraction, there were fewer workers and fewer companies paying into it.
Still, in 1999, Local 707 was 100% funded. The tech bubble — followed by 9/11 — ruined that. The trust lost 30% of its assets. And companies started going out of business. Three of Local 707’s largest employers merged in 2004 — purchased by Yellow Freight, which borrowed cash to buy two competitors. When the 2008 crash came, Yellow Roadway Carrier couldn’t make its payments. The bank told it to force concessions from the unions or face liquidation, McCaffrey said. It employed 35,000 teamsters — 1,600 from Local 707. Employees took a 15% pay cut and gave up vacation time and other benefits.
From left, Tim Chmil, Milton Acosta, Edward Hernandez, Ted Petrone and Ray Narvaez have all been struggling to make ends meet with their slashed pension checks.
(SUSAN WATTS/NEW YORK DAILY NEWS)
Yellow Roadway was allowed to skip its pension contributions for 18 months. When the company started paying again, it was at 25% of the previous rate. The fund began to topple, with roughly 700 workers paying into a fund supporting more than 4,000 retirees. Local 707’s fund pays out $48 million a year — and takes in $7.5 million in contributions, McCaffrey said.
“I’ve been lobbying Congress and asking anybody I can find for help for the last five years,” he said.
“The really horrible thing is, even though we saw this coming, we couldn’t do a thing to change it — because by law, we can’t touch pensions."
In 2014, Congress passed a law meant to give relief to multi-employer pensions — but when Local 707 applied for restructuring, it was denied.
It didn’t pass the solvency tests required for a bailout, McCaffrey said.The fund ran out of cash this month, throwing its retirees on the mercy of insurance payouts, about a third of what their pensions were.
McCaffrey has had to explain the new reality to his members. The worst calls are from the widows.
“They say, ‘We’re sure it’ll all work out, Mr. McCaffrey, because my husband told me, before he died, not to worry about anything because the union would always take care of me,’ ” he said. “I wish to God we could.”
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