Message from President Hoffa

Dear Brothers and Sisters:

I am writing to let you know that your International Union is angry about the benefit reductions imposed by the Central States Funds and that we have placed the highest priority on exploring alternatives to these cuts. I have sent a letter to Fund Executive Director Tom Nyhan expressing our outrage and demanding answers to some tough questions. In particular, we want to know why the largest benefit contribution rates ever negotiated in the UPS and freight contracts were not enough to maintain benefits. I will share his response with you when I receive it.

Our UPS contact in 2002 set the pattern for contributions to the Funds. At the time, we focused on winning the biggest increase in employer contributions to the health and welfare and pension funds in Teamster history and we achieved that. For example, we negotiated 62.5 cents per hour per year more into the Funds over the life of the contract, compared to only 36 cents in the 1997 agreement. The Fund assured us at the time that this increase would be more than enough to protect the pension and health benefits. we then went out and obtained the same increases from the Freight employers.

You can be certain that I would not have approved any contract if we knew at the time we would be looking at reduced benefits down the road.

It is important for you to remember that the Central States Funds are not controlled by the Teamsters Union. The Funds operate under a government consent decree with government-approved investment managers. While half of the Trustees are active or retired Teamsters elected by Local Unions in the Fund, the other half are employer representatives. By law, Trustees must act to preserve the viability of the Funds.

Over the last several months, the Fund as reported to participants, the Union, and employers on the Funds’ deteriorating financial condition and the need for benefit changes. However, we did not anticipate the severity of the changes.

The cuts implemented by Central States are now in place, pursuant to an order by the U.S. District Court. According to the scenario presented by Central States, if they had not taken these drastic actions, it is likely that the pension could face a takeover by the Federal Government due to the funding shortfall. A Federal takeover would result in an immediate slashing of benefits for current and future retirees with the maximum payout of a little more than $1,000 per month. No one wants that to happen.

I have met with the Union trustees of the Fund to make them aware of our deep concerns over the Fund’s actions. I know that they were in the difficult position of having to act immediately to save the Funds. Nevertheless, I have urged them to explore other options to minimize or modify the impact upon our members.

I have also met, and will meet again, with Teamster employers to demand that they make additional contributions to the Funds in order to restore the financial stability of the plans. We will not rest until the Central States employers accept their share of the crisis facing the Fund.

We cannot ignore that most of these problems have resulted from a weak economy, misguided Washington priorities, and soaring health care costs. That is why I have dispatched our lobbyists on Capitol Hill to fight for legislation that will give funds like Central States some breathing room to recover as the economy improves. And that is why the Teamsters are leading the fight for a national health insurance program that will provide coverage for every American.

Most importantly, I urge you not to be misled by those who would use this real crisis as a way to score political points by spreading misinformation and using divisive tactics. During the last five years, the Teamsters Union has succeeded by remaining united and attacking our problems by utilizing our collective strength.

I pledge to you that this Union will do everything in its power to defend your pension and health security today and in the future. And together we will work to obtain the protections we were promised would result from our triumphs at the bargaining table.

Fraternally yours,

James P. Hoffa
General President