BLOOMINGTON, Minn. (WCCO) — After a relaxing trip to Spain, Terry and Carol Toyen arrived home to news they’d rather not know in a letter from Terry’s pension plan.
“I didn’t think it was going to be that big of a cut,” Terry said.
After 32 years as a Teamsters truck driver, Toyen was counting on a nice pension.
“The numbers are there and facts are there, but the reality is that it’s just another pension fund that didn’t look as good when it comes down to retiring,” he said.
Even Toyen’s husband Carol was bracing for the cuts, but not quite this big.
“Other people thought it was only going to be maybe 20, 25 percent hit,” she said. “Now it’s almost half.”
It’s all because the Central States Pension Fund — covering 400,000 present and retired teamsters — is in deep trouble. Taking in only $1 in employer contributions for every $3.46 paid out.
Andrew Rolnick is a senior partner and financial planner at North Star Resource Group. He says the news will force folks to reassess not what they want, but what they need.
“If you were expecting to retire this year or next year and you got the bad news, we need to reset our expectations,” he said. “What is it that we can do? Is it working longer, doing part time work? Is it possibly moving and downsizing? They’re difficult situations, but that’s where I would start.”
For Terry and Carol, they’ll likely tap into Social Security earlier than they’d planned, and tighten up the budgetary belt a few more notches.
“It might not be possible to do another big vacation again,” Toyen said.
Rolnick said it’s going to hit members much differently depending on age. While the fund’s rescue plan cuts benefits much deeper for younger Teamsters, they also have more time to come up with alternatives to funding retirement.
If the rescue plan is approved next spring the pension reductions will take effect in July 2016.