The Teamsters union's Central States Pension Fund here has written off $118 million in bad investments in the last two years, documents on file with the Labor Department show.
The biggest writeoff, $68 million, occurred during the most recent period covered by the reports - from Feb. 1, 1975, to Jan. 31, 1976 - with the remaining $50 million for the same period a year earlier.
The Chicago Daily News reported today that federal officials are concerned about the writeoffs because the fund is a defined benefit plan, with the size of a retiree's pension determined by a formula that includes such things as years of service and age.
This means that the fund must have enough money to cover these planned benefit for retiree or implement two possible options:
Reduce benefits to retirees.
Boost contributions made for Teamsters by employers under labor agreements with the union. Many of the employers are trucking companies.
However, a spokesman for the pension fund, Robert Glass, said the fund is fiscally sound. "We have $30 million to $31 million a month coming in, and we're paying out between $21 million and $22 million a month in benefits," he said.
"We end up with about $143 million a year to invest. We currently have two actuarial firms studying our situation. However, these is no big calamity coming up where we won't be able to pay our retirees."
Glass added that part of the writeoffs were merley the result of a reappraisal of some outstanding real estate loans.
The writeoffs were included in documents the pension fund is required to file with the Labor Department under the 1974 Employee Retirement Income Security Act.
The fund is under investigation by both the Justice and Labor Departments. The joint inquiry was launched after reports were received that the fund had been making large real estate loans for shaky business ventures, including some that were allegedly linked to organized crime.
The fund has $1.4 billion in assets, with more than half of its $923 million in real estate investments in Nevada and California. The Nevada investments include major Las Vegas hotels and gambling casinos.
In an unrelated development, the Labor Department today announced the filing of what could be a precedent-setting suit charing a New York Teamsters local with pension fund irregularities.
The action against Teamsters Local 806 in Melville, Long Island, seeks appointment of a receiver for the local's pension fund, the removal of the trustees and resitution by the trustees of allegedly misspent money.
The Local 806 suit, filed last week in U.S. District Court in Brooklyn, says George Snyder, a trustee and the local's secretary-treasurer, received about $1 million from the local's three pension and welfare funds, which the government charges was more than he deserved for his services.
The suit also charges that the trustees, including Snyder, improperly spent $380,000 in fund money to redecorate offices at the local and improperly diverted another $290,000 to a corporation set up by the local, which then used the money to pay off debts of the union itself.