The 2023 bankruptcy of Yellow Freight, the largest in trucking history, left 30,000 workers, including 22,000 Teamsters members, without jobs and raised urgent questions about pension security. Do Teamster pensioners receive benefits after bankruptcy? Who funds these pensions now? Do current union LTL carriers pay Yellow’s former pension obligations? CPC Consultants will provide answers and opinions on this topic, highlighting their impact on shippers reliant on LTL capacity and costs. As union carriers like ABF and TForce navigate similar risks, understanding the pension liability is key to making decisions on carrier choices and whether carriers with these obligations are sustainable solutions.
Do Teamster Pensioners Receive Pension Benefits After Yellow Freight Declared Bankruptcy?
Yes, Yellow pensioners continue to receive benefits, but with caveats. The Yellow Retirement Pension Plan terminated on May 1, 2024, and is now insured by the Pension Benefit Guaranty Corporation (PBGC), which guarantees payments up to ERISA limits. For the 4,300 participants, PBGC covers vested benefits, though some may be reduced due to the plan’s underfunding. Multiemployer Teamsters plans, like Central States Pension Fund (CSPF), which Yellow withdrew from, received $35.8 billion in federal bailout funds under the American Rescue Plan Act in January 2023, securing benefits for retirees. However, Yellow’s failure to pay $137 million in contributions pre-bankruptcy led to ongoing litigation, with retirees receiving payments but facing potential cuts if funds aren’t fully replenished.
Who Funded the Teamster Pensions After Yellow Declared Bankruptcy?
The U.S. government primarily funded the rescue through the PBGC and the $35.8 billion SFA to 11 Teamsters multiemployer plans, including CSPF, which held $5 billion in Yellow claims. This bailout, part of the American Rescue Plan, prevented insolvency and restored benefits to 90% of pre-2008 levels. Yellow’s bankruptcy estate is paying into pension funds through withdrawal liability, a debt a Delaware bankruptcy court ruled it owes as of September 2024. This payment is at least $1 billion and could reach up to $6.5 billion, though it’s limited by a cap. The PBGC insures single-employer plans like Yellow’s, stepping in as trustee after termination. Ongoing litigation ensures estate assets (e.g., $1.9 billion from terminal sales) pay liabilities, but the federal bailout was the immediate lifeline.
Do Current Union LTL Carriers Pay the Pensions that Yellow Freight Paid?
No, current union LTL carriers like ABF Freight and TForce Freight do not pay Yellow’s specific pension obligations. Yellow’s withdrawal liability is tied to its own contributions to the plans, not shared with other carriers. Under the Multiemployer Pension Plan Amendments Act (MPPAA), Yellow owes the funds for its underfunding, paid from its bankruptcy estate, not redistributed to remaining contributors. Other union carriers continue contributing to the same plans (e.g., CSPF) for their own employees, but Yellow’s $6.5 billion claim is isolated. This structure protects ongoing operations but highlights risks for shipper’s dependent on union carriers, as contribution hikes (up 3-5% in 2025) could raise LTL rates.
CPC’s take on the remaining pensions from Yellow Freight do not impact Shippers at all. Shippers can have confidence making carrier selections and know that the legacy pension programs are being managed elsewhere. Keep in mind that union carriers do have a 2-4% rate increase to fund their pensions from fund assessments. When a Shipper is making carrier selections through a bid process, CPC Consultants is a solution to simplify pricing programs and drive organic savings with its cost-per-pound method. Clients save 30% on average, so contact CPC Consultants to optimize your transportation expenditures.The post Teamsters Pensions After Yellow Freight Bankruptcy: What Shippers Need to Know first appeared on Transportation, Shipping, Supply Chain, Freight Consultants.
Source: CPC Consultants, LLC
