US federal mediator Kenneth Feinberg rejected the Central States Pension Fund’s rescue plan that would have cut benefits for more than 250,000 working and retired union members.

Feinberg’s decision upholds retirement obligations to members of the International Brotherhood of Teamsters. About two-thirds of the 400,000 members would have had their pension checks reduced under the rescue plan, some by 50 percent or more, documents show. Central States, one of the nation’s biggest multiemployer pension funds, pays out more than $2.8 billion in benefits a year.

The decision could dim the chances for multiemployer pension funds to avoid insolvency by slashing benefits. Central States projects that, without the cuts, it will be out of funds by 2026 because it’s currently paying out $3.46 for every $1 it takes in.

BLOOMBERG NEWS