Sheet Metal Workers National Pension Fund Update

Transcription

1 Sheet Metal Workers National Pension Fund Update

2 NPF Update Status of the Fund Positive Cash Flow Variable Benefit Accrual Rate (VBAR) Contribution Rates Organizing Tools Leveraging Assets SHEET METAL WORKERS NATIONAL PENSION FUND 2 2

3 NPF Funding Plan Year Valuation Date January January January January Funded Percentage 59.4% 59.3% 59.1% 57.4% Value of Assets $4,294,266,345 $4,140,279,634 $3,940,831,853 $3,711,928,315 Value of Liabilities $7,230,768,938 $6,987,384,126 $6,671,514,903 $6,463,106,428

4 Contrast Assumptions v. Experience Assumptions Experience 2015 Participant count as of 2013 will remain flat thru 2026 Hours will be the same as 2013 Investment return 7.5% CBA s that clearly spell out increases are counted Slight increase in participants Hours up about 4.7% Investment return -0.42% (market value actuarial basis) Contribution income up 12%

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7 $ Billions Sheet Metal Workers' National Pension Fund: Credit Balance and Funded Percentage Projections Assuming 90 Million Hours/Year and 5.0% Returns through ProjectedYear-EndCredit Balance for Plan Years Beginning January % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% ProjectedFundedPercentage as of January Based on the actual experience of 2016, the Plan is projected to enter the Green Zone in 2028, and is projected to meet the requirements of the Funding Improvement Plan.

8 Legal and General Index Funds An initiative of SMART to leverage funds across the sheet metal industry. Requires no minimum investment. Fees for smaller funds will be the same as NPF fees. Arrangement is only for sheet metal funds. NPF moved assets into these funds from S&P 400, S&P 500, S&P 600 and other index funds resulting in annual fee savings of $120,000. Other National Funds (LU&C and SASMI) making similar moves that will result in $40,000 savings.

9 North America s Building Trades Unions (NABTU) ProxyVote Plus Investment Database NABTU s Capital Strategies program was created in 2016 to facilitate a more active partnership between NABTU and the trustees, administrators, advisors and investment managers of our members pension savings in the pursuit of benefit improvements and prudent, responsible and financially sound investment policies. Compiling and tracking total investments of our Funds will give Sheet Metal and all of Building Trades one collective voice as we steward the assets of our members.

10 Iron Workers pension cuts approved; retirees to get smaller checks Union pension fund plans 30 percent cut to retiree benefits Teamsters Pension Plans Seek Massive Cuts to Retirees to Stay Solvent

11 Multi Employer Pension Reform Act of 2014 Provided tools for seriously critical funds to remain solvent. One tool: cuts to benefits meant to be less than the cuts pensioners would realize with the PBGC.

12 Alaska Ironworkers Pension Plan Automotive Industries Pension Fund Bricklayers & Allied Craftsmen Local No 7 Pension Plan Bricklayers And Allied Craftworkers Local 5 Pension Plan Central States, Southeast And Southwest Areas Pension Plan IAM Motor City Pension Fund Iron Workers Local 17 Pension Fund Ironworkers Local 16 Pension Fund Local 805 IBT Pension and Retirement Plan New York State Teamsters Conference Pension & Retirement Fund New York State Teamsters Conference Pension & Retirement Fund Road Carriers Local 707 Pension Fund SW Ohio Regional Council for Carpenters Pension Plan Teamsters Local 469 Pension Plan Teamsters Local 469 Pension Plan United Furniture Workers Pension Fund United Furniture Workers Pension Fund A Western States Office and Professional Employees Pension Fund In Review Denied Withdrawn Withdrawn Denied In Review Approved Denied In Review In Review In Review Denied In Review Denied Withdrawn Withdrawn In Review In Review

13 NONE OF THESE TOOLS ARE AVAILABLE TO THE NPF WE CANNOT MAKE PENSION CUTS We are not critical and declining. We are not red zone. We are endangered, yellow zone. We are not expected to become insolvent. ere not expected to become iove. We have a funding improvement plan which projects us to be green by the end of the funding improvement period.

14 Variable Benefit Accrual Rate Plan Year Annual Investment Return % % % 3 year average 8.75%

15 VBAR Formula IF, the three-year average market value investment return percentage reported in the preceding Plan Year s Actuarial Valuation is: THEN, the VBAR rate of Accrual for the Plan Year will be: 10% or higher 1.25%* 8.5% or higher, but less than 10% 1.0%* 6.5% or higher, but less than 8.5% 0.75%* Greater than 0%, but less than 6.5% 0.5%* 0% or less 0%* *FOR 55/30 CONTRIBUTION RATE, THE ACCRUAL IS 70% OF AMOUNTS LISTED.

16 VBAR From the Start 2014 VBAR 2015 VBAR 2016 VBAR 2017 VBAR 2018 VBAR 2016 TBD % 6.12% 6.12% % 20.56% 20.56% % 11.98% 11.98% % -1.72% % TBD 3 Year Avg 8.25% 10.27% 12.89% 8.75% TBD VBAR 0.75% 1.25% 1.25% 1.00% TBD

17 Contribution Rates First Alternative: 7% Increase Required in 2017 Second Alternative: 3.5% Increase Required 2017 Default: No increase required in and 2019: Trustees have determined that, barring any catastrophic events impacting the plan, there will be no mandated increases. Beyond 2019: TBD

18 EVOLUTION: Organizing Tools Owner Member Exclusions: Trustee Resolution to allow new Owner Members to participate in the plan but exclude contributions on themselves for one year. Free Look: A BRAND NEW Employer who signed a CBA, and began contributing in 2015, 2016, or 2017 will not be assessed withdrawal liability if its obligation to contribute ceases w/in 48 months.

19 Employers Using These Tools Free Look Owner Member Exclusions 2015: 4 Employers Approved 2016: 12 Employers Approved 2016: 4 Employers Approved 2017: 9 Employers Approved 1 Pending Requests 2017: 1 Pending Request

20 Unfunded Vested Liability The December 31, 2015 Withdrawal Liability Valuation establishes the basis for WDL for withdrawals that occur in the 2016 Plan Year. 2014: $4.41 billion 2015: $4.86 billion Increase: $449 million

21 Unfunded Vested Liability The Long Term Interest Rate Assumption used for Funding is 7.5%. The 2015 return was 0.42% Other demographic changes (i.e. more or fewer deaths than expected) also can impact the UVL. PBGC Interest Rate Changed for both short term and long term. 3.10% and 3.29% To 2.46% and 2.98% Lower Interest Rates = Higher Liabilities

22 Unfunded Vested Liability 12/31/14 $4.407 Low Investment Return $176 Change in PBGC Interest Rates $197 Other Changes (Demographics) $76 Total Changes $449 12/31/15 $4.856

23 Non-Discrimination Testing Requirement of qualified plans to ensure that the benefits, rights, and features of a plan do not discriminate in favor of highly compensated employees. HCE in 2017 is an employee who earned $120,000 or more in Required to do this testing every three years for employers who employ: Non Bargained Non Alumni HCE We will need your help to identify if your Local Union should be included in testing and to gather applicable data.

24 NPF Adoption Agreements The NPF was established in May 1966 to provide a defined benefit plan to collectively bargained employees. Adoption Agreements are Executed when no CBA is applicable to cover: - Local Union Officials - Health and other Benefit Fund Administrators - Apprentice Coordinators and Part time Instructors Employed by a JATC

25 Participation under an NPF Adoption Agreement Alumni Only former sheet metal workers that worked in Covered Employment under the Plan. Alumni and Non-Alumni (excludes employees that are covered under a collective bargaining agreement to which the Employer is a party e.g. clerical employees covered by an OPEIU agreement). Other exclusions include Part-time hourly (JATC) What about the week that they travel for training? Trustees, warden, conductor, steward, staffing for elections or picketing, President or Recording Secretary (not currently working fulltime for the Union).

26 Contribution Rate(s) under an NPF Adoption Agreement The single Contribution Rate in effect under the Collective Bargaining Agreement and any renewal, modification, or amendment of such successor Collective Bargaining Agreement. Such rate shall apply to all Covered Employees or the Employer. The highest Contribution Rate in effect in the Covered Employee s Home Area as determined by the Collective Bargaining Agreement.

27 EVOLUTION: NCCMP Past Successes: Pension Protection Act of 2006 Worker, Retiree, and Employer Relief Act of 2008 Affordable Care Act Multiemployer Pension Reform Act of 2014 Current Priorities: PBGC Crisis Composite Plan Legislation Protecting the ACA

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