Local Union Officers and Employees Pension Fund Report

Transcription

1 Local Union Officers and Employees Pension Fund Report International Union of Bricklayers and Allied Craftworkers 2015 Convention Baltimore, Maryland September 14-18

2 International Union of Bricklayers and Allied Craftworkers Local Union Officers and Employees Pension Fund 620 F Street, N.W., Suite 846; Washington, DC Phone: Fax: The International Union of Bricklayers and Allied Craftworkers Local Union Officers and Employees Pension Fund ( LOEPF or Plan ) was established as a result of action taken at the International Union s 1968 Convention. The Plan became effective July 1, 1969, with benefits first being payable as of September The Plan is supported by monthly contributions made by Local Unions, District Councils, and Related Organizations based upon a percentage of the Salary of all participating officers and employees. Currently, LOEPF participating employers contribute twenty-three percent (23%) of their Officers and Employees Salaries to the Plan. An actuarial valuation is performed annually on the LOEPF in accordance with the requirements of ERISA. Since the 2010 Convention, like many other defined benefit pension plans, the LOEPF has faced rising costs in providing retirement, disability, and survivor benefits, notwithstanding solid investment returns, due to several factors, including, but not limited to, unusually low interest rates, longer life expectancies, and a declining number of active participants. These trends along with the mandatory requirements imposed by the Pension Protection Act of 2006 ( PPA ) have caused the Board of Trustees to implement various cost-savings measures for the LOEPF, which should enable the Plan to emerge with stronger funding levels in future years. The following is a chronological summary of LOEPF amendments adopted since the 2010 IU Convention: December 2011 The LOEPF was amended to expand the eligibility criteria for a Disability Pension to include Participants who become totally and permanently disabled while actively employed in SEPF Related Covered Service and to cancel the accrued benefits for missing Participants (subject to possible reinstatement) after a certain period of time. December 2012 For Covered Participants hired on and after January 1, 2013, the LOEPF was amended 1) to define Normal Retirement Age as age sixty-four (64); 2) to make the 100% Qualified Joint and Survivor Annuity ( QJSA ) actuarially equivalent to the Single Life Annuity form of benefit payment; and 3) to indicate that these Participants are not eligible to receive the Plan s 13 th Check. 1

3 December 2013 The LOEPF was amended 1) to indicate that the 13 th Check amount will be calculated based upon the Participant s accrued benefit under the Plan as of December 31, 2013; 2) to make the 100% Qualified Joint and Survivor Annuity ( QJSA ) equal to the greater of: (a) the unreduced 100% QJSA based upon the Participant s accrued benefit under the Plan as of December 31, 2013; or (b) the actuarially reduced 100% QJSA based upon the Participant s accrued benefit under the Plan at the time of his/her retirement. December 2014 The LOEPF was amended to cap the Plan s 13 th Check to an amount equal to the greater of either: 1) an extra month s pension payment or 1/12 th of the Pensioner s annual pension benefit or 2) the amount of the Pensioner s December th Check. January 2015 The LOEPF Plan was restated and submitted to the Internal Revenue Service for a favorable determination letter as part of the five year remedial amendment cycle. A favorable determination letter indicates that the IRS believes the Plan is qualified under IRC 401(a), which means contributions are not included in participant s income until distribution; and, Plan investment earnings accumulate tax-free. The restated Plan incorporated all amendments since the last restatement, additional administrative amendments including the addition of Critical Status provisions, and included an expanded definition of spouse; a one year statute of limitations period in order to initiate a lawsuit against the LOEPF; and, a provision granting an express right to the Trustees to recover pension overpayments. In addition to the above-referenced cost-savings amendments, the LOEPF has implemented several procedures to reduce the administrative costs of the Plan, including: There are prudent procedures in place at the LOEPF Fund office to collect delinquent pension contributions. Under the LOEPF Special Collection Procedures, there is a proactive and staggered approach to collect delinquencies, which include a Reminder Notice from the Central Collections Unit, referral to Fund counsel, and annual internal and field audits. In addition, the enhanced Annual Statements, which reflect the five highest years of Participants salaries as reported to the Plan and are mailed annually, allow Participants to compare the salaries reported to the Plan with the salaries reported on their W-2 Wage & Tax Statements. If there is an apparent discrepancy, the Participant will notify the Fund office and upon receipt of this notification, the Fund office will follow up with the respective employer to collect any retroactive amounts due to the LOEPF. Also, the LOEPF continues to audit Locals LM-2 Reports filed with the Department of Labor for any discrepancies between these amounts and the salaries reported to the Plan. Since 2005, the LOEPF s LM-2 audit program has resulted in the collection of over $1 million in retroactive delinquent pension contributions. The LOEPF retains the services of an outside vendor to conduct death audits of Pensioners and surviving spouses based upon extensive databases of public records. This service has resulted in the cessation of monthly pensions to several Pensioners and 2

4 surviving spouses who had passed away, but where the Fund office was not notified of their deaths. Accordingly, as a result of this service, the Fund s payroll department has been able to cease pension benefit overpayments in a more prompt manner, saving thousands of dollars. As a result of the LOEPF s reclassification from a single employer plan to a multiemployer plan in 2005, the LOEPF has saved over $2.5 million in insurance premiums paid to the Pension Benefit Guaranty Corporation for the 2010 to 2014 Plan Years. PLAN BENEFITS A summary of the current benefits provided by the LOEPF is as follows: NORMAL PENSION Age Requirement: 60/64 for Participants hired on & after Service Requirement: 5 years 2.15% of Final Average Salary per Year of Credited Service accrued prior to May 31, 2009 and 1.50% of Final Average Salary per Year of Credited Service accrued thereafter up to a maximum of 40 years Final Average Salary: Average of the five years of highest annual salary paid to Participant over the course of his career in Covered Employment EARLY RETIREMENT PENSION Age Requirement: 55 Service Requirement: 5 years Accrued Normal Pension benefit reduced by six percent (6%) for each year of age below Normal Retirement Age DISABILITY PENSION Age Requirement: Service Requirement: None 5 years but must become totally and permanently disabled while employed in LOEPF Covered Employment Accrued Normal Pension based on benefit level in effect at the time Covered Employment ended. Paid as if Participant has attained Normal Retirement Age 3

5 DEFERRED VESTED PENSION Age Requirement: Earliest benefits can begin is age 55. Service Requirement: 5 years Accrued Normal or Early Retirement Pension based on benefit level in effect at the time Covered Employment ended PRE-RETIREMENT DEATH BENEFIT Lump-Sum Benefit (if not eligible for surviving spouse s benefit) Age Requirement: Service Requirement: None At least 1 year without a Permanent Break-in-Service 50% of employer contributions with $5,000 minimum PRE-RETIREMENT SURVIVING SPOUSE BENEFIT For the spouse of a Participant who dies at any age, with at least 5 Years of Credited Service, prior to retirement. 100% of the benefit the Participant would have received had he retired the day before he died and elected the 100% QJSA. If the Participant s death occurs before age 55 and with less than 20 Years of Credited Service, payments to the spouse begin on the first of the month following the month in which the Participant would have attained age 55. The surviving spouse may have the option to receive an immediate lump-sum benefit equal to the greater of 100% of contributions or the actuarial equivalent of the surviving spouse pension so long as either option is less than $25,000. If the Participant had at least 20 Years of Credited Service, payments begin as if the participant was age 55. POST-RETIREMENT SURVIVING SPOUSE BENEFIT For the spouse of a Pensioner, who dies after his retirement. 100%, 75% or 50% of the amount received by the Pensioner depending upon the Pensioner s and spouse s election at the time of retirement. Depending upon the Pensioner s and spouse s election, the amount received by the Pensioner may be actuarially reduced in order to provide the spouse with lifetime annuity. 4

6 CURRENT STATUS OF LOEPF In 2015, the Plan is safe under the PPA with an 80.07% PPA funding percentage, which means that the government considers the Plan adequately funded to meet its obligations. The Plan emerged from its 2014 Critical Status due, in part, to the cost-savings actions implemented by the Board of Trustees, as referenced above, and the enactment of the Multiemployer Pension Reform Act of 2014, which changed the methodology for Plans to emerge out of Critical Status. However, even though the Plan has emerged out of Critical Status in 2015, the Plan changes imposed by the May 2014 Rehabilitation Plan remain in place. As of June 1, 2015, Plan assets totaled $111,619, As of January 1, 2015, there were a total of 1,224 Participants and surviving spouses in the Plan: 333 active Participants, 155 terminated vested Participants, 529 Pensioners, and 207 surviving spouses in receipt of benefits or entitled to future benefits. WRAPAROUND PLAN The International Union of Bricklayers and Allied Craftworkers Local Union Officers and Employees of Canada Wraparound Pension Plan ( Wraparound Plan ) was established by the Board of Trustees, effective January 1, As of January 1, 2014, the Wraparound Plan had a 105.4% going-concern funding ratio on a long-term basis. On a solvency basis, the Wraparound Plan had an 86.2% solvency funding ratio and the transfer ratio of the Plan, on a hypothetical wind-up, was 82.8%. The assets of the Wraparound Plan have grown significantly since its establishment. Assets now total $5,107, (CN) as of June 1, As of January 1, 2015, there were a total of 55 Participants and surviving spouses in the Plan: 24 active Participants, 18 terminated vested Participants, and 13 Pensioners and surviving spouses in receipt of benefits. WRAPAROUND PLAN BENEFITS A summary of the current benefits provided by the Wraparound Plan is as follows: NORMAL PENSION Age Requirement: 65 Service Requirement: 2 years [Alberta, Quebec, Ontario, & Manitoba members vest immediately] 2.00% of Final Average Salary per Year of Credited Service accrued prior to January 1, 2010 plus 1.50% of Final Average Salary per Year of Credited Service accrued from 2010 to 2012 plus 1.50% of Annual 5

7 Final Average Salary: Salary per Year of Credited Service accrued thereafter up to a maximum of 30 years Average of the five years of highest annual salary paid to Participant over the course of his career in Covered Employment through December 31, 2012 EARLY RETIREMENT PENSION Age Requirement: 55 Service Requirement: 2 years [Alberta, Quebec, Ontario, & Manitoba members vest immediately] Accrued Normal Pension benefit actuarially reduced for each year of age below Normal Retirement Age DISABILITY PENSION Age Requirement: Service Requirement: None Vested, but must become totally and permanently disabled while employed in Wraparound Plan Covered Employment Accrued Normal Pension based on benefit level in effect at the time Covered Employment ended. Paid as if Participant has attained Normal Retirement Age DEFERRED VESTED PENSION Age Requirement: Earliest benefits can begin is age 55. Service Requirement: Vested Accrued Normal or Early Retirement Pension based on benefit level in effect at the time Covered Employment ended PRE-RETIREMENT DEATH BENEFIT Lump-Sum Benefit (if not eligible for surviving spouse s benefit) Age Requirement: Service Requirement: None At least 1 year without a Permanent Break-in-Service Commuted Value of Accrued Benefit in the form of a lump-sum 6

8 PRE-RETIREMENT SURVIVING SPOUSE BENEFIT For the spouse of a vested Participant who dies at any age prior to retirement. Immediate pension equal to the Commuted Value of accrued benefit at time of death. POST-RETIREMENT SURVIVING SPOUSE BENEFIT For the spouse of a Pensioner, who dies after his retirement. 60% of the amount received by the Pensioner depending upon the Pensioner s and spouse s election at the time of retirement. The amount received by the Pensioner will be actuarially reduced in order to provide the spouse with lifetime annuity. This report is only a brief summary of the important provisions of the LOEPF and Wraparound Plan. Please contact the Fund office for a copy of the full LOEPF and Wraparound Plan Rules and Regulations for a complete description of Plan benefits. 7

9 International Union of Bricklayers and Allied Craftworkers 620 F Street, NW Washington, DC bacweb.org