On Sunday, September 15th, more than 2,200 members gathered at the Tinley Park Convention Center to review various benefit improvement options for our Pension Fund. After 10 years of reducing benefits to stabilize the Fund in the wake of the Great Recession, attendees at this meeting were given options to enhance the benefits for Pension Fund participants.
After two hours of discussion, followed by questions and answers, members voted overwhelmingly to approve an option that will credit all active members’ contributions from April 1, 2020 forward.
In other words, all of the contributions made by each member from April 1, 2020 forward will go toward accrued benefits, with nothing more going into the reserve fund, often referred to as “the bucket.” While nearly half of many members’ current hourly contribution goes into “the bucket,” that will end on April 1, 2020, with all contributions subject to the multiplier in the member’s name. Previous contributions to “the bucket” were not impacted under this plan.
To further illustrate the impact of today’s decision, consider the current and future pension contribution of a District 1-2-3 Heavy Highway/Underground member:
$13.55 total pension contribution
- $6.50 unaccrued (bucket) contribution
- $7.05 accrued (non-bucket) contribution
As of April 1, 2020
$13.55 total contribution
- $13.55 accrued contribution
For the next four years, master agreements will allocate $1 per year into the Pension Fund. The combined result of these contributions and the accrual of all new dollars in will be a rapid increase in the accrued benefits for active members, and a corresponding increase in the projected monthly benefits after retirement.
In addition, when the fund reaches a 90 percent funding level (currently projected in 2024), the assumed rate of investment return that we use in our calculations will go from 7.5 percent to 7.25 percent. That adjustment will lower the funding percentage slightly, and when the fund returns again to 90 percent, that assumed rate will go to 7 percent.
This move will make the fund more resilient, and insulate us from the impact of volatile years in the stock market.
These adjustments will not affect current retirees or members who retire prior to April 1, 2020.
For more information on the actions approved by the membership at the Special General Membership Meeting, plan to attend the October monthly meeting in your District and read the upcoming report from President-Business Manager Sweeney in the October edition of the Local 150 Engineer.