Local 804 and ERISA letter

[JohnnyPension]

I am a retiree from 804 (gone 2 years now) and I just received, in the mail, a letter from Trustee Chris Langan. It is titled:

"NOTICE OF APPLICATION FOR AN EXTENSION OF AN AMORTIZATION PERIOD FOR LOCAL 804 & LOCAL 447 I.A.M.-UPS MULTI-EMPLOYER RETIREMENT PLAN".

I have attached 2 pdf files of the 2 page letter. (1st time doing attachments so if it doesn't work I will try again).

Scary stuff. I am in living out west so the union office is closed. I am reaching out to other 804 members for info. Meanwhile, is there anyone out there who can translate this for us common folk? Thanks.

JohnnyPension

 

[JohnnyPension]

Trying the attachment again. I think I will have to create 2 posts due to size of files.

 

[JohnnyPension]

Attachment page 2:

 

[trplnkl]

I'm not 804 nor a legal beagle, but I can tell ya, the PDF files worked.

 

[JohnnyPension]

Thanks Trp

 

[JonFrum]

Your pension fund has been less than 50% funded every year since 2003. Meaning for every $100 in promissed present and future benefits, they have less than $50 currently on hand to pay for it. Ideally, a fund should be at least 100% funded.

The law requires multi-employer plans to maintain a certain minimum level of funding. If a plan is about to fall below that minimal level, it must take corrective action, usually by cutting benefits, raising contribution rates, or both. It can also ask the IRS to bend the rules, to cut them some slack. UPS Trustee Chris Langan is telling you the Plan has asked the IRS to allow it to spread out the time they will take to get their house at least minimally in order.

Normally the Fund pays for various expenses by amortizing them. That is, by spreading out the funding of the expense over say, ten or fifteen years, rather than taking the hit all at once. (If your son or daughter enrolled in college, you might not be able to pay the entire four year bill today, all at once. You would find it easier to spread it out over four years. It would be even easier to amortize over, say, ten years.) That's what your Plan is trying to do. Take an already spread out payment plan and spread it out a little further.

Many plans are in the same financial situation as your plan, in part, because of the market meltdown, and are asking for the same breathing room from the IRS.

 

[JonFrum]

Several articles on your pension fund are available here . . .
https://web.archive.org/web/20091102124131/http://804membersunitedslate.org/?p=479

Note that there are different ways of calculating the funding level of a pension plan. I'm using the numbers from the Form-5500. The above site uses the AON actuary's numbers, which are more optimistic.

 

[JohnnyPension]

Jon
Thanks for your help. I will pass it on.

John