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Is Central States pension fund ready to go under?
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<blockquote data-quote="JonFrum" data-source="post: 181771"><p>The pension benefits of non-UPSers are largely paid from the following sources:</p><p></p><p>The years of contributions their employer paid in to the fund on their behalf.</p><p></p><p>The years of "excess" contributions their employer paid in to the fund on their behalf, over and above the level necessary to earn each year's full pension credit. [ In the New England fund, for example, we need 1800 hours of contributions per year to earn a full year's pension credit for that year. But an employer might contribute up to 2080 hours on our behalf if we typically work 40 hours a week. The money contributed for hours over 1800 up through 2080 is what I call "excess". ]</p><p></p><p>The years of contributions, both regular and "excess" that all their other employers contributed on their behalf. [ Some employees move from one employer to another during the course of their working career. Indeed, this is the very reason multi-employer pension plans were started: so workers in the trucking and construction industry especially could have a retirement program even though they moved from job to job, and their employers sometimes went out of business. ]</p><p></p><p>The years of contributions from all the employers the employee worked for that were forfeited by all his fellow employees who never achieved Vesting Status. [ Like when a non-UPSer worked at one or more companies, and some of his fellow employees never worked long enough to become Vested. Currently Vesting requires five years; in the past it required ten years! Lots of contributions were abandoned, especially under the ten-year vesting rule. These funds remain in the fund and become available to pay benefits to those who do manage to get vested and eventually retire. ]</p><p></p><p>The contributions contributed over the years on behalf of employees who did not meet a particular plan qualification and had to settle for a lesser benefit. [ A non-UPSer might be aiming for a 25-and-out or a 30-and-out but fall a few months, or years, short. He would have to settle for a pension calculated using an inferior formula. The difference between the inferior formula and the regular formula is another type of "excess" contribution that is available to pay pensions of those employees from those other companies. ]</p><p></p><p>Any self-contributions made by the non-UPS employees into the pension fund, (where permitted.)</p><p></p><p>The investment earnings made by the fund over the years on all these non-UPS employer contributions. </p><p>- - - - -</p><p>In the early days, pensions were very modest, and even the few who were entitled to them, often had to wait until they aged sufficiently to actually begin collecting benefit checks. A small pension becomes even smaller if you "retire" from covered employment in your twenties, thirties, forties or fifties, but have to wait until, say, age 65 to begin receiving benefit checks. Inflation takes its toll all the while. </p><p></p><p>Benefit levels are tied to years of contributions and to the size of the contributions, so those with fewer years of service and smaller hourly contribution rates get much smaller benefit checks. </p><p></p><p>A retiree who's employer has gone out of business is called an "orphan retiree." The benefit checks of these non-UPSers are paid out of all of the above funds, not out of present employer contributions. Even if their employer were still in business and contributing, it would be past contributions made during the employee's working career that would fund his retirement benefits, not current contributions. Current contributions are already earmarked to cover the actively employed members on who's behalf the contributions are made. [ Social Security pays current retirees out of current contributions. Multi-employer pension plans pay current retirees out of past contributions made over the years on their behalf. A very big difference. ] </p><p></p><p>I've never denied that there is some subsidy of Non-UPSers by UPSers, but it can't possibly be anywhere near the 60% APWA supporters claim. Usually if a UPSer doesn't get back all that was contributed by UPS on his behalf, it's either because the UPSer failed to get vested, or failed to meet various other plan requirements, and thus forfeited some, or all, of his contributions.</p></blockquote><p></p>
[QUOTE="JonFrum, post: 181771"] The pension benefits of non-UPSers are largely paid from the following sources: The years of contributions their employer paid in to the fund on their behalf. The years of "excess" contributions their employer paid in to the fund on their behalf, over and above the level necessary to earn each year's full pension credit. [ In the New England fund, for example, we need 1800 hours of contributions per year to earn a full year's pension credit for that year. But an employer might contribute up to 2080 hours on our behalf if we typically work 40 hours a week. The money contributed for hours over 1800 up through 2080 is what I call "excess". ] The years of contributions, both regular and "excess" that all their other employers contributed on their behalf. [ Some employees move from one employer to another during the course of their working career. Indeed, this is the very reason multi-employer pension plans were started: so workers in the trucking and construction industry especially could have a retirement program even though they moved from job to job, and their employers sometimes went out of business. ] The years of contributions from all the employers the employee worked for that were forfeited by all his fellow employees who never achieved Vesting Status. [ Like when a non-UPSer worked at one or more companies, and some of his fellow employees never worked long enough to become Vested. Currently Vesting requires five years; in the past it required ten years! Lots of contributions were abandoned, especially under the ten-year vesting rule. These funds remain in the fund and become available to pay benefits to those who do manage to get vested and eventually retire. ] The contributions contributed over the years on behalf of employees who did not meet a particular plan qualification and had to settle for a lesser benefit. [ A non-UPSer might be aiming for a 25-and-out or a 30-and-out but fall a few months, or years, short. He would have to settle for a pension calculated using an inferior formula. The difference between the inferior formula and the regular formula is another type of "excess" contribution that is available to pay pensions of those employees from those other companies. ] Any self-contributions made by the non-UPS employees into the pension fund, (where permitted.) The investment earnings made by the fund over the years on all these non-UPS employer contributions. - - - - - In the early days, pensions were very modest, and even the few who were entitled to them, often had to wait until they aged sufficiently to actually begin collecting benefit checks. A small pension becomes even smaller if you "retire" from covered employment in your twenties, thirties, forties or fifties, but have to wait until, say, age 65 to begin receiving benefit checks. Inflation takes its toll all the while. Benefit levels are tied to years of contributions and to the size of the contributions, so those with fewer years of service and smaller hourly contribution rates get much smaller benefit checks. A retiree who's employer has gone out of business is called an "orphan retiree." The benefit checks of these non-UPSers are paid out of all of the above funds, not out of present employer contributions. Even if their employer were still in business and contributing, it would be past contributions made during the employee's working career that would fund his retirement benefits, not current contributions. Current contributions are already earmarked to cover the actively employed members on who's behalf the contributions are made. [ Social Security pays current retirees out of current contributions. Multi-employer pension plans pay current retirees out of past contributions made over the years on their behalf. A very big difference. ] I've never denied that there is some subsidy of Non-UPSers by UPSers, but it can't possibly be anywhere near the 60% APWA supporters claim. Usually if a UPSer doesn't get back all that was contributed by UPS on his behalf, it's either because the UPSer failed to get vested, or failed to meet various other plan requirements, and thus forfeited some, or all, of his contributions. [/QUOTE]
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