New England Fund Plan Changes

[my2cents]

Participants in the New England Fund have just received a summary of plan changes. The minimum retirement age has been raised to age 57 and contributing employers will be required to pay an annual 5% "maintenance of benefits" increase. Benefit accrural levels will also be frozen. It appears the Pension Protection Act is already taking hold in New England.

 

[wily_old_vet]

WOW-I'm in a different plan and we received a letter in February that they were having consultants looking at changes to the plan to "strengthen" it. After seeing what had happened to CS Teamsters I made the decision to take my 26 1/2 years and get out before they could do the same to me. According to this letter our plan was in the top 1% of it's peer group. My last day was Friday and this post makes me really glad that I made the decision that I did. I was having some doubts since we hadn't heard any thing further but came to the conclusion that I made the right decision whether any changes were made to the plan or not. How badly are you affected by this change to the plan?

 

[robonono]

Wiley, Congratulations on your retirement. This one's for you...

 

[my2cents]

Looks like you made the shrewd move Wily. In regards to myself, I still have a long way to go before I retire, so there is no immediate impact on myself. My thinking on this subject is along the lines of will this fund be around in 10 years, 20, etc. and/or in what financial state.

 

[sawman]

Wily, that is great! I wise you the best, but if I'm reading this right, and correct me if I'm not, you're not out of the woods yet. I think this new Pension Protection Act allows funds to go back and make cuts to those people how have retired within a year of the cuts. Isn't this plan great

. They are going to make each one of us worry for the first year of our retirement that it may be cut.

 

[wily_old_vet]

Sawman-I'd say thanks but that would be a lie. I know, I know, don't shoot the messenger. This is not the time of life we are supposed to have to worry about all this stuff. Guess I'll just have to see what the next year brings. Even if they do cut my pension, at least I'm away from the rest of the hassles.

 

[sawman]

Wily, Good luck and take care, hope to join you soon!

 

[my2cents]

After taking a second look at the notice, I plan to perform a periodic estimated benefit calculation, once every few months or so. I believe after the July 2005 pension credits are posted next month, the estimated benefit will be frozen for the next 3 years. Will know for certain once I perform the periodic calculations.

 

[ok2bclever]

This link http://tinyurl.com/7qnbp was sent to me.

I don't necessarily agree with TDU on issues, but I appreciate them bringing many of them to light for consideration.

This amendment is a killer for all of us who are still working or recently retired.

The plan will not need to go under if this amendment survives, it appears it would allow the plan to cut our earned benefits to whatever level they see fit as any time.

I don't see how that benefits our pension future or the ability to plan for retirement.

It means a major piece of the financial benefit picture that we work for could go up in smoke far worse than it already has at any time after such legistlation is passed, and they could use the legistlation to continue with ongoing further retroactive cuts repeatedly with no limitations.

Some pension relief.

 

[my2cents]

Thanks for the heads up OK2BC. I haven't had the chance to read the amendments, so I'll keep this in mind as a red zone participant. Personally, I have a mixed opinion on TDU. Some of their material actually makes sense, while on the other hand I've read some stuff, which is absolutely ludicrous.

 

[ok2bclever]

Yep, I appreciate the info they ferret out, but make my own decisions and just skim the rhetoric.

 

[my2cents]

After chatting with a few co-workers about these plan changes this week, most didn't understand how the freeze would work, as outlined in Example #1 A in the notice. The contibution rates are from the New England Supplement (Article 69) and the Monthly Accrural Values are from Table 17 found on the New England Fund's website.

<table border=1><tr><td></TD><TD>Contract Year</TD><TD>Contribution Rate</TD><TD>Monthly Accrural Value </TD></TR><TR><TD>August 1st</TD><TD>2004</TD><TD>$4.66</TD><TD>$248 </TD></TR><TR><TD>August 1st</TD><TD>2005</TD><TD>$4.86</TD><TD>$256 </TD></TR><TR><TD>August 1st</TD><TD>2006</TD><TD>$5.06</TD><TD>$264 </TD></TR><TR><TD>August 1st</TD><TD>2007</TD><TD>$5.26</TD><TD>$272</td></tr></table>

In effect, on August 1st of this year, the $248 monthly accrural value will be the value used for at least the next 3 years - $248 x 3 = $744. Normally, the monthly accrural value will rise with the corresponding contribution rate, instead of being frozen - $256 + $264 + $272 = $792. The resulting difference between $792 and $744 meets and exceeds the annual 5% maintenance of benefits obligation. Once the collective bargaining agreement expires on July 31, 2008, the contribution rates will have to be greater than 5% in order for the participant to start accruing an increased benefit level. In short, the 20 cent increases each year will be used to shore up the funding level of the plan, instead of accruing a benefit for the participant.