Western Conference of Teamsters Pension Trust "endangered"?

Discussion in 'UPS Retirement Topics' started by gandydancer, May 5, 2009.

  1. gandydancer

    gandydancer New Member

    Just got my Annual Funding Notice from the WCTPT. They SAY the "funded percentage" for 2009 is down from 97.1% to 84.7%, which is bad enough ("Under federal law a plan generally will be considered to be in 'endangered' status if...the funded percentage of the plan is less than 80 percent...") but it turns out they are using "actuarial values" for the value of the plan's assets rather than the market value of the plan's assets. In other word they've apparently hired some "actuary" to declare that the assets are "worth" more than the market is currently paying. Here's the numbers:

    1/1/06 Actuarial val of assets $28.126B Liabilities $29.978B 93.8% funded
    12/31/06 fair market val of assets $31.975B
    1/1/07 Actuarial val of assets $29.492B Liabilities $30.794B 95.8% funded
    12/31/07 fair market val of assets $32.323B
    1/1/08 Actuarial val of assets $31.399B Liabilities $32.342B 97.1% funded
    12/31/08 fair market val of assets $25.077B

    Thus at the beginning of '07 the actuary was saying that assets that could be marketed for $32B were really "worth" only $29.5B (why they didn't sell the overvalued assets, and buy assets really worth $32B is an interesting question) and at the beginning of '08 assets worth $31.4B could be sold for $32.3B the day before.

    But if the current value of future pension payments went up according to trend (say to $34B) the claimed 84.7% funding indicates an "actuarial" asset value of $28.8B, $3.7B higher than the fair market value. Or, if the fair market value is correct, and liabilities are now $34B, then the actual funded percentage is only 74%, and the fund is well on its way from "endangered" (80%) to "critical" (65%).

    I understand Central States is much worse off.
  2. soberups

    soberups Pees in the brown Koolaid

    My understanding is that the term "actuarial values" refers to the life expectancy of those who are receiving benefits from the plan...the funding level assumes a certain statistical life expectancy in order to calculate how much will have to be paid out.
  3. Hangingon

    Hangingon New Member

    We received the same letter. I guess it's the precursor to lowering the pension benefits again.
  4. UpstateNYUPSer

    UpstateNYUPSer Very proud grandfather.

    Pension managers are required by the govt to keeps its members informed of the strength of the pension--this is why you got the letter. It doesn't necessarily mean that they will be lowering penion benefits (again) but it also doesn't mean that they won't.

    We received a similar letter here in Upstate NY and I have heard from some of the younger members that the NYS Teamsters Benefit Fund is proposing some changes, chief among these being raising the minimum retirement age for normal pension to 57 regardless of years of service. Prior to this proposed change you could retire at any age if you had 30 years of service. This won't affect me as I will be 58 when I get my 30 but we had a recent retiree who was 50 w/30 yrs of service (not all at UPS but all within NYS Teamsters) so he would have had to work 7 more years to receive the same pension benefit.

    This should be a wake-up call to anyone here who is counting solely on their pension and Social Security at retirement. It is crucial that you have other retirement investments in place. While I do believe that the pension will be there it may not be in the amount that you may be counting on.
  5. JonFrum

    JonFrum Member


    Almost all pension funds have been hurt by the drop in the markets, and as usual, Teamster funds are leading the race to the bottom.:sad-very:

    However, the Western Conference Fund was in the best shape to begin with, and has not suffered as much as the others during the downturn! You're very lucky!:happy2:

    Actuarial Value and Market Value are two different things. You can get an idea of what the actuarial data means by reading the 2008 Instructions to Form-5500. . .

    The actuarial information was formerly contained in Schedule B; Now it's in Schedule MB. Scroll down to pages 43-48. But be warned! Reading this stuff may make your head explode!:knockedout:
  6. helenofcalifornia

    helenofcalifornia Well-Known Member

    If you are in the Western Conference, you received this letter the past week. You should read it and try to understand it. This will affect you.
  7. gandydancer

    gandydancer New Member

    Yes, I see the references to ERISA 304(c)(2), but I don't really have to know what mumbo jumbo they are performing on the fair market value to arrive at the "actuarial value". That's only of concern to the lawyers who sign off on the manipulations being legal. My point is that if the "fair market value" is anything like what its name says, then it's a better indication of what assets the plan has than any manipulated derivative number. And as of 12/31/08 it was $25.077B. And what I assume to be the present value of future liabilities can be estimated to have been, on that date, $34B. Which means that the plan can't afford the benefits it's paying. That it's currently better off than the other Teamster funds won't benefit me at all if it has disappeared into the PBGC before I retire. And the trustees appear to have artificially inflated the present value of their assets to keep the funding percentage above 80% so they can avoid the mandatory steps required of funds with less than 80% funding. That sucking sound I hear is the trustees paying present retirees the funds that are supposed to keep my future benefits above the PBGC minimums.
  8. gandydancer

    gandydancer New Member

    Actuarial assumptions are of course made in estimating the liabilities of the fund. But how can you use them to change the present value of the fund's assets? Do you say, well, the market value of the plan's stock portfolio has dropped by 30%, but we have, say, a historical expectation of a 4% increase per year in the stock market, so we'll keep each $1B in stock we had last year on the books as $1.04B even if we can only sell it for $700M? Madness.
  9. JonFrum

    JonFrum Member


    Actuarial analysis is crucial to a full understanding of the financial status of a pension plan. You seem to reject actuarial analysis as phoney. Like a crooked accountant keeping a second set of books to fool the tax man. Are you really opposed to actuarial analysis for some reasons that you can state, or do you just not understand what actuaries do?