RE: Pension Accrual in 2020
You may have recently received your Pension Statement for the hours you worked in 2018. Next year you will receive your statement for the hours you are working in 2019 (this year). Please remember that in 2018 the pension investment returns were -3.7%. This triggered provisions in the FIP II that will be reflected as a zero accrual on your 2020 pension statement.
FIP II established safeguards to protect the Fund against any future years of negative investment returns. This provides that participants would receive a zero benefit on their contributions in the second year following a year of a negative investment return. This was a deliberate strategy to prevent another catastrophic loss such as we had in 2008.
This action saves the Fund approximately 90 million dollars, but most importantly protects and safeguards the balance you currently have in your retirement benefit. This will go directly to reducing the Plan’s unfunded liability. Keeping the Fund on track towards being fully funded. However, due to the new accrual formula established in 2017, most participants will likely more than offset a year of zero accrual.
Participants will still accrue hours in 2020 and normal accruals are scheduled to resume in 2021.
Since 2008 our fund has paid out over 3 billion dollars in benefit payments to our retirees and beneficiaries while never missing a payment. Over the same time period, we also increased the assets to the fund by 1 billion dollars.
We need you to understand the fund is secure in meeting its obligations and will continue to be as long as we take the necessary steps to adjust for the decrease in participants and contributions experienced after the 2008 recession.
To illustrate how the zero accrual will not significantly impact your pension benefit, see the reverse of this page for an estimate projection.
Tim D. Maitland