sheet metal workers’ national pension fund update · legal and general index funds • an...
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Sheet Metal Workers’ National Pension Fund Update
NPF Update
❖ Status of the Fund
❖ Positive Cash Flow
❖ Variable Benefit Accrual Rate (VBAR)
❖ Contribution Rates
❖ Organizing Tools
❖ Leveraging Assets
2 2
SHEET METAL WORKERS’
NATIONAL PENSION FUND
NPF Funding
Plan Year 2016 2015 2014 2013
Valuation Date
January 1
2016
January 1 2015
January 1 2014
January 1 2013
Funded Percentage 59.4% 59.3% 59.1% 57.4%
Value of Assets $4,294,266,345 $4,140,279,634 $3,940,831,853 $3,711,928,315
Value of Liabilities $7,230,768,938 $6,987,384,126 $6,671,514,903 $6,463,106,428
Contrast Assumptions v. Experience
Assumptions
• Participant count as of 2013 will remain flat thru 2026
• Hours will be the same as 2013
• Investment return 7.5%
• CBA’s that clearly spell out increases are counted
Experience 2015
• Slight increase in participants
• Hours up about 4.7%
• Investment return -0.42% (market value actuarial basis)
• Contribution income up 12%
Sheet Metal Workers' National Pension Fund: Credit Balance and Funded Percentage Projections Assuming 90 Million Hours/Year and 5.0% Returns through 2021
Based on the actual experience of 2016, the Plan is projected to enter the Green Zone in 2028, and is projected to meet the requirements of the Funding Improvement Plan.
2016 2017 2018 2019 2020 2026 2027 2028 2029 2030 2031
$ Bil
lio
ns
Projected Year-EndCredit Balance for Plan Years Beginning January1
1.20
1.00
0.80
0.60
0.40
0.20
0.00
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
2021 2022 2023 2024 2025
ProjectedFunded Percentage as of January 1
Legal and General Index Funds
• An initiative of SMART to
leverage funds across the
sheet metal industry.
• Requires no minimum
investment.
• Fees for smaller funds will be
the same as NPF fees.
• Arrangement is only for sheet
metal funds.
NPF moved assets into these
funds from S&P 400, S&P 500,
S&P 600 and other index funds
resulting in annual fee savings
of $120,000.
Other National Funds (LU&C and
SASMI) making similar moves
that will result in $40,000
savings.
North America’s Building Trades Unions (NABTU)
ProxyVote Plus
Investment Database
Compiling and tracking total investments of our
Funds will give Sheet Metal and all of Building Trades one
collective voice as we steward the assets of our members.
“NABTU’s Capital Strategies program was
created in 2016 to facilitate a more active
partnership between NABTU and the
trustees, administrators, advisors and
investment managers of our members’
pension savings in the pursuit of benefit
improvements and prudent, responsible and
financially sound investment policies.”
“Iron Workers pension cuts
approved; retirees to get
smaller checks”
“Union pension fund plans 30 percent cut to
retiree benefits”
“Teamsters’ Pension Plans Seek Massive Cuts to Retirees to Stay Solvent”
Multi Employer Pension Reform Act of 2014
Provided tools for seriously critical funds to remain solvent.
One tool: cuts to benefits meant to be less than the cuts pensioners would realize with the PBGC.
Alaska Ironworkers Pension Plan In Review
Automotive Industries Pension Fund Denied
Bricklayers & Allied Craftsmen Local No 7 Pension Plan Withdrawn
Bricklayers And Allied Craftworkers Local 5 Pension Plan Withdrawn
Central States, Southeast And Southwest Areas Pension Plan Denied
IAM Motor City Pension Fund In Review
Iron Workers Local 17 Pension Fund Approved
Ironworkers Local 16 Pension Fund Denied
Local 805 IBT Pension and Retirement Plan In Review
New York State Teamsters Conference Pension & Retirement Fund In Review
New York State Teamsters Conference Pension & Retirement Fund In Review
Road Carriers Local 707 Pension Fund Denied
SW Ohio Regional Council for Carpenters Pension Plan In Review
Teamsters Local 469 Pension Plan Denied
Teamsters Local 469 Pension Plan Withdrawn
United Furniture Workers
Pension Fund
Withdrawn
United Furniture Workers
Pension Fund A
In Review
Western States Office and Professional Employees Pension Fund In Review
NONE OF THESE TOOLS ARE AVAILABLE TO THE NPF
WE CANNOT MAKE PENSION CUTSWe are not critical and declining.
We are not red zone.
We are endangered, yellow zone.
We are not expected to become insolvent.ere not expected to become iove.We have a funding improvement plan which projects us to be green by the end of the funding improvement period.
Plan YearAnnual Investment
Return
2013 20.56%
2014 6.12%
2015 -0.42%
3 year average 8.75%
Variable Benefit Accrual Rate - 2017
VBAR FormulaIF, the three-year average marketvalue investment return percentage reported in the preceding Plan Year’sActuarial Valuation is:
THEN, the VBAR rate of Accrual for the Plan Year willbe:
10% or higher 1.25%*
8.5% or higher, but less than 10% 1.0%*
6.5% or higher, but less than 8.5% 0.75%*
Greater than 0%, but less than 6.5% 0.5%*
0% or less 0%*
*FOR 55/30 CONTRIBUTION RATE, THE ACCRUAL IS 70% OF AMOUNTS LISTED.
VBAR From the Start2014 VBAR 2015 VBAR 2016 VBAR 2017 VBAR 2018 VBAR
2016 TBD
2015 -0.42 -0.42
2014 6.12% 6.12% 6.12%
2013 20.56% 20.56% 20.56%
2012 11.98% 11.98% 11.98%
2011 -1.72% -1.72%
2010 14.48%
3 Year Avg 8.25% 10.27% 12.89% 8.75% TBD
VBAR 0.75% 1.25% 1.25% 1.00% TBD
24.74 30.82 38.66 26.26 TBD
• First Alternative: 7% Increase Required in 2017
• Second Alternative: 3.5% Increase Required 2017
• Default: No increase required in 2017
Contribution Rates
• 2018 and 2019: Trustees have determined that, barring any catastrophic events impacting the plan, there will be no mandated increases.
• Beyond 2019: TBD
Owner Member Exclusions:
Trustee Resolution to allow new Owner Members to participate in the plan but exclude contributions on themselves for one year.
EVOLUTION: Organizing Tools
Free Look:
A BRAND NEW Employer who signed a CBA, and began contributing in 2015, 2016, or 2017 will not be assessed withdrawal liability if its obligation to contribute ceases w/in 48 months.
Employers Using These Tools
Free Look
2015: 4 Employers Approved
2016: 12 Employers Approved
2017: 9 Employers Approved
1 Pending Requests
Owner Member Exclusions
2016: 4 Employers Approved
2017: 1 Pending Request
Unfunded Vested LiabilityThe December 31, 2015 Withdrawal Liability Valuation establishes the basis for WDL for withdrawals that occur in the 2016 Plan Year.
2014: $4.41 billion
2015: $4.86 billion
Increase: $449 million
Unfunded Vested Liability
The Long Term Interest Rate Assumption used for Funding is 7.5%.
The 2015 return was –0.42%
PBGC Interest Rate Changed for both short term and long term.
3.10% and 3.29%
To
2.46% and 2.98%
Lower Interest Rates
=
Higher Liabilities
Other demographic changes (i.e. more or fewer deaths than expected) also can impact the UVL.
Unfunded Vested Liability
UVL @ 12/31/14 $4.407
Low Investment Return $176
Change in PBGC Interest Rates $197
Other Changes (Demographics) $76
Total Changes $449
UVL @ 12/31/15 $4.856
Non-Discrimination Testing
• Requirement of qualified plans to ensure that the benefits, rights, and features of a plan do not discriminate in favor of highly compensated employees.
• HCE in 2017 is an employee who earned $120,000 or more in 2016.
• Required to do this testing every three years for employers who employ:
• Non Bargained• Non Alumni• HCE
We will need your help to identify if your Local Union should be included in testing and to gather
applicable data.
NPF Adoption Agreements
The NPF was established in May 1966 to provide a defined benefit plan to collectively bargained employees.
Adoption Agreements are Executed when no CBA is applicable to cover:
- Local Union Officials - Health and other Benefit Fund Administrators- Apprentice Coordinators and Part –time Instructors
Employed by a JATC
Participation under an NPFAdoption Agreement
• Alumni Only – former sheet metal workers that worked in Covered Employment under the Plan.
• Alumni and Non-Alumni (excludes employees that are covered under a collective bargaining agreement to which the Employer is a party e.g. clerical employees covered by an OPEIU agreement).
• Other exclusions include
➢Part-time hourly (JATC) –What about the week that they travel for training?
➢Trustees, warden, conductor, steward, staffing for elections or picketing, President or Recording Secretary (not currently working fulltime for the Union).
Contribution Rate(s) under an NPF Adoption Agreement
•The single Contribution Rate in effect under the Collective Bargaining Agreement and any renewal, modification, or amendment of such successor Collective Bargaining Agreement. Such rate shall apply to all Covered Employees or the Employer.
•The highest Contribution Rate in effect in the Covered Employee’s Home Area as determined by the Collective Bargaining Agreement.
EVOLUTION: NCCMP
Past Successes:
• Pension Protection Act of 2006
•Worker, Retiree, and Employer Relief Act of 2008
•Affordable Care Act
•Multiemployer Pension Reform Act of 2014
Current Priorities:
•PBGC Crisis
•Composite Plan Legislation
•Protecting the ACA
