DEC. 14, 2009 - Recently, the Trustees of the Boilermaker-Blacksmith National Pension Trust announced Amendment 1 to the Pension Plan. These changes: 

• Apply to Pension contributions made on your behalf for work performed on or after January 1, 2010
• Do not cut Pension benefits.
• Do not change the Early Retirement eligibility rules.

The global financial meltdown that began in 2008 has impacted the Plan, forcing Pension Trustees to act to protect the funding status of the Plan and ensure safety of benefits already earned by participants and retirees. The Trustees have opted not to cut Pension benefits, but to increase employer contributions through Amendment 1 to the Pension Plan.

Amendment 1

Amendment 1 to the 12th Restatement of the Pension Plan does the following:

• Increases the Minimum Contribution Rates over a five year period, starting January 1, 2010.
• Uses the increased portion of the contribution as a 35% per year Supplemental Non-Accruing Contribution (SNAC) to be applied towards the funding health of the Pension Plan. Participants do not accrue benefits on the 35% per year SNAC.
• Discontinues the current 15% SNAC that began on February 1, 2009. The 15% SNAC will end on December 31, 2009.

The Minimum Contribution Rate will increase by 35% over the Base Contribution Rate (the rate in effect on September 30, 2008 for each job classification under the agreement at that time) each year from January 1, 2010 through January 1, 2014.

The 35% per year SNAC (the portion of the Rate Factor in the chart that is above 100%) will go towards increasing the funding level of the Pension Plan. Participants do not accrue benefits on the 35% per year SNAC.

Employers cannot deduct the increased portion of the contribution from an employee's paycheck. However, depending on the Collective Bargaining or Participation Agreement, your employer may reduce wages overall to fund the increase in contributions.

Why the Pension Plan is Changing

Changes to the Pension Plan were brought about from a combination of three factors: the Pension Protection Act of 2006, population (demographic) changes, and financial market factors.

The Pension Protection Act (PPA), created to protect pension plans and participants, became effective in 2008. This law imposes stiff new requirements intended to ensure pension plans are funded at certain levels. The PPA requires Trustees to annually review funding levels, create more accurate funding projections, and make adjustments where necessary.

The PPA also established zones to identify the status of a pension plan's funding. Green indicates healthy plans, yellow represents endangered plans, and red signals critical plans. The Boilermaker Pension Plan was in the green zone in 2008 and elected to maintain its green zone status for 2009. These changes approved by the Trustees are intended to prevent the Plan from entering the red zone.

Population (demographic) changes also contributed to the Trustee's decision. Like all Americans, Boilermakers are living longer and receiving benefits longer. In fact, recent studies show approximately 20 percent of active Boilermakers are within the 50-54 age group, with another 15 percent in the 45-49 age group.* That's more than one-third of active Boilermakers who could be receiving retirement benefits within the next 10 years. Plus, all Americans are living longer. A 65-year old man is now expected to live to age 82 and a 65-year old woman is expected to live to age 85.**

Previous actuarial projections indicated the 15% SNAC would keep us in the green zone. However, the global financial meltdown negatively affected our investments as it did most other investments across the world. In light of this, additional changes to the Pension Plan became necessary to avoid red zone status for the Pension Plan. The Fund's investment earnings, demographic changes, and the aging population combine to affect funding.

Since the creation of the Pension Plan in 1960, many adjustments to the Plan have been made. Plan changes are intended to preserve benefits currently promised and continue future benefits for current employees. The Trustees may be required to make additional changes in the future to maintain the Plan's funding levels.

For More Information

To learn more about Amendment 1 to the Pension Plan, read the Pension Plan Amendment 1 204(h) Notice and review the Participant Frequently Asked Questions (FAQs). To learn how employers are affected by this change, read the Pension Plan Amendment 1 Employer Notice and review the Employer Frequently Asked Questions (FAQs). If you have additional questions after reviewing these notices, please call Customer Care at 866-342-6555, 7 a.m. to 5 p.m. CST, Monday through Friday.

* Source: Segal Company Actuarial Valuation and Review as of January 1, 2008

** Source: Foundation on Aging