HomeMy WebLinkAbout20230109INT to Staff Attachment - Response to No. 15_2022 Annual Funding Notice.pdf1
ANNUAL FUNDING NOTICE
FOR
IDAHO PLUMBERS AND PIPEFITTERS PENSION PLAN
Introduction
This notice includes important information about the funding status of your multiemployer pension
plan (“the Plan”). It also includes general information about the benefit payments guaranteed by
the Pension Benefit Guaranty Corporation (“PBGC”), a federal insurance agency. All traditional
pension plans (called “defined benefit pension plans”) must provide this notice every year
regardless of their funding status. This notice does not mean that the Plan is terminating. It is
provided for informational purposes and you are not required to respond in any way. This notice
is required by federal law. This notice is for the plan year beginning June 1, 2021 and ending May
31, 2022 (“Plan Year”).
How Well Funded Is Your Plan
The law requires the administrator of the Plan to tell you how well the Plan is funded using a
measure called the “funded percentage.” The Plan divides its assets by its liabilities on the
Valuation Date for the plan year to get to this percentage. In general, the higher the percentage,
the better funded the plan. The Plan’s funded percentage for the Plan Year and each of the two
preceding plan years is shown in the chart below. The chart also states the value of the Plan’s
assets and liabilities for the same period.
2021/2022 2020/2021 2019/2020
Valuation Date June 1, 2021 June 1, 2020 June 1, 2019
Funded Percentage 98% 84% 83%
Value of Assets $148,699,120 $125,937,325 $119,402,651
Value of Liabilities $151,302,312 $149,117,768 $143,499,971
Year-End Fair Market Value of Assets
The asset values in the chart above are measured as of the Valuation Date. They also are
"actuarial values." Actuarial values differ from market values in that they do not fluctuate daily
based on changes in the stock or other markets. Actuarial values smooth out those fluctuations
and can allow for more predictable levels of future contributions. Despite the fluctuations, market
values tend to show a clearer picture of a plan's funded status at a given point in time. The asset
values in the chart below are market values and are measured on the last day of the Plan Year.
The chart also includes the year-end market value of the Plan's assets for each of the two
preceding plan years.
Valuation Date May 31, 2022 May 31, 2021 May 31, 2020
Fair Market Value of Assets $145,668,000* $ 148,699,120 $ 120,199,841
* The Fair Market Value of Assets for May 31, 2022 is based on preliminary financial statements. This
value is unaudited and subject to change.
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Endangered, Critical, or Critical and Declining Status
Under federal pension law, a plan generally is in "endangered" status if its funded percentage is
less than 80 percent. A plan is in "critical" status if the funded percentage is less than 65 percent
(other factors may also apply). A plan is in "critical and declining" status if it is in critical status and
is projected to become insolvent (run out of money to pay benefits) within 15 years (or within 20
years if a special rule applies). If a pension plan enters endangered status, the trustees of the
plan are required to adopt a funding improvement plan. Similarly, if a pension plan enters critical
status or critical and declining status, the trustees of the plan are required to adopt a rehabilitation
plan. Funding improvement and rehabilitation plans establish steps and benchmarks for pension
plans to improve their funding status over a specified period of time. The plan sponsor of a plan
in critical and declining status may apply for approval to amend the plan to reduce current and
future payment obligations to participants and beneficiaries.
The Plan was not in endangered, critical, or critical and declining status in the Plan Year.
Participant Information
The total number of participants and beneficiaries covered by the Plan on the valuation date was
2,067. Of this number, 859 were current employees, 783 were retired and receiving benefits, and
425 were retired or no longer working for the employer and have a right to future benefits.
Funding & Investment Policies
Every pension plan must have a procedure to establish a funding policy for plan objectives. A
funding policy relates to how much money is needed to pay promised benefits. The funding policy
of the Plan is to contribute at a level consistent with applicable bargained and special agreement
contracts. The Plan's resources are intended to fund Plan obligations. Plan resources include
accumulated Plan assets plus expected future contributions and investment income. Plan
obligations are benefit payments to current and future retirees and beneficiaries, including
benefits earned to date as well as benefits expected to be earned in the future. Plan obligations
also include expected expenses paid from Plan assets.
Pension plans also have investment policies. These generally are written guidelines or general
instructions for making investment management decisions. The Plan’s investment policy is
adopted by the Board of Trustees and includes investment objectives intended to reflect the Plan’s
long-term investment horizon. The Plan’s current investment objective is long-term in nature. The
objective is to maximize long-term growth of assets within prudent levels of risk while targeting a
total rate of return (as measured over a full market cycle) to exceed the actuarial assumed rate of
return.
Under the Plan’s investment policy, the Plan’s assets were allocated among the following
categories of investments, as of the end of the Plan Year. These allocations are percentages of
total assets:
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Asset Allocations Percentage
Stocks 55%
Investment grade debt instruments 23%
High-yield debt instruments 4%
Real estate 9%
Other 9%
Right to Request a Copy of the Annual Report
Pension plans must file annual reports with the US Department of Labor. The report is called the
"Form 5500." These reports contain financial and other information. You may obtain an electronic
copy of your Plan's annual report by going to www.efast.dol.gov and using the search tool. Annual
reports also are available from the US Department of Labor, Employee Benefits Security
Administration's Public Disclosure Room at 200 Constitution Avenue, NW, Room N-1513,
Washington, DC 20210, or by calling 202.693.8673. Or you may obtain a copy of the Plan's annual
report by making a written request to the plan administrator. Annual reports do not contain
personal information, such as the amount of your accrued benefit. You may contact your plan
administrator if you want information about your accrued benefits. Your plan administrator is
identified below under "Where to Get More Information."
Summary of Rules Governing Insolvent Plans
Federal law has a number of special rules that apply to financially troubled multiemployer plans
that become insolvent, either as ongoing plans or plans terminated by mass withdrawal. The plan
administrator is required by law to include a summary of these rules in the annual funding notice.
A plan is insolvent for a plan year if its available financial resources are not sufficient to pay
benefits when due for that plan year. An insolvent plan must reduce benefit payments to the
highest level that can be paid from the plan's available resources. If such resources are not
enough to pay benefits at the level specified by law (see Benefit Payments Guaranteed by the
PBGC, below), the Plan must apply to the PBGC for financial assistance. The PBGC will loan the
plan the amount necessary to pay benefits at the guaranteed level. Reduced benefits may be
restored if the plan's financial condition improves.
A plan that becomes insolvent must provide prompt notice of its status to participants and
beneficiaries, contributing employers, labor unions representing participants, and PBGC. In
addition, participants and beneficiaries also must receive information regarding whether, and how,
their benefits will be reduced or affected, including loss of a lump sum option.
Benefit Payments Guaranteed by the PBGC
The maximum benefit that the PBGC guarantees is set by law. Only benefits that you have earned
a right to receive and that cannot be forfeited (called vested benefits) are guaranteed. There are
separate insurance programs with different benefit guarantees and other provisions for single-
employer plans and multiemployer plans. Your Plan is covered by PBGC's multiemployer
program. Specifically, the PBGC guarantees a monthly benefit payment equal to 100 percent of
the first $11 of the Plan's monthly benefit accrual rate, plus 75 percent of the next $33 of the
accrual rate, times each year of credited service. The PBGC's maximum guarantee, therefore, is
$35.75 per month times a participant's years of credited service.
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Example 1: If a participant with 10 years of credited service has an accrued monthly benefit of
$600, the accrual rate for purposes of determining the PBGC guarantee would be determined by
dividing the monthly benefit by the participant's years of service ($600/10), which equals $60. The
guaranteed amount for a $60 monthly accrual rate is equal to the sum of $11 plus $24.75 (.75 x
$33), or $35.75. Thus, the participant's guaranteed monthly benefit is $357.50 ($35.75 x 10).
Example 2: If the participant in Example 1 has an accrued monthly benefit of $200, the accrual
rate for purposes of determining the guarantee would be $20 (or $200/10). The guaranteed
amount for a $20 monthly accrual rate is equal to the sum of $11 plus $6.75 (.75 x $9), or $17.75.
Thus, the participant's guaranteed monthly benefit would be $177.50 ($17.75 x 10).
The PBGC guarantees pension benefits payable at normal retirement age and some early
retirement benefits. In addition, the PBGC guarantees qualified preretirement survivor benefits
(which are preretirement death benefits payable to the surviving spouse of a participant who dies
before starting to receive benefit payments). In calculating a person's monthly payment, the PBGC
will disregard any benefit increases that were made under a plan within 60 months before the
earlier of the plan’s termination or insolvency (or benefits that were in effect for less than 60
months at the time of termination or insolvency). Similarly, the PBGC does not guarantee benefits
above the normal retirement benefit, disability benefits not in pay status, or non-pension benefits,
such as health insurance, life insurance, death benefits, vacation pay, or severance pay.
For additional information about the PBGC and the pension insurance program guarantees, go to
the Multiemployer Page on the PBGC’s website at www.pbgc.gov/prac/multiemployer. Please
contact your employer or plan administrator for specific information about your pension plan or
pension benefit. PBGC does not have that information. See “Where to Get More Information”,
below.
Where to Get More Information
For more information about this notice, you may contact the Plan’s Administrative Office at Idaho
Plumbers and Pipefitters Pension Plan c/o BeneSys Inc. PMB #116 5331 S Macadam Ave, Ste
258 Portland, OR 97239, (208) 288-1610 or 1-(800) 808-1687. For identification purposes, the
official plan number is 001 and the plan sponsor’s name and employer identification number or
“EIN” is Idaho Plumbers and Pipefitters Pension Plan and 82-6010346.