benefit accrual rate reduction

[Guest henrit]

Are there any survey out there which shows what other multi-employer funds are doing as far as benefit accrual rate reductions? I am interested in the magnitude of the reductions that other funds are adopting.

If not, do you know of any funds that had adopted a benefit accrual rate reduction, and what's the magnitude of the reduction?

[Guest TMH]

Two of our pension funds have reduced their crediting rate. One from 3% to 2%, the other from 4.5% to 2.25%; then to 1.5%, and next year to 0.50%. They have also filed for an amortization extension with the IRS.

[Guest henrit]

TMH - do you mind tell me the sizes of your two funds? Are the reductions done as of a certain date or do you equate the reduction to the renewal date of collective bargaining agreement?

Thanks.

[Effen]

We have one (1000+ actives) that went to 0 accrual and they still may not make it. I have another (400 actives) that is looking at a combined 1/3 reduction of multiplier and 10%/yr increase in contribution rate over the next 5 years. That still may not be enough, but it's a start.

You probably need to run some projections and see what it will take to save the fund. I find the Trustees are usually hesitant to implement any reduction, but once you or the attorney explains the consequences of not doing it, they will.

If you can, I strongly recommend Paul Angelo's "Multiemployer Plans Workshop" at the 2005 EA meeting. This session is not taped so you have to be there, but it is usually a good source for this type of information.