Single Employer Union DB with scheduled benefit increases under PPA

[mwyatt]

Don't deal too much with union plans recently, but looking at a plan right now and just wanted to brush up on one point under PPA funding.

Plan is collectively bargained with a single employer (not a multiemployer plan). Benefits are dollar based; in this situation looks like scheduled rate improvements only impact future service (so any scheduled increases aren't affecting prior accruals, only future accruals). Under pre-PPA funding, when a contract was settled and we were funding on projected benefits, for 412 and 404 we recognized the full increase under the life of the contract in the year of signing (so if a contract had the benefit multiple increasing say a dollar a year for 5 years, we would establish an amendment amortization base with the highest multiple covered under the contract, rather than a year by year increase). For Current Liability purposes would just value the benefit in effect at the valuation date.

Under PPA, not really seeing anything that covers this situation (and now that I think about it, since PPA is pure unit credit, maybe why it doesn't). Given that in this situation where bargained benefit increases here only affect future, not accrued to date, benefits, Funding Target isn't affected in any event here. The improvements in benefits paid would only affect current and future Target Normal Costs under the Plan so maybe nothing to deal with under PPA?

For 404 and cushions, again the Funding Target isn't going anywhere in the future either since no history of increasing past service benefits; any improvements are in the Target Normal Cost, so no cushion for future benefit increases either (although given this is a Union plan, maximum deductible contribution is probably an academic exercise anyways).

Anything I'm missing?

[david rigby]

Does 1.430(d)-1(d) provide any help?