Breaking News: Another Union Plan Approved for Benefit Cuts

The last of the four plans that submitted applications last July to cut benefits under MPRA got their letter.

From their latest 5500 filing:

Plan Name: SW OH Regional Council of Carpenters Pension Plan
EIN/PN: 31-6127287/001
Total participants @ 12/31/17: 5,486 including:
Retirees: 2,676
Separated but entitled to benefits: 1,137
Still working: 1,673

Asset Value (Market) @ 1/1/17: $218,949,3534
Value of liabilities using RPA rate (3.05%) @ 1/1/17: $685,997,330 including:
Retirees: $399,561,528
Separated but entitled to benefits: $122,751,401
Still working: $163,684,401

Funded ratio: 31.92%
Unfunded Liabilities as of 1/1/17: $467,047,976

Asset Value (Market) as of 12/31/17: $227,429,452
Contributions: $17,172,581
Payouts: $30,852,117
Expenses: $1,736,203

12 responses to this post.

  1. Posted by Tough Love on February 11, 2019 at 2:26 pm

    Yup , THAT’S the way it SHOULD BE (reduce the BENEFITS) … but no “bailout”.

    Reply

    • Posted by NJ2AZ on February 11, 2019 at 10:41 pm

      naaah i’m sure if they got a big enough loan they could cover full benefits AND loan interest and still pay back all the principle at maturity (lolz)

      Reply

  2. Posted by skip3house on February 11, 2019 at 3:09 pm

    ‘Wait a long time, then hurry up’. Reverse of old Army of ‘Hurry up and wait’.

    Reply

  3. Posted by Tough Love on February 11, 2019 at 10:48 pm

    New article …………..

    US Treasury Approves Benefits Cuts for Two More Pensions ………….. Mid-Jersey Trucking and Toledo Roofers become 11th and 12th funds cleared for benefits reductions under MPRA.

    https://www.ai-cio.com/news/us-treasury-approves-benefits-cuts-two-pensions/

    Reply

  4. Posted by NJ2AZ on February 11, 2019 at 11:19 pm

    i wish someone had the time, energy, and smarts (i do not) to take one of these MPRA plans and figure out exactly how big of a loan they would need and the required estimated returns to fully fund benefits & loan interest and a full principle repayment in 30 years.

    i realize it’d be heavy on assumptions but still

    Reply

    • Posted by Tough Love on February 11, 2019 at 11:55 pm

      lol ………….. I have the smarts, but neither the time or energy.

      Reply

      • Posted by Anonymous on February 12, 2019 at 8:34 am

        Uh….don’t you want to reverse that statement TL? You have the time and the energy, but not the smarts. 😄😄
        Lol. Set yourself up for that one

        Reply

        • Posted by Tough Love on February 12, 2019 at 1:58 pm

          El gaupo,

          You must be confusing me with POs. You know, the ones who nationally, have an average IQ of 104.

          Reply

    • Posted by Brian on February 12, 2019 at 7:55 am

      It really does come down to the assumptions. As an illustration only (I’m not saying that this is exactly how the proposed legislation would work, nor that any of the assumptions in the illustration are reasonable), here’s a rough estimate.

      One key thing to remember is that they aren’t allowed to invest the loan in any risky assets. But if they’re only earning a risk-free rate on the loaned amount, the only way they get any benefit from it is if the annual loan interest payments they make are at a lower rate. So let’s assume they can earn 3.5% on the loaned amount, but only pay 1%.

      For this plan, assume the contributions (17mm), benefits (21mm), and expenses (2mm) stay constant for 30 years. Also, they assume they earn a regular 5.5% return on their existing asset portfolio. You can solve for a loan amount that allows them to pay the loan interest, benefits, and expenses, while accumulating (with interest earned, contributions, and the growth of the existing asset portfolio) to a big enough amount to pay off the principal after 30 years. But they still have liabilities outstanding after 30 years, so they will still need some additional assets – let’s assume $200mm remaining would do it.

      With all of those assumptions, I solved for an initial loan of $330mm; about half of their current liability.

      It is extremely sensitive to the assumptions. If you assume that benefits payments will grow slightly over time (seems reasonable) while contributions shrink slightly (also seems reasonable) you get a very different answer. Using a 2% growth rate for benefits and a 2% decrease rate for contributions, I solve for an initial loan of $580mm.

      Reply

      • Posted by skip3house on February 12, 2019 at 9:16 am

        Hi Brian… Guessing half trillion $$ per every 5K people in bad pension plans, on average U.S. needs too many trillions of $$….. good job. Should put this line of reasoning to the trash heap.

        Reply

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