February 07 President's message
The Collective Bargaining Agreement, Article XIX, Section 19.101 provides for a retirement program that includes a defined benefit retirement pension, defined contribution 401(k) and a defined benefit retirement medical benefit plan. The recent Pension Protection ACT (PPA) of 2006 modified existing funding rules for all multi-employer defined benefit plans and imposes requirements of corrective action for under-funded plans. Under PPA, a multi-employer plan is considered to be endangered status if it is less than 80% funded (or projected within the next six years) with an accumulated funding deficiency. The implementations of these new requirements is effective in 2008. Required corrective actions are swift and could be an increase in contributions, modifications of the benefit or a combination of both. Let’s be clear about this, the legislation was promoted by the then Republican majority and intended to eliminate workers’ defined pensions. Our current pension plan is not in funding jeopardy to pay out existing and future benefits. We are now being required to have a higher level of funding for the liability.
In December of 2007, all participants in the Retirement plan received a letter from the Trust, as required by law, stating that the current funding level is 77%. My article is not intended to alarm, but to apprise you that the Retirement Trustees must carefully look at ways to close a $7 million funding gap. With the 2006 investment returns exceeding assumptions and the implementation of strategies recommend by our actuary, some of the funding gap was closed.
The goal of the CSO Officers and CSO Trustees is to maintain the current level of benefit calculation outlined in Article XIX, Section 19.304, so current actives can enjoy the same level of benefits as current retirees. The last CBA change in the retirement plan occurred in 1998 when the contract was modified by the parties to eliminate an automatic COLA for retirees and change the language to “shall be considered annually when deemed to be appropriate,” which now is impacting long time retirees. We do not want to make decisions that will adversely impact our current active CSO members, or future and current retirees.