TRUSTEES OF THE Boilermaker-Blacksmith National Pension Trust will meet this June to determine what changes may be needed to comply with the Pension Protection Act of 2006. The law imposes new requirements that are intended to ensure pension plans are funded at certain levels.
During the winter construction conference at Marco Island Mar. 3-7, Tom DelFiacco, vice president of the Segal Co. (the trust actuary), explained how the law impacts the Boilermaker pension trust and outlined the changes being considered by the trustees. Most provisions of the act went into effect Jan. 1, 2008.
DelFiacco said the law requires that the board of trustees annually determine the plan’s funding level and project future funding levels. Funding levels are calculated as a percentage of assets in the plan compared to its future pension payment obligations. The higher the percentage, the healthier the plan is. He said the reform legislation establishes a “warning system — with green, yellow, and red zones.” Plans in the green zone meet minimum funding requirements. Plans in the yellow or red zones require immediate corrective action to meet minimum funding requirements. The law also requires additional disclosures of fund status, not only to the participants but also to the union, the employers, and several government agencies.
The Boilermaker pension trust is currently in the green zone and is healthy, DelFiacco stated. However, actuarial projections indicate the plan could move into the yellow zone within several years and into the red zone in subsequent years. As a Taft-Hartley trust, the pension is overseen by a board consisting of an equal number of union and employer trustees. Union trustees attending the construction conference sought input from business managers and said they would continue to seek input until the pension board meeting in June. Any changes to the pension trust would probably become effective Oct. 1, 2008.
DelFiacco said the Pension Funding Act requires regular actuarial evaluations and certifications. Projections depend on assumptions about contributions, employment levels, and investment performance.
Since its creation in 1960, the Boilermaker-Blacksmith National Pension Trust has been adjusted numerous times to reflect changing circumstances and to preserve the benefit for all participants. The pension board has overseen many improvements on behalf of the plan’s participants. For example, the pension factor has been increased 20 times. The factor was set at 18 percent when the plan was first created; it stands at 33 percent today.
The Boilermaker pension trust remains one of the top Taft-Hartley plans in the nation.