Greetings Sisters & Brothers:
You will be receiving the letter copied below in the near future. It is an attempt to address the concerns by some participants regarding the recent Annual MPIPHP Funding Notice. Please pay close attention to paragraph three of the letter below.
I am a Director on the Pension Plan and I can tell you the Plan is well funded and your contributions and payouts are safe. What you are seeing in the Funded percentage notice is the remnants of the Plan recognizing the losses incurred back in 2007-2009 in our investments which the government allowed us to amortize over several years. We are still reporting those losses even though our investments today are showing healthy gains. In other words, what you are reading is an accounting issue which will resolve itself over the years.
I pledge to you as one (1) of thirty-two (32) Directors on the Pension Fund that I will push for conservative measures to increase our funding, if necessary. There are many avenues we could take and I am willing to explore them all, if a problem develops. While I remain your Secretary Treasurer I will do what is necessary to make sure every member and Retiree of Local 399 is able to retire with a full pension. Please do not be distracted by the naysayers. The Plan is healthy and your benefits are protected.
Teamsters Local 399
Letter from MPIPHP
Thank you for your inquiry regarding the Funded Percentage of the MPI Pension Plan as of January 1, 2017. I would like to provide you with some additional information which was not included in the recently published Funding Notice. As stated in the Notice, the funded percentage dropped from 76.8% on 1/1/16 to 67.4% on 1/1/17. As also stated in the Notice, the funded percentage is a comparison of the value of plan assets to the value of plan benefits. Since plan benefits are paid over a period of time, the valuation of plan benefits is a complex task. We rely on the Plan’s actuary to make this valuation. In making this valuation, the actuary is taking a more conservative approach to the valuation of plan benefits than in the past and is anticipating that rates of return in the future will be lower than previously anticipated.
Another significant factor in the current funded percentage is the recognition of prior years’ investment losses. The Pension Relief Act of 2010 is federal law enacted following the economic crisis of 2008 which allows pension plans to recognize (or spread) losses over a longer period. The MPI Pension Plan has availed itself of these provisions and continues to take into account losses gradually over time. As a result, at this point in time MPI anticipates another small decline in the funded percentage for January 1, 2018 followed by increases thereafter. Although these projections are based on assumptions made using actuarial science and long-term experience, no one can predict the future with complete certainty. This is especially true with the financial markets and investment return assumptions.
During 2016 (the year to which the notice relates), the MPI Pension Plan earned 6.9% (gross) on its assets, which we believe is a reasonable rate of return based on the economic conditions in effect that year. During 2017 the Plan earned 11.1% (gross). The Plan is in compliance with all legal requirements including IRS requirements for plan funding. Accordingly, we want to assure our participants that we fully expect to continue to pay all benefits when due.