'For our union employees if you have any questions about our proposal you may ask us. If you have feedback or input about our proposal you must bring that to the union, the Union is the lawful representative of our union employees. We simply want employees to know what we are offering and why.'
Q1. What is the Company's Proposal? I heard that the company wants to take way union pension.
A1. The Company wants employees to have a choice. The company has proposed to the union that employees be given a choice to stay with the teamster pension or move to the 401k with Company match.(Due to the Negotiation process this information may be outdated and will be updated.)
Q2. If the Union Members decide to go for this proposal, how will the new pension affect their 80 and out rule that is in place with the Teamsters?
A2.We believe that anyone who has looked at the Western Conference Teamster Pension Trust webpage (WCTPension.org) would agree that it is complicated and the reason is because we think the plan is complicated – so a correct answer will depend on each employee’s work situation.
In general many employees work beyond the rule of 80 and many will never reach the rule of 80 because they have not worked long enough for a company contributing to PEER (PEER is the “supplemental contribution” that pays for the 80 and out), so the PEER payment now required does them no good. We have had some retired employees tell us they are very disappointed to learn how the Union pension actually works out once they actually retire and begin to collect.
The rule of 80 and out and how it is applied is determined by the WCTPPT Trustees and not the Company. We have told the unions that we are prepared to address specific issues of concern in the Company proposal.
Because the Teamster pension is so complicated and is so specific to any one person we cannot give a direct answer. What we can say is that if our offer of choice is accepted and if the company 401(k) is choosen to replace the WCTPPT, each employee chooses when to retire, the employee chooses how much to put into pension (401(k)) and how much to keep as wages. We believe that under what the Company has offered to the Union an employee might be able to actually retire sooner with the Company plan than the Union plan IF that employee made the choice to put into the 401(k) the maximum the law allows. Each employee has much more control over their 401(k) and they take it with them if they move or change jobs - that is not the case in the Teamster plan. If an employee were to leave OHFL and take a Teamster job with a Washington County where pension is controlled by the State their Teamster pension would just sit. With a 401(k) the employee continues to control the money they got while at Oak Harbor.
Each employee will need to do their own research to see what fits them best. What we do know is that under the Teamster plan there are no individual employee choices – under what the Company has offered to the Union, should the 401(k) be chosen, each employee has choices now and into the future as their situation changes.(Due to the Negotiation process this information may be outdated and will be updated.)
Q3. What is the benefit factor that we keep hearing about and who establishes it?
A3. While we are not experts on the Teamster Pension and we encourage each employee to discuss their situation with the Plan Administrator, it is our understanding that the actual terminology is ‘Accrual Rate’. This is the percentage of the total annual contribution that you will receive as a monthly benefit when you retire. The best thing for you to do is to compute your own projected benefit from the Western Conference of Teamsters Pension Trust website (www.wctpension.org).
However, here is what we compute as the scenario for 2007:
Oak Harbor paid $2.76 in actual pension contribution for the purpose of calculating benefits (peer is not included in the pension payments or calculations). The company pays for up to 2080 hours and the accrual rate is 1.65. Here is the math, as we understand it,
So if you worked 2080 or more hours, and you are vested in the pension, you have a right to receive $94.72 per month. So, for example, if the accrual rate averages the same from now until you retire in 20 years you would multiply the 94.72 x 20 for 1894.40 per month in benefits.
There are many rules that may affect this benefit amount such as survivorship and recent coverage rules. You should refer to the Western Conference of Teamsters Pension Trust website (www.wctpension.org) in order to understand these rules so you can understand better your actual benefit amount because some rules reduce benefits amounts.
The Accrual rate is determined by the trustees and is based on funding requirements. The rate has gone from 2.7 in 2002, 1.2 in 2003, 1.65 in 2007, 2.0 in 2008, 1.2 from 2009 on. The Trustees can change the Accrual Rate at any time without consent by employees or Oak Harbor.
See www.wctpension.org/participants/pu_qa_lessthan20.html if you have less than 20 years in the plan or www.wctpension.org/participants/pu_qa_morethan20.html if you have more than 20 years.
Q4. What is Cliff Vesting?
A4. Cliff Vesting means that you have no vesting (ownership of your account) until a specific period is over. In the case of the Western Conference of Teamsters Tension Trust, Oak harbor employees have 0% vesting until they reach 5 years with over 500 hours in each of the 5 years working for a company that is participating in the pension. For more information about vesting see the Teamster pension website, www.wctpension.org/participants/plan_summary/partici_vest.html
Q5. Is a 401(k) a less secure plan than a multi-employer pensions trust?
A5. No plan is without risk, the difference is who controls the risk.
401(k) plan risks – the funds you put into your 401(k) can almost never be touched by anyone but you, the matching funds contributed to a 401(k) cannot be touched by Oak Harbor once you’re vested in them. All the money in your 401(k) is invested by you in the 15 available mutual funds according to your chosen percentages. The more risky funds you choose in your investment mix the more potential reward you may receive. As with any investment you should know your own risk comfort level and invest accordingly. The inherent risk with a 401(k) is the performance of your mutual fund selections.
Guaranteed defined benefit plan – the risk related to this is that the trustees manage the funds within this plan. They have a goal to optimize the money and get a return on investment so that the funds grow. They can invest in equities, mutual funds, bonds, or other investment according to their bylaws. The ultimate job of the trustees is to maintain the funding level of the pension plan. There are 3 ways they manage the funding level:
The funds are guaranteed by the Pension Benefit Guaranty Corporation (PBGC) once you are vested in them. The maximum amount that is guaranteed by the PBGC is $16.25 per month for each qualified year of service. This means that if the plan were to become insolvent, unable to pay, someone with 30 years of service would receive $487.50 per month or $5,850.00 per year. For more information www.wctpension.org/participants/plan_summary/other_info.html#Anchor-Pension-17209.
The Western Conference of Teamsters Pension is 93.6% funded right now, in recent years they have raised the premiums to employers and reduced benefits to the employees. For more information see: www.wctpension.org/participants/plan_summary/retire_form/page4popup.gif and www.wctpension.org/local_unions/memo_accrual_increase.html
Q6. What happens to my teamster pension plan if I choose to go to the 401(k) with match?
A6. This is a question best answered by your local union or the trust administrator due to the complexity of the plan. It is our interpretation that very little will happen to the pension you have already earned. We believe that you would receive 2 retirement payments when you choose to retire, your monthly payment from the trust and a lump amount from the 401k plan. The Company is discussing this issue with the union.(Due to the Negotiation process this information may outdated and will be updated.)
Q7. Must I retire from Oak Harbor to keep my teamster pension?
A7. We believe the rules about that are called “Recent Coverage” and can be viewed on the pension site at, www.wctpension.org/participants/plan_summary/recent_cover.html . You are not required to retire from Oak Harbor. You will however forfeit some of your benefit if you don’t meet the recent coverage rules. Please review these rules so you know the impact your choices may make on your ultimate benefit amount.
Q8. Why would Oak Harbor want to move employees to the 401k with match?
A8. 401(k) plans give you the employee the most flexibility. Any amounts you contribute are 100% yours and as an employee vests in the 401(k) that portion also becomes yours. The plan by design is 100% portable, so depending on where you work or retire you contribute and manage your money in a 401(k). We can also offer the match program where you can choose to invest in your retirement or keep the additional money in your paycheck. The company believes that you are the one who should decide what is best for you and your family. By giving you a choice the Company will save money whenever an employee does not want to benefit or does not want the full benefit.
Q9. What is the story with “Funding” and the multi-employer pensions?
A9. Funding is basically the percentage of the estimated total pension benefits (money) that the trust has as an asset within the trust accounts. So with simple numbers if the trust estimated that they have $1,000,000 in earned benefits (pensions to pay out) that they will be obligated for and they have plan assets of $900,000 they would be 90% funded or 10% underfunded.
Due to the mismanagement of pension funds in the past, the federal government has established rules about how much funding the trust must maintain. If the trust fund is less than 80% funded, the pension is deemed, “endangered”, and the trustees must either increase premiums to employers or reduce future benefits to correct the underfunding. If the fund is less than 60% funded, the pension is deemed, “critical”, and the trust is required to reduce future benefits and raise premiums.
www.aon.com/us/busi/hc_consulting/pension_reform/multiemployer_narrative.pdf This is a document from a consulting group in Washington, DC that is available on the net. www.wctpension.org/whats_new/funding_status.html This is a letter to the trustees from their actuary telling them that the fund is estimated a 93.8%.
Q10. If I move to the 401(k) with match what percentage will I get?
A10. During the current negotiation process the company has proposed up to a 6% match for current employees.(Due to the Negotiation process this information may outdated and will be updated.)
Q11. How do I find the pension page Ed mentioned on the Oak Harbor Conversations DVD?
A11. Go to www.oakhanswers.com/pensions.htm
Q12. Why is the Company proposal to have workgroups vote to keep Teamster Pension or move to a 401K matching? Why can’t individual people choose to keep Teamster Pension or move to a 401K?
A12. We had a meeting with the Teamster Pension Trust and it comes down to this. The Trust has a rule that doesn’t allow individuals to opt out of the pension. It is either the whole group or not according to their rules.(Due to the Negotiation process this information may be outdated and will be updated.)
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