TOPICS - PENSION

Annual Funding Notice

TOPICS - WELFARE

Summer Coverage Extends Through August 31

Summer Coverage on Full-Time Students

Beneficiary on Life Insurance

Spouse Has Other Insurance

New Spouse and Step-Children

In Response To Your Questions

Q. I recently received the Annual Funding Notice from the Pension Trust which indicates Plan’s “funded current liability percentage” for the Plan Year was 83.7% as of December 31, 2006, down 4.3% from the 88% funding level over the previous year (2005).  I was under the impression that the District 9 Pension Trust was nearly “fully funded”.  Is this not true?  Also, with all the talk and discussions in the media about insolvent plans and the Pension Protection Act, is the fund “endangered” or in a “critical” status?  Has District 9 been required to contact the PBGC concerning its plan or is it on the watch list?

 A. New pension legislation was enacted in 2006, specifically the Pension Protection Act (“PPA”) of 2006.  The act was signed by President Bush on August 17, 2006.  This legislation requires a multiemployer pension plan to use the Pension Reform Funded Test to measure the plan’s funding status to determine whether plans are in Endangered (“Yellow Zone”) or Critical (“Red Zone”) status.

Under the Pension Reform Funded Test required by the PPA of 2006, the percentage is derived by the following calculation:

Actuarial Value of Assets

Present Value of Accumulated Benefits

This calculation resulted in a funded percentage of 106% and 105% for plan years ending in 2005 and 2006, respectively.  This methodology measures the degree to which assets fund benefits earned to date (both vested and non-vested) which is an indication of the progress toward funding of all benefits, assuming an on-going plan.  Use of the long-term valuation assumptions provides consistency from year to year. This percentage is currently projected to be 106.23% for the plan year ending in 2007.

The requirements of the law generally do not go into effect until the first plan year in 2008.  Therefore, the annual funding notices for plan years ending in 2004, 2005, 2006 (the notice at issue) and 2007 are required to be issued under the current law.  The current law is the Pension Funding Equity Act of 2004 (“PFEA”).

Under the PFEA Funded Percentage methodology, the percentage is derived by the following calculation:

Actuarial Value of Assets

Current Liability

This calculation resulted in a funded percentage of 88% and 83.7% for plan years ending in 2005 and 2006, respectively.  This methodology uses current liability and is based on a required mortality table and interest rate.  The required interest rate is tied to current market conditions and is currently much lower than the long-term valuation assumption; therefore, this percentage is lower than the one which will be required under the PPA of 2006.  This percentage is currently projected to be 80.39% for the plan year ending in 2007.

Based on the percentages required under the PPA of 2006 and the fact no projected Funding Standard Account deficiency exists, the plan would be categorized as neither in endangered nor critical status. 

A copy of the annual funding notice sent by the Pension Trust can be examined by clicking on the following link. 

ANNUAL FUNDING NOTICE

Any further questions or document requests should be directed to the Pension Trust office at (314) 739-6442.

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Q. My 20 year old dependent son, who is a full-time student in college, is currently on summer break and won’t be returning back to  school for classes until August when classes resume. Does he have coverage over the summer months while he is out of school?

A. As you know, a dependent child of an eligible member, who is age 19 and older and is a full-time student in an accredited educational institution (high school, trade school, vocational school, junior college or university), is eligible for benefits until his or her 25^th birthday.  Under previous plan rules, the dependent child’s eligibility automatically terminated on the last day of the last month in which the child was a full-time student, typically on May 31, or if he or she married.

The plan has been revised to provide those students who are on summer break, or who are between semesters, to have coverage provided during that time.  The student must have (1) been a full time student in consecutive semesters; (2) return back to school as a full-time student when classes resume; and (3) the school must return a completed Student Verification Form.  Failure to comply with these requirements will result in coverage being terminated on August 31.

The plan has been revised to require the completion of a Student Verification Form by the member and educational institution (see Forms to download a copy).  Official notification from the school is required for each period.

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Q. My 22 year old dependent daughter, who is a full time, undergraduate student in college and is expected to  graduate in June of this year and is uncertain whether she will enroll as a full time student this fall seeking a graduate or other professional degree.  Does she have coverage over the summer months while she contemplates her future?

A.  The plan has been revised to provide those students who are on summer break, or who are between semesters, to have coverage provided during that time.  The student must have (1) been a full time student in consecutive semesters; (2) return back to school as a full-time student when classes resume; and (3) the school must return a completed Student Verification Form.  Failure to comply with these requirements will result in coverage being terminated on August 31.

The Trust must be notified as soon as the student changes from Full Time Status or overpayments may be applied to the member’s account.

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 Q. I’m not sure who I named as my life insurance beneficiary. How can I make sure I have the right beneficiary or beneficiaries listed?

 A.   We keep life insurance beneficiary forms on file.  You can call or write us for a copy of your beneficiary form or you can submit a new beneficiary form.  Remember, we must pay life insurance benefits as indicated on your beneficiary form.  If no beneficiary form is filed or if your named beneficiary is deceased, life insurance benefits will be paid to your estate or trust.

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Q.  My wife works and has her own group insurance.  What does she need to do to file her claim with District 9?

 A.    After her primary carrier has processed her claim, she needs to send us a copy of the itemized bill along with the Explanation of Benefits from her insurance company (a copy of the provider’s bill showing what the other insurance paid is not sufficient).  If we receive a copy of a bill without the explanation of benefits from the other insurance, we will hold the claim and advise you what we need before we can process it.

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Q.   I recently got married and my new spouse has children. How do I get my new wife and step-children covered?

 A.     In order to add your new wife and step-children to your insurance, we need a completed enrollment form listing their names and birth dates, a copy of your marriage license, and a complete copy of your spouse’s divorce decree from the children’s natural father. This divorce decree will let us know who is supposed to provide the primary insurance for the children. If there is no divorce decree, then we need the children’s birth certificates along with the court order that shows which natural parent is to provide insurance.  Your step-children must live in your household on a full-time basis and be dependent on you for support.

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