The Pension Protection Act of 2006 (PPA), added requirements for measuring the financial health of multiemployer pension plans such as ours. PPA requires the Laborers' Pension Fund’s (Fund's) actuary to determine the Fund’s financial status under these rules and certify that status annually. If the Fund’s status is critical (“Red Zone”) or endangered (“Yellow Zone”), the Trustees must notify all plan participants, beneficiaries, participating unions and contributing employers in writing and take corrective action to restore the financial health of the plan. Retirement plans that are in good financial condition (what is referred to as the “Green Zone”) are not required to take any action.
In addition, the PPA expanded upon the amount of, and type of information that Pension Funds must send out to participants, beneficiaries, local unions, employers and others with an interest in the Plan. The Fund sends an Annual Funding Notice within four months after the Plan Year; therefore, the Fund sent this notice in September 2009, September 2010, September 2011, September 2012, September 2013, September 2014, September 2015 and now again in September 2016.
We are pleased to announce that our Plan is certified as being Green / good financial condition for the 2010-2011 through 2016-2017 Plan years. Pension plans with a funding status of good financial health must have a funded percentage of at least 80 percent and meet other conditions as well. As of June 1, 2010 (the beginning of the 2010-2011 Plan year), our Plan had a funded percentage of 81.7%. As of June 1, 2011 (the beginning of the 2011-2012 Plan year), our Plan had a funded percentage of 83.0%. As of June 1, 2012 (the beginning of the 2012-2013 Plan year), our Plan had a funded percentage of 82.4%. As of June 1, 2013 (the beginning of the 2013-2014 Plan year), our Plan had a funded percentage of 82.1%. As of June 1, 2014 (the beginning of the 2014-2015 Plan year), our Plan had a funded percentage of 84.0%. As of June 1, 2015 (the beginning of the 2015-2016 Plan year), our Plan had a projected funded percentage of 82.4%. As of June 1, 2016 (the beginning of the 2016-2017 Plan year), our Plan had a projected funded percentage of 81.7%. Notice of our current PPA zone certification was mailed in September 2016, along with your Annual Funding Notice.
To improve funding, the contribution rate was increased by $2.20 per hour to $8.37 effective June 1, 2009, by $0.20 per hour to $8.57 effective June 1, 2010, by $0.25 per hour to $8.82 effective June 1, 2011, by $0.20 per hour to $9.02 effective June 1, 2012, by $0.50 per hour to $9.52 effective June 1, 2013, by $0.60 per hour to $10.12 effective June 1, 2014, by $0.60 per hour to $10.72 effective June 1, 2015 and by $0.85 per hour to $11.57 effective June 1, 2016.
In recent years, the Trustees have taken other steps to help ensure that the Fund is in good financial condition, which includes instructing the Fund’s actuary to anticipate higher mortality and levels of early retirement and disability. Increasing these predictions lowers the funding percentage; however, this helps mitigate the potential negative financial impact of these actions on the Plan’s financial condition and strengthen the Plan for the future.
The Trustees will continue to work closely with our plan professionals to monitor the financial markets and manage the Plan in a manner that will preserve its future health.