Posted:
January 11, 2013
The financial standing of the defined benefit American Maritime Officers Pension Plan is improving in the fiscal year that began last October 1, rising from the "red zone" and "critical status" as defined by the federal Pension Protection Act of 2006 for the first time since 2009.
The Plan reached the law's less difficult "yellow zone" and "endangered status" on December 28, 2012, according to Horizon Actuarial Services.
Certification of the AMO Pension Plan in the "yellow zone" by Horizon resulted from favorable investment performance, the rehabilitation strategy adopted by the Plan's joint union-employer Board of Trustees in 2009 and additional measures applied by the trustees in consultation with Horizon.
The trustees and Horizon continue to review data and consider potential further action to bring the AMO Pension Plan to full funding - the "green zone" as defined by the Pension Protection Act. The immediate intent is to preserve the "20 and out" retirement option with monthly benefits from the Plan, but full funding of the AMO Pension Plan would also allow funding of the new American Maritime Officers Defined Contribution Plan to reach the 100-percent level for every individual DC Plan retirement account.
At the close of fiscal year 2012 last September 30, the AMO Pension Plan was funded at 68 percent, with an estimated $506 million in accrued vested benefit liabilities and assets valued at approximately $344 million. In fiscal year 2011, the Plan was funded at 57.7 percent, with an estimated $504 million in liabilities and assets of approximately $291 million.
In fiscal 2012, the AMO Pension Plan paid $32 million in monthly benefits to Plan participants and survivors.
The AMO Pension Plan Board of Trustees will keep Plan participants informed of all developments as they occur.
AMO Pension Plan's investment returns exceed expectations significantly
The defined benefit American Maritime Officers Pension Plan's investment returns exceeded the assumed rate of 7.5 percent by far during the fiscal year that ended last September 30.
In October 2011, the first full month of fiscal year 2012, the Plan made 8.9 percent in investment markets. Dramatic market rebounds and strong returns in nine of the 12 months of the fiscal year resulted in a return for the year of 20.4 percent.
This solid performance followed poor returns in markets plagued in fiscal 2011 by prolonged recession.
The overall performance of the AMO Pension Plan's investments is measured by "benchmarks" assigned by investment managers to the various asset classes held by the Plan. "Benchmarks" are the average performances of asset classes as gauged by several indexes. Had the Plan's investments in fiscal 2011 met the assigned benchmarks, the total return that year would have been 18.1 percent.
The AMO Pension Plan's equity holdings - large-cap, mid-cap and small-cap stocks - generated a positive return of 31.7 percent in fiscal 2012, surpassing the benchmark of 29.8 percent by 1.9 percent.
Fixed income and bond investments by the Plan led to a positive return of 9.2 percent, exceeding the 5.2 percent benchmark by 4 percent.
Other investment asset classes - international equities, emerging market equities, commodities and real estate investment trusts - returned 16 percent to the Plan, topping the 15.7 percent benchmark by 0.3 percent.
Eleven of the Plan's 14 investment managers surpassed benchmarks in their respective asset classes in fiscal 2012. Two additional investment managers missed their benchmarks by less than 2 percent. The one overall setback occurred in the commodities asset class, which had a negative return of 6.7 percent. Commodities account for less than 3 percent of the AMO Pension Plan's total investment assets.
Improved standing for AMO Pension Plan
The financial standing of the defined benefit American Maritime Officers Pension Plan is improving in the fiscal year that began last October 1, rising from the "red zone" and "critical status" as defined by the federal Pension Protection Act of 2006 for the first time since 2009.
The Plan reached the law's less difficult "yellow zone" and "endangered status" on December 28, 2012, according to Horizon Actuarial Services.
Certification of the AMO Pension Plan in the "yellow zone" by Horizon resulted from favorable investment performance, the rehabilitation strategy adopted by the Plan's joint union-employer Board of Trustees in 2009 and additional measures applied by the trustees in consultation with Horizon.
The trustees and Horizon continue to review data and consider potential further action to bring the AMO Pension Plan to full funding - the "green zone" as defined by the Pension Protection Act. The immediate intent is to preserve the "20 and out" retirement option with monthly benefits from the Plan, but full funding of the AMO Pension Plan would also allow funding of the new American Maritime Officers Defined Contribution Plan to reach the 100-percent level for every individual DC Plan retirement account.
At the close of fiscal year 2012 last September 30, the AMO Pension Plan was funded at 68 percent, with an estimated $506 million in accrued vested benefit liabilities and assets valued at approximately $344 million. In fiscal year 2011, the Plan was funded at 57.7 percent, with an estimated $504 million in liabilities and assets of approximately $291 million.
In fiscal 2012, the AMO Pension Plan paid $32 million in monthly benefits to Plan participants and survivors.
The AMO Pension Plan Board of Trustees will keep Plan participants informed of all developments as they occur.
AMO Pension Plan's investment returns exceed expectations significantly
The defined benefit American Maritime Officers Pension Plan's investment returns exceeded the assumed rate of 7.5 percent by far during the fiscal year that ended last September 30.
In October 2011, the first full month of fiscal year 2012, the Plan made 8.9 percent in investment markets. Dramatic market rebounds and strong returns in nine of the 12 months of the fiscal year resulted in a return for the year of 20.4 percent.
This solid performance followed poor returns in markets plagued in fiscal 2011 by prolonged recession.
The overall performance of the AMO Pension Plan's investments is measured by "benchmarks" assigned by investment managers to the various asset classes held by the Plan. "Benchmarks" are the average performances of asset classes as gauged by several indexes. Had the Plan's investments in fiscal 2011 met the assigned benchmarks, the total return that year would have been 18.1 percent.
The AMO Pension Plan's equity holdings - large-cap, mid-cap and small-cap stocks - generated a positive return of 31.7 percent in fiscal 2012, surpassing the benchmark of 29.8 percent by 1.9 percent.
Fixed income and bond investments by the Plan led to a positive return of 9.2 percent, exceeding the 5.2 percent benchmark by 4 percent.
Other investment asset classes - international equities, emerging market equities, commodities and real estate investment trusts - returned 16 percent to the Plan, topping the 15.7 percent benchmark by 0.3 percent.
Eleven of the Plan's 14 investment managers surpassed benchmarks in their respective asset classes in fiscal 2012. Two additional investment managers missed their benchmarks by less than 2 percent. The one overall setback occurred in the commodities asset class, which had a negative return of 6.7 percent. Commodities account for less than 3 percent of the AMO Pension Plan's total investment assets.