Posted:
December 22, 2008
No immediate measures are needed to keep the American Maritime Officers Pension Plan sound through 2009, the plan’s trustees have concluded.
The joint union-employer trustees met in emergency session in Dania Beach to address a three-pronged threat to the AMO Pension Plan and to single and multiemployer defined benefit pension plans in the private and public sectors nationwide — difficult funding requirements under the Pension Protection Act of 2006, massive and sustained losses in investment markets in 2008, and a deepening recession.
The Plan’s actuaries and counsel and AMO Plans Executive Director Steve Nickerson participated in the lengthy meeting.
“The AMO Pension Plan is strong — for now,” said AMO National President Tom Bethel. “The Plan expects to meet its current obligations and cover its liabilities safely in 2009 with no reduction in benefits, no freeze on pension credits, no restrictions on benefit options and no additional contributions from deep-sea, Great Lakes and inland waters employers.
“However, we cannot say for certain — no one can say for certain — what the AMO Pension Plan’s condition will be in 2010 or beyond,” Bethel continued. “The Pension Protection Act remains a burden to all defined benefit pension plans, investment markets remain unstable and prevailing economic conditions could result in fewer cargoes and less business for U.S. merchant vessel operators in all trades — vessels withdrawn from service because of weak demand do not provide the jobs that represent employer contributions to the AMO Pension Plan and the other benefit funds established for all AMO members and their families.”
Bethel, who serves as alternating chairman and secretary of the AMO Plans trustees, cited “a traumatic combination of factors” affecting the AMO Pension Plan, including the collapse of investment markets and funding mandates under the 2006 law.
“Like all individual and institutional investors, the AMO Pension Plan suffered steep losses in the stock and bond markets in 2008,” Bethel explained. “Meanwhile, the Pension Protection Act kicked in like a mule, requiring multiemployer plans like ours to fund liabilities over 15 years instead of 30 — anyone whose 30-year mortgage becomes a 15-year mortgage knows what this does to the cost of the mortgage and the payments that must be made in full and on time.”
Bethel said specific provisions of the Pension Protection Act could force “substantial increases in employer contributions to the AMO Pension Plan — possibly as high as 300 percent.”
The AMO Pension Plan trustees also considered the potential impact of H.R. 7327, which would amend the Pension Protection Act in part by postponing the rigid funding requirements for two years and delaying the required “funding and rehabilitation periods” for fragile multiemployer plans designated in 2008 or 2009 as “endangered” or “critical.” The AMO Pension Plan is not now considered at risk under the standards set for each category by the Pension Protection Act.
“H.R. 7327 would give defined benefit pension plans room to breathe, with the hope that the investment markets will have stabilized and improved in two years,” Bethel said. “The bill would buy time — without it, some 90 percent of the defined benefit pension plans in the United States would go under in 2009.”
Bethel added: “The Pension Protection Act was well intentioned, but its framers did not foresee the catastrophic current conditions that are driving retirement account values down to such perilous levels, and several of the law’s provisions could destroy, rather than protect, defined benefit pension plans. H.R. 7327 is helpful, and it is certainly welcome, but it is not the permanent fix working families deserve.”
H.R. 7327 — titled the “Worker, Retiree and Employer Recovery Act of 2008”— was approved without objection in the House of Representatives Dec. 10 and by unanimous consent in the Senate Dec. 11. The President is expected to sign the legislation into law before the New Year.
“Retirement security emerged this year as one of the most important issues of our time,” Bethel said. “We will not lose focus on it, and we will keep all AMO families informed of all developments on this critical front.”
AMO Pension Plan safe, but markets and mandates pose significant threats
No immediate measures are needed to keep the American Maritime Officers Pension Plan sound through 2009, the plan’s trustees have concluded.
The joint union-employer trustees met in emergency session in Dania Beach to address a three-pronged threat to the AMO Pension Plan and to single and multiemployer defined benefit pension plans in the private and public sectors nationwide — difficult funding requirements under the Pension Protection Act of 2006, massive and sustained losses in investment markets in 2008, and a deepening recession.
The Plan’s actuaries and counsel and AMO Plans Executive Director Steve Nickerson participated in the lengthy meeting.
“The AMO Pension Plan is strong — for now,” said AMO National President Tom Bethel. “The Plan expects to meet its current obligations and cover its liabilities safely in 2009 with no reduction in benefits, no freeze on pension credits, no restrictions on benefit options and no additional contributions from deep-sea, Great Lakes and inland waters employers.
“However, we cannot say for certain — no one can say for certain — what the AMO Pension Plan’s condition will be in 2010 or beyond,” Bethel continued. “The Pension Protection Act remains a burden to all defined benefit pension plans, investment markets remain unstable and prevailing economic conditions could result in fewer cargoes and less business for U.S. merchant vessel operators in all trades — vessels withdrawn from service because of weak demand do not provide the jobs that represent employer contributions to the AMO Pension Plan and the other benefit funds established for all AMO members and their families.”
Bethel, who serves as alternating chairman and secretary of the AMO Plans trustees, cited “a traumatic combination of factors” affecting the AMO Pension Plan, including the collapse of investment markets and funding mandates under the 2006 law.
“Like all individual and institutional investors, the AMO Pension Plan suffered steep losses in the stock and bond markets in 2008,” Bethel explained. “Meanwhile, the Pension Protection Act kicked in like a mule, requiring multiemployer plans like ours to fund liabilities over 15 years instead of 30 — anyone whose 30-year mortgage becomes a 15-year mortgage knows what this does to the cost of the mortgage and the payments that must be made in full and on time.”
Bethel said specific provisions of the Pension Protection Act could force “substantial increases in employer contributions to the AMO Pension Plan — possibly as high as 300 percent.”
The AMO Pension Plan trustees also considered the potential impact of H.R. 7327, which would amend the Pension Protection Act in part by postponing the rigid funding requirements for two years and delaying the required “funding and rehabilitation periods” for fragile multiemployer plans designated in 2008 or 2009 as “endangered” or “critical.” The AMO Pension Plan is not now considered at risk under the standards set for each category by the Pension Protection Act.
“H.R. 7327 would give defined benefit pension plans room to breathe, with the hope that the investment markets will have stabilized and improved in two years,” Bethel said. “The bill would buy time — without it, some 90 percent of the defined benefit pension plans in the United States would go under in 2009.”
Bethel added: “The Pension Protection Act was well intentioned, but its framers did not foresee the catastrophic current conditions that are driving retirement account values down to such perilous levels, and several of the law’s provisions could destroy, rather than protect, defined benefit pension plans. H.R. 7327 is helpful, and it is certainly welcome, but it is not the permanent fix working families deserve.”
H.R. 7327 — titled the “Worker, Retiree and Employer Recovery Act of 2008”— was approved without objection in the House of Representatives Dec. 10 and by unanimous consent in the Senate Dec. 11. The President is expected to sign the legislation into law before the New Year.
“Retirement security emerged this year as one of the most important issues of our time,” Bethel said. “We will not lose focus on it, and we will keep all AMO families informed of all developments on this critical front.”