Posted:
April 29, 2016
The joint union-employer trustees of the American Maritime Officers Defined Contribution Plan have revised the Plan's benefit calculation method for participants who received in-service lump-sum distributions from the defined benefit AMO Pension Plan.
Under the revised formula - effective May 1, 2016 - all AMO DC Plan participants who drew in-service lump-sum distributions from the AMO Pension Plan will earn AMO DC Plan credits only for service following the dates of the lump-sum benefit payouts. These participants will lose no AMO DC Plan benefits accrued before May 1, 2016.
AMO Defined Contribution Plan "points" for all participants through April 30 had been based on participant age at the start of the calendar year, years of AMO service and credited Seafarers International Union service where applicable. These criteria still apply to AMO DC Plan participants who had not qualified for or received in-service lump-sum payments under an option eliminated when the traditional AMO Pension Plan was frozen under federal law in December 2009.
"This benefit calculation modification represents a significant overdue reform in the AMO Defined Contribution Plan," said AMO National President Paul Doell, chairman of the AMO Plans Boards of Trustees. "It addresses what many AMO members see reasonably as a fundamental flaw."
The AMO Defined Contribution Plan paralleled a strategy to restore full funding to the defined benefit AMO Pension Plan, and it was established "as a permanent way to ease retirement planning and enhance security for all AMO members and their families," Doell continued.
When the AMO Defined Contribution Plan was established, many AMO members believed that active in-service lump-sum pension recipients should have been excluded from the new retirement fund. Their case was that lump-sum recipients had gained substantially from the one-time payments from the AMO Pension Plan, that they were participants in the AMO 401(k) and Money Purchase Benefit Plans and that they had remained in their jobs, with steady income from wages and vacation benefits.
"At the time, there were varied interpretations of the governing law, one of which was that excluding a specific class of active AMO members from the AMO DC Plan could have been viewed as discriminatory," Doell said. "This debate continues today. But this law clearly allows revision of the benefit calculation method - there is no equivocation, no room for conflicting opinion or interpretation and no risk of discrimination complaints. This is what the AMO Defined Contribution Plan trustees agreed to - and why they agreed to it - with respect to in-service lump-sum pension recipients."
Notice of the AMO Defined Contribution Plan's revised "points" formula and individual statements were mailed by AMO Plans Executive Director Steve Nickerson to all active in-service lump-sum recipients the week of April 4.
Trustees modify AMO DC Plan formula for ISLS recipients
The joint union-employer trustees of the American Maritime Officers Defined Contribution Plan have revised the Plan's benefit calculation method for participants who received in-service lump-sum distributions from the defined benefit AMO Pension Plan.
Under the revised formula - effective May 1, 2016 - all AMO DC Plan participants who drew in-service lump-sum distributions from the AMO Pension Plan will earn AMO DC Plan credits only for service following the dates of the lump-sum benefit payouts. These participants will lose no AMO DC Plan benefits accrued before May 1, 2016.
AMO Defined Contribution Plan "points" for all participants through April 30 had been based on participant age at the start of the calendar year, years of AMO service and credited Seafarers International Union service where applicable. These criteria still apply to AMO DC Plan participants who had not qualified for or received in-service lump-sum payments under an option eliminated when the traditional AMO Pension Plan was frozen under federal law in December 2009.
"This benefit calculation modification represents a significant overdue reform in the AMO Defined Contribution Plan," said AMO National President Paul Doell, chairman of the AMO Plans Boards of Trustees. "It addresses what many AMO members see reasonably as a fundamental flaw."
The AMO Defined Contribution Plan paralleled a strategy to restore full funding to the defined benefit AMO Pension Plan, and it was established "as a permanent way to ease retirement planning and enhance security for all AMO members and their families," Doell continued.
When the AMO Defined Contribution Plan was established, many AMO members believed that active in-service lump-sum pension recipients should have been excluded from the new retirement fund. Their case was that lump-sum recipients had gained substantially from the one-time payments from the AMO Pension Plan, that they were participants in the AMO 401(k) and Money Purchase Benefit Plans and that they had remained in their jobs, with steady income from wages and vacation benefits.
"At the time, there were varied interpretations of the governing law, one of which was that excluding a specific class of active AMO members from the AMO DC Plan could have been viewed as discriminatory," Doell said. "This debate continues today. But this law clearly allows revision of the benefit calculation method - there is no equivocation, no room for conflicting opinion or interpretation and no risk of discrimination complaints. This is what the AMO Defined Contribution Plan trustees agreed to - and why they agreed to it - with respect to in-service lump-sum pension recipients."
Notice of the AMO Defined Contribution Plan's revised "points" formula and individual statements were mailed by AMO Plans Executive Director Steve Nickerson to all active in-service lump-sum recipients the week of April 4.