Posted:
April 23, 2009
By Steve Nickerson
AMO Plans Executive Director
We are in the midst of an economic downturn that has had a significant impact on our Pension Plan. None of us has experienced in our lifetimes the economic turmoil that has occurred since October of 2007. As a result, many rumors are surfacing regarding the state of our Pension Plan. One rumor overheard is: “The government is going to take over our Pension Plan.” Another rumor is: “Our Pension Plan is broke.” These statements are not fact - they are just rumors. The fact is, like all other pension plans in the private and public sectors, the AMO Pension Plan is facing serious funding challenges resulting from the investment market meltdown and rigid new funding requirements under federal law. As the Trustees continue to meet and make decisions with regard to our Pension Plan, participants will be kept apprised of all developing issues.
A notice was sent to all participants regarding the IRS required Actuarial Certification with respect to the AMO Pension Plan at the end of 2008. The most important fact contained in that notice is that there have been no significant changes made recently to the AMO Pension Plan and the Plan will continue to operate as it has in the past during the current plan year (October 1, 2008 through September 30, 2009).
The following communication, the first of several to follow, deals with the facts and not the rumors.
Status of the AMO Pension Plan
Since the beginning of the stock market decline at the end of 2007, through March of 2009, the assets of the AMO Pension Plan have received a return of negative 31.8%. During this market decline, the Pension Plan has continued to pay monthly benefits in the range of $1.8 million to $2 million per month for a total of 18 months, or approximately $33 million. Also during this period, the Pension Plan has paid out approximately $75 million in lump sum payments. At the beginning of the fiscal year starting October 1, 2007, the Pension Plan had assets of $525 million, and as of April 2009, the Pension Plan has assets of $300 million. From October 2007 through the first part of April 2009, the AMO Pension Plan has lost $160 million.
The Pension Plan was over 90% funded for our fiscal year ending September 30, 2007. However, it is now projected that the Plan will be 60% to 65% funded by the end of the current fiscal year. It is estimated that 90% of all pension plans nationwide will be less than 65% funded.
The Pension Protection Act and what the AMO membership was facing at the beginning of 2008
There were two major concerns with respect to the Pension Plan facing the AMO membership at the start of 2008 that were created by the implementation of the federal Pension Protection Act of 2006 (“PPA”) and regulatory changes. The first was what we refer to as “Alternate Normal Retirement Age.” As you know, the Pension Plan considers a participant eligible for an in service lump sum distribution when his age plus his years of AMO service equals 75. Under IRS regulations a plan’s normal retirement age must not be earlier than the earliest age that is reasonably representative of the typical retirement age for a particular industry. A normal retirement age below age 55 is generally considered to be too early unless the IRS grants specific approval for a particular industry. The Trustees had planned to present a case to the IRS in support of allowing our industry to provide an in-service lump sum prior to the age of 55. Because the effective date of the change in the definition of normal retirement age has been extended from October 1, 2008, to October 1, 2010, as a result of temporary relief provided by legislation passed by Congress and signed by the President in December 2008, the Trustees will consider presenting their case to the IRS at a later date.
The second issue of great concern to the membership has to do with the factors used to determine the amount of a lump sum distribution. Federal law determines which interest rates are to be used. If interest rates go up then lump sum factors go down. If interest rates go down then lump sum factors go up. The concept is that if you are given a pool of money in a higher interest rate environment then the lump sum amount could be invested and you could receive principal and earnings equal to a monthly annuity. The problem arose because Congress determined that the use of the Treasury Bond Interest Rate to calculate lump sum factors results in a lump sum amount with a value that is greater than that of a monthly pension. Therefore, Congress has mandated the usage of the Corporate Bond Interest Rate and will phase out the use of the Treasury Bond Interest Rate. This increases interest rates, driving the lump sum factors down. The new interest rate structure was to take effect October 1, 2008, utilizing 80% of the Treasury Bond Rate and 20% of the Corporate Bond Rate. The Corporate Bond Rate was to increase by 20% over five years, meaning that by 2012 the rate used would be 100% Corporate Bond Rate. IRS transitional relief allowed the pension plan to defer the effective date of this change until October 1, 2010, at which time 60% of the Corporate Bond Rate will be used and 40% of the Treasury Bond Rate will be used. The Corporate Bond Rate will increase by 20% a year so that in 2011 the rate used will be 80% Corporate and 20% Treasury and by October 1, 2012 it will be 100% Corporate Bond Rate.
The closer a participant is to the age of 65 the less effect the change will have. If the interest rates from the Corporate Bond Rate curve were fully in effect in 2008, the reduction in lump sums would be about 12% for lump sums taken at age 60, 21% for lump sums taken at age 55, and 25% for lump sums taken at age 50 when compared to lump sums calculated utilizing the Treasury Rate.
However, for our Plan, both of the above changes were delayed until 2010.
Pension Protection Act and funding requirements
The PPA has established three rating levels of funding for pension plans: Green Zone, Yellow Zone and Red Zone. The funding of a pension plan compares the assets to the liabilities and projects future accruals and payments. The “percent funded” level refers to the ratio of a plan’s assets to its liabilities.
An actuary takes into consideration multiple assumptions when ascertaining the funding status of a plan. Federal law dictates what must transpire when a fund is within the parameters of a specific funding level. A Green Zone Plan is a plan that is over 80% funded. An “endangered” or Yellow Zone Plan is a plan that is between 65% funded and 80% funded. A “critical” or Red Zone Plan is a plan that is below 65% funded and/or meets other criteria. Once an actuary determines the funding status of a plan, he must certify the plan’s status to the IRS.
The AMO Pension Plan was certified as a Green Zone Plan for the current plan year, (October 1, 2008 through September 30, 2009) allowing the Plan to operate unencumbered by the PPA. However, we must begin to prepare for the next plan year during which, like 90% of the pension plans in the U.S., the Plan will be faced with a possible Red Zone Plan certification.
A Red Zone Pension Plan
Once a pension plan is certified as a Red Zone Plan, a number of events must occur before it can be certified as a Green Zone Plan (funded greater than 80%). The law requires that a “Red Zone” pension plan immediately cease the payment of lump sum benefits. In addition, the Trustees are required to create a rehabilitation plan designed to improve the funding level of the plan.
The most expensive component of our Plan is the subsidy of an early retirement benefit known as “twenty and out.” Currently, there is no actuarial reduction in a pension benefit if it is received prior to the age of 65. Our plan has the “twenty and out” (twenty pension years of covered AMO employment) provision that allows a participant to retire well before the age of 65 and receive the same pension as if they were age 65. A rehabilitation plan would require that the twenty and out provision be eliminated until the plan is fully funded or, in the alternative, the twenty and out provision could be maintained. However, the pension amount would have to be reduced if it is taken prior to the age of 65.
The Pension Plan could be frozen under a rehabilitation plan, meaning that contributions would still be made, but additional service would not accrue until the funding status was improved sufficiently. In addition, disability retirement could be eliminated.
Also under a rehabilitation plan, the parties to collective bargaining could be required to increase contributions to help fund the shortfall. This increase in contributions by our covered employers would be concurrent with any benefit cuts that are required. By law, funding requirements in a pension plan must be met. Otherwise, the contributing employers could be faced with funding deficiency penalties and taxes.
The current projection by the Plan’s actuary is that the Plan will be 60% to 65% funded as of September 30, 2009. It would be premature at this juncture to say exactly what will happen with the Plan at that time. That is why the Trustees are meeting on a regular basis with the actuary and counsel to develop a plan of action.
The Pension Benefit Guaranty Corporation
The Plan pays insurance premiums to the Pension Benefit Guaranty Corporation (PBGC) in the amount of $9 per participant per year. The PBGC guarantees that, in the event the Plan becomes insolvent, a vested participant will receive a monthly pension at age 65 of, at most, $35 per month, per year of service. For example, a participant with 10 years of service would be guaranteed a pension of $350 per month at age 65. A participant with 30 years of service would be guaranteed a pension of $1,050 per month at age 65. It should be emphasized that the Plan is not in a position of insolvency and therefore the PBGC is not taking over the Plan. The PBGC, which is operating at a massive and still-growing deficit, does not want to take over any pension plan. This is part of the reason for the requirement for a Red Zone Plan to establish a rehabilitation plan in order to prevent it from becoming insolvent.
Trustee considerations & decisions
The Trustees continue to meet and explore all of the options with respect to the operation of the Pension Plan. The effect of the downturn in the economy over the last year-and-a-half and the advice of our actuaries, financial advisors and counsel as to how to proceed going forward will be taken into consideration. The sacred promise to our members that they will receive a pension benefit is foremost on the Trustees’ minds. Consideration is being given to the ability of contributing employers to maintain operations and provide jobs for the membership of AMO in this climate. The projections by the actuary will tell the Trustees what can be expected in the future. The meetings will continue and decisions will be made in the best interest of all Plan participants.
Moving forward as a “defined benefit plan”
As the Trustees continue to weigh their options, it is important to determine how long it will take the Pension Plan, which is a “defined benefit plan”, to return to an acceptable funding level while it continues to accrue pension credits. The decline of the stock market and the implementation of the PPA must be taken into consideration. If it will take ten years to be in a position to offer benefit increases or to be in a fully funded status again, then we need to consider whether or not the defined benefit arrangement is the appropriate pension vehicle for our membership. Deficient funding levels of a defined benefit plan may create withdrawal liability for all employers. This withdrawal liability would be carried on the financial balance sheets of our employers along with any required increase in contributions. These issues will directly affect the contracts in place as well as the possibility for wages and contributions to other AMO benefits plans to be increased. The administration, professional and legal expenses incurred to administer a defined benefit plan continue to increase due to the cumbersome laws that govern them.
A rehabilitation plan could require the temporary removal of the twenty and out provision, the temporary removal of the in-service lump sum provision, and the temporary freezing of the accrual of future benefits while we continue to pay monthly benefits for pensions that have already accrued. The Trustees are trying to determine the length of time required to become fully funded again. Also, the 2006 wage freeze for determining benefits would not be moved forward to another year until the funding level can pay for the increase in funding liability created by the lifting of the wage freeze. In other words, we could be faced with a 2006 wage freeze for the distant future. All of these elements are directly affected by the financial markets.
It is possible to freeze benefits, continue contributions and receive earnings without the accrual of new benefits. This could mean that for three to five years, or perhaps longer, no new benefits would be earned but, at retirement, a participant would receive his benefit accrued through 2009.
The funding level would immediately improve without the twenty and out provision but it could also be a long period of time before it could be re-implemented.
The quickest restoration of a benefit would be the in-service lump sum, but this benefit would not be available until a specific age and, at the earliest, that age would be 55.
The Trustees and participants are faced with an uphill climb to restore the defined benefit to its previous state and to be in a position to improve benefits.
Alternative – a parallel “defined benefit plan” and “defined contribution plan”
An alternative to spending the next decade re-funding the defined benefit plan without the accrual of additional benefits is currently being considered, although no action has been taken. It takes more than $25 million to fund a new year of accrued benefit under the defined benefit plan. The Trustees have asked the actuary to perform analysis to determine what options we have so that participants can accrue additional benefits in the event the defined benefit is frozen. One option would be to freeze the defined benefit plan and under the rehabilitation plan pay off the accrued liability while new benefits accrue under a defined contribution plan in addition to 401(k) and MPB. The viability of running a third, additional, plan is dependent on the availability of contributions and earnings to pay off the liability of the old (defined benefit) plan while generating retirement savings in the new (defined contribution) plan.
All benefits under the old plan would freeze. The value of the benefit accrued could be converted to a lump sum for all active participants. Upon the re-funding of the old plan, participants would become eligible to roll over their lump sum amount to their defined contribution plan as well as receive future contributions into their defined contribution plan account. This would give each participant control of his/her own pension plan account and would not be subject to the old defined benefit plan restrictions, with the expensive compliance requirements and cumbersome laws which apply to defined benefit plans.
The viability of this alternative is being investigated by the Trustees and the Plan’s professionals. As the answers unfold, the Trustees will take action to ensure that participants receive the benefits accrued in the past, while continuing to earn new benefits in the future. If in fact the Trustees are forced to stop the payment of lump sums, to no longer allow the 20 and out provision, or to freeze the plan, this alternative could be a way to increase the value of your benefit quicker than freezing the plan and waiting for benefits to be reinstated.
Communications
In the coming months the activities of the Trustees will generate new communications. Every effort will be made to notify all participants as events transpire. Please pay attention to the AMO Newspaper, AMO Currents and to correspondence directly from the Pension Plan office.
These are trying times and the economic conditions affect everyone in this country. The Trustees will make every effort to mitigate the effect of these economic conditions and protect your right to a pension benefit.
Each Trustee meeting, each communication will generate new questions. This is a time where we need to operate in trust and not in fear. New events will cause change and new issues will arise. The Trustees will make every effort to communicate any and all actions. The Plan’s office will make every effort to answer each and every question. Your patience and understanding are greatly appreciated. The membership of AMO has faced crisis a number of times over the years and each time has prevailed. We will prevail over this economic environment as well if we marshal our resources carefully and intelligently.
Addressing the facts regarding the AMO Pension Plan
By Steve Nickerson
AMO Plans Executive Director
We are in the midst of an economic downturn that has had a significant impact on our Pension Plan. None of us has experienced in our lifetimes the economic turmoil that has occurred since October of 2007. As a result, many rumors are surfacing regarding the state of our Pension Plan. One rumor overheard is: “The government is going to take over our Pension Plan.” Another rumor is: “Our Pension Plan is broke.” These statements are not fact - they are just rumors. The fact is, like all other pension plans in the private and public sectors, the AMO Pension Plan is facing serious funding challenges resulting from the investment market meltdown and rigid new funding requirements under federal law. As the Trustees continue to meet and make decisions with regard to our Pension Plan, participants will be kept apprised of all developing issues.
A notice was sent to all participants regarding the IRS required Actuarial Certification with respect to the AMO Pension Plan at the end of 2008. The most important fact contained in that notice is that there have been no significant changes made recently to the AMO Pension Plan and the Plan will continue to operate as it has in the past during the current plan year (October 1, 2008 through September 30, 2009).
The following communication, the first of several to follow, deals with the facts and not the rumors.
Status of the AMO Pension Plan
Since the beginning of the stock market decline at the end of 2007, through March of 2009, the assets of the AMO Pension Plan have received a return of negative 31.8%. During this market decline, the Pension Plan has continued to pay monthly benefits in the range of $1.8 million to $2 million per month for a total of 18 months, or approximately $33 million. Also during this period, the Pension Plan has paid out approximately $75 million in lump sum payments. At the beginning of the fiscal year starting October 1, 2007, the Pension Plan had assets of $525 million, and as of April 2009, the Pension Plan has assets of $300 million. From October 2007 through the first part of April 2009, the AMO Pension Plan has lost $160 million.
The Pension Plan was over 90% funded for our fiscal year ending September 30, 2007. However, it is now projected that the Plan will be 60% to 65% funded by the end of the current fiscal year. It is estimated that 90% of all pension plans nationwide will be less than 65% funded.
The Pension Protection Act and what the AMO membership was facing at the beginning of 2008
There were two major concerns with respect to the Pension Plan facing the AMO membership at the start of 2008 that were created by the implementation of the federal Pension Protection Act of 2006 (“PPA”) and regulatory changes. The first was what we refer to as “Alternate Normal Retirement Age.” As you know, the Pension Plan considers a participant eligible for an in service lump sum distribution when his age plus his years of AMO service equals 75. Under IRS regulations a plan’s normal retirement age must not be earlier than the earliest age that is reasonably representative of the typical retirement age for a particular industry. A normal retirement age below age 55 is generally considered to be too early unless the IRS grants specific approval for a particular industry. The Trustees had planned to present a case to the IRS in support of allowing our industry to provide an in-service lump sum prior to the age of 55. Because the effective date of the change in the definition of normal retirement age has been extended from October 1, 2008, to October 1, 2010, as a result of temporary relief provided by legislation passed by Congress and signed by the President in December 2008, the Trustees will consider presenting their case to the IRS at a later date.
The second issue of great concern to the membership has to do with the factors used to determine the amount of a lump sum distribution. Federal law determines which interest rates are to be used. If interest rates go up then lump sum factors go down. If interest rates go down then lump sum factors go up. The concept is that if you are given a pool of money in a higher interest rate environment then the lump sum amount could be invested and you could receive principal and earnings equal to a monthly annuity. The problem arose because Congress determined that the use of the Treasury Bond Interest Rate to calculate lump sum factors results in a lump sum amount with a value that is greater than that of a monthly pension. Therefore, Congress has mandated the usage of the Corporate Bond Interest Rate and will phase out the use of the Treasury Bond Interest Rate. This increases interest rates, driving the lump sum factors down. The new interest rate structure was to take effect October 1, 2008, utilizing 80% of the Treasury Bond Rate and 20% of the Corporate Bond Rate. The Corporate Bond Rate was to increase by 20% over five years, meaning that by 2012 the rate used would be 100% Corporate Bond Rate. IRS transitional relief allowed the pension plan to defer the effective date of this change until October 1, 2010, at which time 60% of the Corporate Bond Rate will be used and 40% of the Treasury Bond Rate will be used. The Corporate Bond Rate will increase by 20% a year so that in 2011 the rate used will be 80% Corporate and 20% Treasury and by October 1, 2012 it will be 100% Corporate Bond Rate.
The closer a participant is to the age of 65 the less effect the change will have. If the interest rates from the Corporate Bond Rate curve were fully in effect in 2008, the reduction in lump sums would be about 12% for lump sums taken at age 60, 21% for lump sums taken at age 55, and 25% for lump sums taken at age 50 when compared to lump sums calculated utilizing the Treasury Rate.
However, for our Plan, both of the above changes were delayed until 2010.
Pension Protection Act and funding requirements
The PPA has established three rating levels of funding for pension plans: Green Zone, Yellow Zone and Red Zone. The funding of a pension plan compares the assets to the liabilities and projects future accruals and payments. The “percent funded” level refers to the ratio of a plan’s assets to its liabilities.
An actuary takes into consideration multiple assumptions when ascertaining the funding status of a plan. Federal law dictates what must transpire when a fund is within the parameters of a specific funding level. A Green Zone Plan is a plan that is over 80% funded. An “endangered” or Yellow Zone Plan is a plan that is between 65% funded and 80% funded. A “critical” or Red Zone Plan is a plan that is below 65% funded and/or meets other criteria. Once an actuary determines the funding status of a plan, he must certify the plan’s status to the IRS.
The AMO Pension Plan was certified as a Green Zone Plan for the current plan year, (October 1, 2008 through September 30, 2009) allowing the Plan to operate unencumbered by the PPA. However, we must begin to prepare for the next plan year during which, like 90% of the pension plans in the U.S., the Plan will be faced with a possible Red Zone Plan certification.
A Red Zone Pension Plan
Once a pension plan is certified as a Red Zone Plan, a number of events must occur before it can be certified as a Green Zone Plan (funded greater than 80%). The law requires that a “Red Zone” pension plan immediately cease the payment of lump sum benefits. In addition, the Trustees are required to create a rehabilitation plan designed to improve the funding level of the plan.
The most expensive component of our Plan is the subsidy of an early retirement benefit known as “twenty and out.” Currently, there is no actuarial reduction in a pension benefit if it is received prior to the age of 65. Our plan has the “twenty and out” (twenty pension years of covered AMO employment) provision that allows a participant to retire well before the age of 65 and receive the same pension as if they were age 65. A rehabilitation plan would require that the twenty and out provision be eliminated until the plan is fully funded or, in the alternative, the twenty and out provision could be maintained. However, the pension amount would have to be reduced if it is taken prior to the age of 65.
The Pension Plan could be frozen under a rehabilitation plan, meaning that contributions would still be made, but additional service would not accrue until the funding status was improved sufficiently. In addition, disability retirement could be eliminated.
Also under a rehabilitation plan, the parties to collective bargaining could be required to increase contributions to help fund the shortfall. This increase in contributions by our covered employers would be concurrent with any benefit cuts that are required. By law, funding requirements in a pension plan must be met. Otherwise, the contributing employers could be faced with funding deficiency penalties and taxes.
The current projection by the Plan’s actuary is that the Plan will be 60% to 65% funded as of September 30, 2009. It would be premature at this juncture to say exactly what will happen with the Plan at that time. That is why the Trustees are meeting on a regular basis with the actuary and counsel to develop a plan of action.
The Pension Benefit Guaranty Corporation
The Plan pays insurance premiums to the Pension Benefit Guaranty Corporation (PBGC) in the amount of $9 per participant per year. The PBGC guarantees that, in the event the Plan becomes insolvent, a vested participant will receive a monthly pension at age 65 of, at most, $35 per month, per year of service. For example, a participant with 10 years of service would be guaranteed a pension of $350 per month at age 65. A participant with 30 years of service would be guaranteed a pension of $1,050 per month at age 65. It should be emphasized that the Plan is not in a position of insolvency and therefore the PBGC is not taking over the Plan. The PBGC, which is operating at a massive and still-growing deficit, does not want to take over any pension plan. This is part of the reason for the requirement for a Red Zone Plan to establish a rehabilitation plan in order to prevent it from becoming insolvent.
Trustee considerations & decisions
The Trustees continue to meet and explore all of the options with respect to the operation of the Pension Plan. The effect of the downturn in the economy over the last year-and-a-half and the advice of our actuaries, financial advisors and counsel as to how to proceed going forward will be taken into consideration. The sacred promise to our members that they will receive a pension benefit is foremost on the Trustees’ minds. Consideration is being given to the ability of contributing employers to maintain operations and provide jobs for the membership of AMO in this climate. The projections by the actuary will tell the Trustees what can be expected in the future. The meetings will continue and decisions will be made in the best interest of all Plan participants.
Moving forward as a “defined benefit plan”
As the Trustees continue to weigh their options, it is important to determine how long it will take the Pension Plan, which is a “defined benefit plan”, to return to an acceptable funding level while it continues to accrue pension credits. The decline of the stock market and the implementation of the PPA must be taken into consideration. If it will take ten years to be in a position to offer benefit increases or to be in a fully funded status again, then we need to consider whether or not the defined benefit arrangement is the appropriate pension vehicle for our membership. Deficient funding levels of a defined benefit plan may create withdrawal liability for all employers. This withdrawal liability would be carried on the financial balance sheets of our employers along with any required increase in contributions. These issues will directly affect the contracts in place as well as the possibility for wages and contributions to other AMO benefits plans to be increased. The administration, professional and legal expenses incurred to administer a defined benefit plan continue to increase due to the cumbersome laws that govern them.
A rehabilitation plan could require the temporary removal of the twenty and out provision, the temporary removal of the in-service lump sum provision, and the temporary freezing of the accrual of future benefits while we continue to pay monthly benefits for pensions that have already accrued. The Trustees are trying to determine the length of time required to become fully funded again. Also, the 2006 wage freeze for determining benefits would not be moved forward to another year until the funding level can pay for the increase in funding liability created by the lifting of the wage freeze. In other words, we could be faced with a 2006 wage freeze for the distant future. All of these elements are directly affected by the financial markets.
It is possible to freeze benefits, continue contributions and receive earnings without the accrual of new benefits. This could mean that for three to five years, or perhaps longer, no new benefits would be earned but, at retirement, a participant would receive his benefit accrued through 2009.
The funding level would immediately improve without the twenty and out provision but it could also be a long period of time before it could be re-implemented.
The quickest restoration of a benefit would be the in-service lump sum, but this benefit would not be available until a specific age and, at the earliest, that age would be 55.
The Trustees and participants are faced with an uphill climb to restore the defined benefit to its previous state and to be in a position to improve benefits.
Alternative – a parallel “defined benefit plan” and “defined contribution plan”
An alternative to spending the next decade re-funding the defined benefit plan without the accrual of additional benefits is currently being considered, although no action has been taken. It takes more than $25 million to fund a new year of accrued benefit under the defined benefit plan. The Trustees have asked the actuary to perform analysis to determine what options we have so that participants can accrue additional benefits in the event the defined benefit is frozen. One option would be to freeze the defined benefit plan and under the rehabilitation plan pay off the accrued liability while new benefits accrue under a defined contribution plan in addition to 401(k) and MPB. The viability of running a third, additional, plan is dependent on the availability of contributions and earnings to pay off the liability of the old (defined benefit) plan while generating retirement savings in the new (defined contribution) plan.
All benefits under the old plan would freeze. The value of the benefit accrued could be converted to a lump sum for all active participants. Upon the re-funding of the old plan, participants would become eligible to roll over their lump sum amount to their defined contribution plan as well as receive future contributions into their defined contribution plan account. This would give each participant control of his/her own pension plan account and would not be subject to the old defined benefit plan restrictions, with the expensive compliance requirements and cumbersome laws which apply to defined benefit plans.
The viability of this alternative is being investigated by the Trustees and the Plan’s professionals. As the answers unfold, the Trustees will take action to ensure that participants receive the benefits accrued in the past, while continuing to earn new benefits in the future. If in fact the Trustees are forced to stop the payment of lump sums, to no longer allow the 20 and out provision, or to freeze the plan, this alternative could be a way to increase the value of your benefit quicker than freezing the plan and waiting for benefits to be reinstated.
Communications
In the coming months the activities of the Trustees will generate new communications. Every effort will be made to notify all participants as events transpire. Please pay attention to the AMO Newspaper, AMO Currents and to correspondence directly from the Pension Plan office.
These are trying times and the economic conditions affect everyone in this country. The Trustees will make every effort to mitigate the effect of these economic conditions and protect your right to a pension benefit.
Each Trustee meeting, each communication will generate new questions. This is a time where we need to operate in trust and not in fear. New events will cause change and new issues will arise. The Trustees will make every effort to communicate any and all actions. The Plan’s office will make every effort to answer each and every question. Your patience and understanding are greatly appreciated. The membership of AMO has faced crisis a number of times over the years and each time has prevailed. We will prevail over this economic environment as well if we marshal our resources carefully and intelligently.