COVID-19, wild Wall Street and the defined benefit AMO Pension Plan
The defined benefit AMO Pension Plan survived the catastrophic first quarter investment market losses resulting from the COVID-19 pandemic and remains in the "green zone" as determined by the federal Pension Protection Act of 2006, according to a preliminary analysis by the AMO Pension Plan's actuaries, Horizon Actuarial Services LLC.
The Plan's funded status today as certified under the Pension Protection Act is about 85 percent, and the one-time January 1, 2020 10-percent increase in benefits earned by active vested AMO members from the AMO Pension Plan is secure.
In the last six weeks, as investment markets veered wildly in response to COVID-19, the AMO Pension Plan lost 13.7 percent. For perspective, consider that, on March 18, it was reported that all of the market gains recorded over the last three years had been wiped out, with losses reaching or exceeding 30 percent.
The AMO Plans administration, the investment managers, the certified public accountants, the actuaries and the joint union-employer AMO Pension Plan Board of Trustees have one immediate, common and compelling obligation in response to this health emergency and its economic impact - we have to do everything we can to ensure that the AMO Pension Plan has "green zone" status under the federal statute at the end of its fiscal year on September 30, 2020.
Our most unnerving frustration here is that the everyday functions of retirement fund management are complicated by the absolute uncertainty looming behind every tragic aspect of this health emergency. Advisories and alerts change each day. Market indices fluctuate significantly each day. Conditions at sea and in port vary daily from vessel to vessel.
Will the AMO Pension Plan and other defined benefit retirement funds nationwide be subject to new rules and regulations from the Internal Revenue Service and the U.S. Department of Labor? We simply do not know.
The truth at this moment is that no one knows - and no one can project - the eventual reach and the lasting consequences of this novel coronavirus crisis.
Meanwhile, we will do our best to cope with the relentless uncertainty driven by an emergency of unprecedented scope. We will meet our commitments to current retirees and survivor beneficiaries - more than $30 million a year in monthly benefits - and we will focus intently on protecting the AMO Pension Plan's "green zone" standing.
These objectives require careful consideration of daily variable influences, such as return on investment and interest rate assumptions, and they require a prudent, practical asset allocation mix. We must also trust that emergency economic relief measures ultimately agreed upon by Congress and the President will result in the investment market stability we see as critical to the AMO Pension Plan's sustained mission.
We are grateful to all deep-sea, Great Lakes and inland waters AMO members for their patience, their professionalism and their understanding under extremely difficult circumstances. We will keep you current as developments occur, and we welcome your input and your perspective.
Paul Doell
Chairman
AMO Pension Plan Board of Trustees
March 24, 2020