An update on defined benefit AMO Pension Plan's projected funded status

During its meeting at AMO headquarters on July 20, the joint union-employer trustees of the defined benefit AMO Pension Plan heard an encouraging update on the Plan's projected funded status from Horizon Actuarial Services LLC.

Horizon reported that its fiscal 2021 year-end filing with the U.S. Department of Labor on September 30 put the funded status of the AMO Pension Plan safely in the 2006 Pension Protection Act's "green zone" at 91.3 percent.

This funded status projection was based on an interest rate assumption of 7 percent, analysis of the AMO Pension Plan's assets and liabilities, investment market analysis since October 1, 2021 - the start of fiscal year 2022 - and the "return assumptions" of the Plan's money managers.

A bar graph prepared by Horizon showed that improved economic conditions and stabilized, largely favorable investment market performance could very well bring the AMO Pension Plan funded status to 100 percent by fiscal year 2023.

It is important to note here that actuarial funded status projections filed annually with the U.S. Department of Labor are required by law, and that these projections are just that - forecasts based on thorough current analyses.

There is a significant distinction between a yearly projected funded status and the market value funded status as influenced daily by return on investment. As you read this, the AMO Pension Plan's market value funded status could be increasing or declining with today's tempo on Wall Street.

Meanwhile, the AMO Pension Plan pays $40 million a year in earned, vested monthly benefits to retired AMO members and their designated beneficiaries. "Inactive vested participants" - individuals who no longer work under AMO covered employment - are due monthly benefits at age 65.

The AMO Pension Plan's overall liabilities are decreasing, but the tragic twist here is that this decline is linked directly to the passing of AMO members and their survivors.