Posted:
November 2, 2010
The defined benefit American Maritime Officers Pension Plan surpassed its assumed rate of return on investments by nearly 50 percent in fiscal 2010.
The AMO Pension Plan earned 11.2 percent overall, compared to the 7.5 percent rate of return assumed by the Plan's actuaries. The AMO Pension Plan outperformed the actuarial assumption by 49.3 percent in the fiscal year, which ended at midnight on Sept. 30.
Moreover, AMO Pension Plan investments outpaced their "benchmarks" by 16.7 percent. "Benchmarks" are used to measure the performances of various asset classes.
Had the AMO Pension Plan's performance in fiscal 2010 been equal to the performances of the assigned benchmarks, the Plan's rate of return would have been 9.58 percent. The AMO Pension Plan earned 10.4 percent on large cap, mid-cap and small cap stocks, outperforming the 9 percent benchmark by 15.5 percent.
The Plan earned 9.8 percent from bonds, outperforming the benchmark of 9.2 percent by 6.5 percent.
Other investments - international and emerging market stocks, commodities and real estate investment trusts - returned 16.9 percent for the AMO Pension Plan in fiscal 2010. This rate exceeded the benchmark return of 12.4 percent by 36.3 percent.
Ten out of 13 AMO Pension Plan investment managers surpassed their benchmarks in all investment classes in the fiscal year.
At the end of fiscal 2010 on Sept. 30, the AMO Pension Plan was funded at 62.6 percent, with an estimated $479 million in accrued vested benefit liabilities and assets valued at approximately $300 million.
At the end of fiscal 2009 on Sept. 30, 2009, the AMO Pension Plan was funded at 54.1 percent, with an estimated $523 million in accrued vested benefit liabilities and assets valued at $283 million.
In fiscal 2010, the AMO Pension Plan paid $52 million in monthly benefits to Plan participants and survivors.
Fiscal 2010 was the first year in which the AMO Pension Plan operated under a rehabilitation strategy intended to bring the Plan out of "critical" funding status as defined by the Pension Protection Act of 2006.
The AMO Pension Plan was driven to "critical" or "red zone" funding status under the Pension Protection Act in October 2009 by the combined effects of a deep and persistent economic recession, the collapse of investment markets in 2008 and the daunting requirements of the Pension Protection Act itself - the law effectively doubled the cost of maintaining defined benefit pension plans.
In the last year, 80 percent of the remaining single employer and multiemployer defined benefit pension plans in the private sector nationwide entered the Pension Protection Act's "red zone."
The AMO Pension Plan rehabilitation strategy - developed by the joint union-employer trustees of the AMO Pension Plan in compliance with the federal law - included increased employer contributions to the AMO Pension Plan through collective bargaining, a freeze on pension credits for benefit calculation purposes (but not for benefit eligibility) as of December 31, 2009 and the mandatory end of lump-sum pension benefit distribution.
Under the rehabilitation plan, the option of retirement with monthly pension benefits at 20 years or more of covered employment remains available to all deep-sea, Great Lakes and inland waters participants in the AMO Pension Plan.
AMO Pension Plan actuaries had said the rehabilitation plan would restore full funding to the AMO Pension Plan in about seven years.
We know this is a tough time for all AMO families with respect to retirement planning and options. These numbers do not suggest a near-term end to the difficulty, but they do provide some encouragement. The money managers have done well, and this will help keep our pension rehabilitation plan on course.
Once the AMO Pension Plan is restored to full funding, the Plan will be terminated. AMO Pension Plan participants will at that point have the choice of retiring with monthly benefits or rolling the accumulated lump-sum values of their earned benefits into their individual retirement savings accounts under the forthcoming AMO Defined Contribution Plan.
The employer-paid AMO Defined Contribution Plan will apply union-wide on January 1, 2011.
The AMO Pension Plan Money Purchase Benefit and the AMO 401(k) Plan will not be affected by termination of the defined benefit AMO Pension Plan or by union-wide coverage under the AMO Defined Contribution Plan.
American Maritime Officers Pension Plan
Nov. 2, 2010
AMO Pension Plan rehabilitation, one year on: recovery proceeds as returns on investments surpass actuarial assumption and 'benchmark' rates
The defined benefit American Maritime Officers Pension Plan surpassed its assumed rate of return on investments by nearly 50 percent in fiscal 2010.
The AMO Pension Plan earned 11.2 percent overall, compared to the 7.5 percent rate of return assumed by the Plan's actuaries. The AMO Pension Plan outperformed the actuarial assumption by 49.3 percent in the fiscal year, which ended at midnight on Sept. 30.
Moreover, AMO Pension Plan investments outpaced their "benchmarks" by 16.7 percent. "Benchmarks" are used to measure the performances of various asset classes.
Had the AMO Pension Plan's performance in fiscal 2010 been equal to the performances of the assigned benchmarks, the Plan's rate of return would have been 9.58 percent. The AMO Pension Plan earned 10.4 percent on large cap, mid-cap and small cap stocks, outperforming the 9 percent benchmark by 15.5 percent.
The Plan earned 9.8 percent from bonds, outperforming the benchmark of 9.2 percent by 6.5 percent.
Other investments - international and emerging market stocks, commodities and real estate investment trusts - returned 16.9 percent for the AMO Pension Plan in fiscal 2010. This rate exceeded the benchmark return of 12.4 percent by 36.3 percent.
Ten out of 13 AMO Pension Plan investment managers surpassed their benchmarks in all investment classes in the fiscal year.
At the end of fiscal 2010 on Sept. 30, the AMO Pension Plan was funded at 62.6 percent, with an estimated $479 million in accrued vested benefit liabilities and assets valued at approximately $300 million.
At the end of fiscal 2009 on Sept. 30, 2009, the AMO Pension Plan was funded at 54.1 percent, with an estimated $523 million in accrued vested benefit liabilities and assets valued at $283 million.
In fiscal 2010, the AMO Pension Plan paid $52 million in monthly benefits to Plan participants and survivors.
Fiscal 2010 was the first year in which the AMO Pension Plan operated under a rehabilitation strategy intended to bring the Plan out of "critical" funding status as defined by the Pension Protection Act of 2006.
The AMO Pension Plan was driven to "critical" or "red zone" funding status under the Pension Protection Act in October 2009 by the combined effects of a deep and persistent economic recession, the collapse of investment markets in 2008 and the daunting requirements of the Pension Protection Act itself - the law effectively doubled the cost of maintaining defined benefit pension plans.
In the last year, 80 percent of the remaining single employer and multiemployer defined benefit pension plans in the private sector nationwide entered the Pension Protection Act's "red zone."
The AMO Pension Plan rehabilitation strategy - developed by the joint union-employer trustees of the AMO Pension Plan in compliance with the federal law - included increased employer contributions to the AMO Pension Plan through collective bargaining, a freeze on pension credits for benefit calculation purposes (but not for benefit eligibility) as of December 31, 2009 and the mandatory end of lump-sum pension benefit distribution.
Under the rehabilitation plan, the option of retirement with monthly pension benefits at 20 years or more of covered employment remains available to all deep-sea, Great Lakes and inland waters participants in the AMO Pension Plan.
AMO Pension Plan actuaries had said the rehabilitation plan would restore full funding to the AMO Pension Plan in about seven years.
We know this is a tough time for all AMO families with respect to retirement planning and options. These numbers do not suggest a near-term end to the difficulty, but they do provide some encouragement. The money managers have done well, and this will help keep our pension rehabilitation plan on course.
Once the AMO Pension Plan is restored to full funding, the Plan will be terminated. AMO Pension Plan participants will at that point have the choice of retiring with monthly benefits or rolling the accumulated lump-sum values of their earned benefits into their individual retirement savings accounts under the forthcoming AMO Defined Contribution Plan.
The employer-paid AMO Defined Contribution Plan will apply union-wide on January 1, 2011.
The AMO Pension Plan Money Purchase Benefit and the AMO 401(k) Plan will not be affected by termination of the defined benefit AMO Pension Plan or by union-wide coverage under the AMO Defined Contribution Plan.
American Maritime Officers Pension Plan
Nov. 2, 2010