IPF Reports Positive Trend at Regional Meetings
Past Service Credits Common Among Multi-Employer Plans

At the last round of BAC Regional Council meetings, Local Officers received a report on the actuarial status of the Bricklayers and Trowel Trades International Pension Fund (IPF). Among the topics discussed were the funded status of the plan, the historical participant population, contribution hours reported, investment returns, and admission of new groups into the Fund.

Higher Returns = Better Benefits

Based on the year 2000 IPF actuarial valuation, IPF is “right where it should be for a Multi-Employer Pension Fund at an 83 percent funded level — the average for a Multi-Employer Pension Fund,” representatives of The Segal Company, the IPF actuarial firm, told Regional Council participants. This means that if all 70,000 participants retired tomorrow, the Fund would be able to pay 83 cents on the dollar. The reality is that the average age of the IPF plan participant is 41 and about 200 participants retire each month. The biggest impact on the funded status of the IPF in recent years has been benefit improvements adopted, including a 15 percent increase in the IPF benefit formula.

...the actual rate of return between 1991 and 2000 has been significantly higher — 12.9 percent.

Over the last ten years, the number of IPF pensioners has grown by 65 percent. During this time, pensioners have taken advantage of periodic benefit improvements and Cost of Living Adjustments (COLAs). This has been balanced by a 49 percent increase in the number of active participants due to new members joining BAC and more local unions joining the IPF.

Investment returns have also allowed the IPF Trustees to make benefit improvements. While benefit improvements are based in part on an assumed annual rate of return averaging 7.5 percent for IPF, the actual rate of return between 1991 and 2000 has been significantly higher — 12.9 percent. Since IPF is structured to pay out an increasing amount of benefits each year, the assumptions noted above ensure that benefit improvements take into consideration fluctuations in future employment levels and investment returns.

Past Service Credits Attract New Groups to the Benefit of IPF and Plan Participants

Questions about what impact new groups joining IPF and receiving past service credits would have on current participants’ benefits were addressed by IPF Executive Director David Stupar. “Due to the growth in participating groups and assets IPF is a well-funded Plan, and well positioned to consider further benefit improvements,” Stupar told Regional Council attendees.

The actuaries reported that the majority of union Multi-Employer Defined Benefit Plans like IPF allow for the granting of past service credit. In the case of IPF, the increase in participants has contributed to the ability to improve IPF benefits without jeopardizing the health and financial stability of the Fund. In fact, the 24-year limit on past service credit has been allowed by IPF since 1972 when the Fund was started. While “CAPS,” or limits, have been removed from the accumulation of total years of service, the limit on past service credits has been kept at 24 years to ensure the Plan’s stability, while at the same time allowing it to offer an incentive for new groups to join IPF. These new groups help make up for their past service credit through increased IPF hours and contributions.

For answers to questions about IPF, please contact David F. Stupar, IPF Executive Director, at the Fund Office at 202-383-3935 or via email at dstupar@ipfihf.org.