The IPF/IHF 2006 Annual Report
Programs, Diligence and Technical Expertise Create Strength and Stability

Watch your mailbox for the Annual Report of the International Pension Fund (IPF) and International Health Fund (IHF). The purpose of the Annual Report is to provide audited financial information about each IU benefit program. The 2006 Report highlights the impact of the Pension Protection Act and reviews the ongoing commitment of IPF and IHF to improve participant services through the Electronic Reciprocal Transfer System (ERTS) and the BAC Prescription Drug Program.

ERTS

A tangible example of the Funds’ push to utilize new technologies to meet members’ needs is the Electronic Reciprocal Transfer System, a user friendly program that’s helping thousands of traveling members receive credit for hours worked and contributions earned – promptly, efficiently and securely.

Through the use of secure Internet connections at participating Local fund offices and Local Unions, encrypted benefit data is sent to traveling members’ home funds. The web-based system reduces human error, eliminates paperwork, and speeds up the transfer process significantly. Registered members also like the online option of modifying or canceling their designations.

BAC Prescription Drug Coalition

At the recommendation of the BAC Health Care Task Force in 2004, BAC introduced the BAC Prescription Drug Program. IHF and several Local funds signed on to help participating members and their health plans rein in soaring prescription drug costs. Since then, participating BAC funds have saved their participants – BAC members and their families – roughly $13.3 million.

At present, more than 29,000 participants in 11 BAC-sponsored Local plans have signed on to the BAC Program. In addition to savings, the Program offers patient care services such as refill reminders and important information about the drugs they are taking. A clinical team of doctors, pharmacists, and registered nurses directs these services.

Pension Protection Act

Signed into law in August 2006, the Pension Protection Act contains more than 900 pages of significant modifications to regulations governing retirement plans and retirement savings accounts. The Act, which represents the single biggest piece of pension legislation in more than 30 years, modified rules governing single and multi-employer defined benefit plans, Individual Retirement Accounts (IRAs), 401(k) plans, and other retirement savings and investment vehicles.

A significant feature of the Act is the process trustees must follow to avoid pension funding problems. The Act classifies defined benefit (pension) plans such as IPF into categories or ‘zones’ based on their funding level – the amount of assets the plan has compared to its liabilities based on the actuarial valuation – and whether the plans contributions meet the federally mandated minimum amounts to avoid a funding deficiency. In general, if a pension plan is funded at a level of 80% or higher and has not projected funding deficiencies in the next seven years, it is considered to be on solid financial footing – in the green zone. Plans that fall into another zone (yellow or red) will have to develop a funding improvement plan, which may, depending on the how serious the funding problem is, put restrictions on benefit improvements affecting accrual rates, vesting and eligibility requirements.

The Act requires the fund’s actuary to certify the status of the plan (i.e., the zone the plan falls into) before the 90th day of the plan year for 2008, using projections based on the 2007 plan valuation. If the actuary believes the plan will be in critical status they may perform this certification earlier. The good news is that IPF is not expected to be in critical status so there will be no early certification by the actuaries.

The Act also requires plans to notify all interested parties, including employers, of the status of the plan within 30 days of the required annual certification. As such, IPF participants and contributing employers will be notified of IPF’s status on or before April 29, 2008.

If you have any questions on the Pension Protection Act, please contact:

David F. Stupar
Executive Director
International Pension Fund
dstupar@ipfweb.org