The launch of your new Dierbergs and UFCW Local 655 pension plan has taken longer than anticipated. Part of this is due to the COVID 19 pandemic, and part is due to some unforeseen complexities in building a new plan from scratch. That being said, we would like to share as much information as we can at this time.
First the new plan is extremely close to being complete.
Below is a summary of the plan’s monthly benefit. After that, there is information about what is left to be completed in order to finalize the plan completely.
We want to be clear that specific benefit requests will need to be officially requested from the Fund Administrator once the plan has been finalized. This is not an official notice of plan benefits.
Annual Benefit Earned for Clerk Classification:
$30 per month assuming a 5.25% annual return on Plan assets each year and working the hours needed to earn a full credit (1,700 hours per year: which is the same hours requirement as the previous UFCW Local 655 Pension Plan, thelegacy plan).
If the return on investments is below 5.25% per year, then your benefit could belower than $30 per month.
If the return on investments exceeds 5.25% per year then:
- Excess returns will be split 75-25
- 75% of excess returns will go first towards filling out any benefits that may have been decreased due to previous returns below 5.25% and then towards increasing your monthly benefit over the base rate of $30. This means an investment return over 5.25% could result in your monthly benefit increasing over $30.
- 25% of excess returns will be placed in a reserve fund.
The reserve fund is in place to make sure that once you are collecting your pension benefit, your monthly benefit level will not decease due to investment returns below 5.25%. Ideally, if investment returns average over 5.25% your benefit would actually increase during retirement.
For example: Assuming the investment return on Plan assets is 5.25% in each year of active service, a participant who has 20 credits at $30 per month would receive a $600 monthly pension benefit. Our goal after 10 years of retirement is that good investment return years would build a strong reserve fund that could potentially increase the monthly benefit to be more than $640 and that a strong reserve fund would help prevent any reductions in the participant’s monthly benefit in the event of an annual return(s) below 5.25% post retirement.
There is a provision that would allow Assistant Department Managers, Department Managers and Core Managers to earn a benefit greater than $30 per month. Assistants could earn up to $31 per month, Department Managers could earn up to $32 per month, and Core Managers could earn up to $34 per month. This provision will apply if the negotiated contribution rate is enough to cover Plan cost at these higher benefit rates. This could happen for several reasons such as administrative cost are less then we projected them to be.
Finally, there is one more component regarding the payment of your benefits at retirement. If the present value of your benefits is $5,000 or less, then your pension benefits would be paid out as a lump sum. If the present value of your benefits is more than $5,000 but less than $10,000, then you would have the option of taking your benefits monthly or all at once as a lump sum. If you receive a lump sum retirement benefit, there would be an option to roll that in to a 401(k) or other retirement account.
For those of you asking why this has taken so long, below you’ll find a detailed layout of the fund professionals we are working with, and what we are waiting for from these professionals to finalize this agreement. We performed extensive due diligence in vetting and selecting these professionals to help manage your new retirement fund. We hope you find this information helpful.
Rubin Brown: Fund Auditor
Status: Contract is complete and being signed as of the drafting of this memo.
Segal Marco Advisors: Fund Investment Consultant
Status: Contract is being finalized and being prepared for signature.
EPIC: Fund Administrator
Status: Waiting to receive and review their contract.
Hammond Shinners/Reinhart Boerner Van Deuren: Fund Counsel
Status: Agreements Signed.
Segal: Fund Actuary (different branch from investment consultant)
Status: Waiting to receive contract for review.
Charles Schwab: Banking Services
Status: Working with EPIC and Schwab to prepare contract for review.
There are also multiple documents that must be completed and filed.
Trust Agreement
Status: Signed.
MOU (Memorandum of Agreement)
Status: Signed.
Plan Document
Status: Complete and ready for signature.
SPD (Summary Plan Description)
Status: As soon as the Plan Document is complete the Fund Actuary will draft.
Investment Policy
Status: Now that we have retained Segal Marco Advisors, EPIC and Segal are working on developing an investment policy.
