Southwest Ohio Carpenters Pension Fund Pension Recovery Plan
Pension Recovery Plan
The Southwest Ohio Carpenters Pension Fund is facing very serious troubles because it is underfunded.
The underfunding has been caused by:
- Short-sighted government regulation;
- The stock market crash of 2008;
- Deep losses in membership and hours worked between 2000 and 2016 due to non-union competition, the introduction of new technologies, and the construction recession;
- Increased number of retirees and decreased number of active members; and
- Ourselves, for not organizing enough new members to compensate for these membership losses.
The economic crashes, and the almost seven-year depression from 2008-2015, were not foreseeable.
Over the last 15-20 years, the Trustees took the actions we needed to keep the Plan on course based on historical factors and legal regulations. The Trustees have tried all available options to address these problems.
If we do not take action now, the Pension Fund will run out of money in 18 years or less. At that point, our Pension Fund will have zero assets and will not be able to pay benefits to current and future retirees.
If that happens, the Fund will then be taken over by the Pension Benefit Guaranty Corporation (PBGC), and all participants of the Pension Fund will face cuts across the board that will be higher than those in our Pension Recovery Plan.
And the PBGC is projected to run out of money within 10 years—in which case, all benefits will be reduced to almost nothing.
While the Trustees have taken many steps to address this issue, the situation now requires a Pension Recovery Plan.
Our overriding goal is to put the Southwest Ohio Carpenters Pension Fund on stable financial footing for long-term sustainability, so all participants get some measure of financial security.
There are no easy answers to the problems the Pension Fund faces, but there is now a path forward through the Multiemployer Pension Reform Act of 2014 (MPRA). Until MPRA was passed, there was no real way to truly fix the problem of underfunded pension funds like ours. Our Pension Fund, and your pensions, would have been left to wither and die. The passage of MPRA gives us new tools we can use to save the Fund and your pensions, but it calls for sacrifices by most participants.
MPRA gives Trustees of funds like ours the ability to avoid insolvency and save your pensions by reducing benefits (including benefits of retirees already collecting their pensions), within certain limits. MPRA relief is available only to funds who have problems that can be fixed permanently by enacting a one-time benefit reduction.
Our Pension Recovery Plan will:
- Fix the Fund's finances “once and for all.”
- Put the Fund back in a position where our future financial stability is as close to guaranteed as we can make it.
- Allow the Fund to continue to pay benefits for the foreseeable future.
We have submitted an application for MPRA relief to the Treasury Department. We have also sent individualized notices to all participants explaining in detail our proposal to save your pension and the Pension Fund. The notices include personalized benefit amounts so you can see what the changes will mean for you—and what will happen to your pension if we do not take action.
The following resources are available on this website to help you better understand how we got here and how the Pension Recovery Plan will work:
- Revised Pension Recovery Plan Sample Cover Letter and Individualized Notice
- Announcement Letter from the Trustees
You can also watch our two videos. There's a link to one on this page and to the other on the home page.
We will post updates and new documents to this site when they are available. Please check the site regularly.
We are working hard to keep the cuts equitable and fair. However, because of the way the Pension Fund works, the percentage by which benefits will be reduced will differ based on a number of factors, including whether a participant is a normal retiree, an early retiree or an active participant.
This is not an easy step for the Trustees to take, and we do not take it lightly. After much research and discussion, we have concluded that we have no alternative and no time to lose. If we do not take this step, we face the possibility that the Fund will run out of money and participants will have to rely on the shaky Pension Benefit Guaranty Corporation (PBGC) and face much larger benefit cuts. Counting on the PBGC to protect the Plan is not a good option. If the PBGC runs out of money, as it is projected to do in 10 years or so, EVERYONE will be out of luck—even those whose benefits cannot be cut under MPRA.
What’s more, the longer we wait, the larger that benefit reductions will have to be. If we wait too long, no relief plan will be able to save the Plan. We need to have a Pension Fund that can take care of itself. The Pension Recovery Plan is our best and only option.