Pension Plan Protection Act
Important Information on the Pension Protection Act and Possible Benefit Reductions
For the past several years, the Operating Engineers (Local 12) Pension Fund has followed a program to improve funding. This program was significantly altered in 2006 when Congress enacted the Pension Protection Act of 2006 (PPA). The PPA aims to strengthen defined benefit plans, such as ours, by requiring that the Fund adopt a series of plan changes, including changes to benefits and contributions to improve funding. These changes are found in a Rehabilitation Plan and Schedules which the Trustees developed with guidance from actuaries and others.
The two current schedules are the Default Schedule, and the Alternative Schedule, which make changes in benefits and adjust contributions. Every year, the Trustees review the Plan’s progress under the Rehabilitation Plan and current financial, actuarial and industry conditions and make adjustments to the Rehabilitation Plan and Schedules, as necessary.
The Alternative Schedule required increases in employer contribution rates in order to maintain the current level of benefits. In the event an employer does not agree to the increased contribution rates, the Default Schedule with reduced benefits must be implemented for the employees of that employer. As of the current time (December, 2014) all employers signatory to a bargaining agreement with I.U.O.E. Local 12, have agreed to the increased contribution rates required by the Alternative Schedule. As a result, no members have been affected by the reduced benefits of the Default Schedule. In the event the Default Schedule becomes applicable to any employers in the future, the employer and all employees of that employer will be so notified along with a description of the resulting benefit changes.