GREAT LAKES FABRICATORS AND ERECTORS ASSOCIATION Industry Meeting - PowerPoint PPT Presentation

GREAT LAKES FABRICATORS AND ERECTORS ASSOCIATION Industry Meeting February 27, 2018

WELCOME • Opening Greeting – Patrick Baker • Welcome – James Buzzie, President

GLFEA CRITICAL MANDATE What makes this meeting so important – Patrick Baker Looking at the issues confronting our industry - James Buzzie Bringing our industry together to solve difficult problems - Tom Broad

Overview of the Benefit Funds • Iron Workers Local 25 Pension Fund – Bill Cumming, Richard Sawhill, Patrick Baker, James Buzzie • Iron Workers Health Fund of Eastern Michigan – Patrick Baker • Iron Workers Training Fund of Eastern Michigan – Chris Vlk, Patrick Baker

• Iron Workers Local No. 25 Pension Plan • Projection Addendum • February 26, 2018 • Tom Cliffel, FSA • Ken Densmore, ASA Cary Franklin, FSA • Atlanta ■ Cleveland ■ Los Angeles ■ Miami ■ Washington, D.C.

• Projection Results Investment Return PPA Total UVB for Credit 2018/2019 Plan Years Funded Withdrawal Balance at through Beginning Percentage Plan Liability at 4/30/2038 2026/2027 After at 5/1/2037 On-going Hours Worked 2017/2018 ($millions) 2 Plan Year 4/30/2027 5/1/2037 ($millions) 1 Scenario or Frozen? per Year Plan Year 1 On-going 2,618,000 7.5% 7.5% 7.5% 118% $273 $169 2 2,618,000 7.5% 7.5% 141% $198 $324 On-going 15.0% 3 2,618,000 7.5% 7.5% 95% $347 $15 On-going 0.0% 4 On-going 2,618,000 7.5% 95% $346 $28 6.5% 6.5% 5 On-going 7.5% 7.5% 7.5% 91% $354 ($16) 2,400,000 6 7.5% 7.5% 7.5% 112% $254 $116 Frozen 2,400,000 7 Frozen 7.5% 7.5% 7.5% 0% $613 ($715) Declining 3 • Notes 1. The May 1, 2017 withdrawal liability valuation is not yet completed, but we included estimated total unfunded vested benefits (UVBs) for withdrawal liability in these projections. We have estimated the May 1, 2017 withdrawal liability based on the May 1, 2016 results (adjusted for changes in the funding liability in the preliminary May 1, 2017 valuation and for th e applicable PBGC interest rates of 2.15% for the first 20 years and 2.60% thereafter). For May 1, 2018 and thereafter, we have assumed that the most recently published PBGC interest rates (2.39% for the first 20 years and 2.60% thereafter) remain the same for all future years. 2. The impact of 5-year amortization extensions effective May 1, 2017 are disregarded in determining the zone status. 3. Declining hours start at the valuation hours of 2,618,000 and are projected based on our valuation assumptions, assuming no new entrants to the Plan. See the projection exhibits for these hours. Iron Workers Local No. 25 Pension Plan 2 February 26, 2018

• Scenario 6 • 7.5% asset return during plan year beginning May 1, 2017 and each future year 2.618 million hours per year / on-going plan Iron Workers Local No. 25 Pension Plan 3 February 26, 2018

• Scenario 6 • 7.5% asset return during plan year beginning May 1, 2017 and each future year 2.4 million hours per year / on-going plan Iron Workers Local No. 25 Pension Plan 7 February 26, 2018

• Scenario 6 • 7.5% asset return during plan year beginning May 1, 2017 and each future year 2.4 million hours per year / frozen plan Iron Workers Local No. 25 Pension Plan 8 February 26, 2018

• Iron Workers Local No. 25 Pension Plan • Preliminary May 1, 2017 Valuation Results • and Other Actuarial Topics • February 26, 2018 • Tom Cliffel, FSA • Ken Densmore, ASA Cary Franklin, FSA • Atlanta • Cleveland • Los Angeles • Miami • Washington, D.C.

• Participation • I r o n W o r k e s r L o c a l N o . 2 5 P e n s o i n P a l n • Participation as of the Valuation Date • 6,000 • 5,000 • 4,000 • 3,000 • 2,000 • 1,000 • 0 • 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 • Retirees & Beneficiaries 2,663 2,722 2,755 2,739 2,754 2,785 2,573 2,703 2,696 2,736 • Inactive Vested Participants 777 641 772 824 822 833 865 831 846 900 • Active Participants 2,067 1,987 1,805 1,618 1,628 1,531 1,507 1,531 1,561 1,496 • Total Participants 5,507 5,350 5,332 5,181 5,204 5,149 4,945 5,065 5,103 5,132 • Ratio of Actives to Inactives 0.60 0.59 0.51 0.45 0.46 0.42 0.44 0.43 0.44 0.41 • Notes: 1) Prior to 2014 alternate payees receiving benefits under a Qualified Domestic Relations Order are included in counts for • Retirees & Beneficiaries Iron Workers Local No. 25 Pension 5 Plan February 26, 2018

• Scenario 6 • 7.5% asset return during plan year beginning May 1, 2017 and each future year • 2.618 million hours per year / on-going plan Iron Workers Local No. 25 Pension 24 Plan February 26, 2018

• Scenario 6 • 7.5% asset return during plan year beginning May 1, 2017 and each future year • 2.4 million hours per year / on-going plan 28 Iron Workers Local No. 25 Pension Plan February 26, 2018

• Scenario 6 • 7.5% asset return during plan year beginning May 1, 2017 and each future year • 2.4 million hours per year / frozen plan Iron Workers Local No. 25 Pension 29 Plan February 26, 2018

• Critical Status: Emergence  While the Plan is projected to meet the annual benchmark for the • funding deficiency, it is still projected to have a funding deficiency at the • end of the rehabilitation period. That is, the Plan would still be in Critical • Status.  Therefore, while the Plan may meet its benchmark this year, it is • projected to not meet the benchmark in some future years.  The Rehabilitation Plan is projected to need updating in the future if the • goal is to to emerge from Critical Status on time.  Estimated corrective action (contribution increase or equivalent benefit • reduction) effective May 1, 2018 to project on time emergence from • Critical Status: Hours Assumption $ per hour 2.618M hours per year $2.20 2.4M hours per year $4.30 2017 PPA Certification hours: 2.7M in 2017, 2.5M in $3.70 2018 and 2.4M per year thereafter Iron Workers Local No. 25 Pension 34 Plan February 26, 2018

• Review of Remaining Adjustable Benefits  At the September 12, 2 017 Board meeting, the Trustees requested a • menu of possible benefit reductions with estimated cost savings.  We presented this information (based on the May 1, 2016 transition match results) to • the Trustees at the November 28, 2017 Board meeting.  The information in the following slides has been updated to reflect the results of the • preliminary May 1, 2017 valuation. Iron Workers Local No. 25 Pension 36 Plan February 26, 2018

• Considerations for Potential Benefit Reductions  Whether cost savings generated by potential benefit reductions can • free up contributions to allocate towards increased future benefit • accruals depends on plan structure.  In a two plan structure (where a new separate defined contribution or Variable Benefit plan is established), it seems fairly clear that it is permissible.  In a one plan structure, it is less clear. The regulations state that a plan in Critical Status may not be amended to increase benefits “unless the plan actuary certifies that such increase is paid for out of additional contributions not contemplated by the rehabilitation plan, and, after taking into account the benefit increase, the multiemployer plan still is reasonably expected to emerge from critical status by the end of the rehabilitation period on the schedule contemplated in the rehabilitation plan.”  Several of the potential benefit reductions shown are adjustable • benefits that can be reduced or eliminated only while the Plan is in • Critical Status, so the Trustees would want to decide on any benefit • reductions before applying for amortization extensions. Iron Workers Local No. 25 Pension 37 Plan February 26, 2018