The International Association of Machinists National Pension Fund recently disclosed that it will cut retirement benefits by 40 percent despite its overall fiscal health.
Those changes in pension funds are expected to affect workers in the years to come at AK Steel and other companies as of a Sept. 1 cut-off date.
Here are five things we learned about the looming changes.
1. What will change
The rehabilitation plan will eliminate all early retirement subsidies moving forward, and also force employers to contribute an additional 6 percent of wages to the fund.
IAM also will change how benefits are calculated, moving away from a service time-based approach to a flat 1 percent of monthly contributions.
2. The changes left the local union ‘appalled and shocked’
IAM Local Lodge 1943 President Neil Douglas said in a letter to members that the lodge had “no prior knowledge that these changes to our pension plan were even being considered.”
“We were completely appalled and shocked to say the least,” wrote Douglas.
3. The union is working to find a solution
Douglas told this news outlet Friday afternoon that Local Lodge 1943 is “looking into the matter further and will continue to update our membership as we find out more information.”
In his late April letter, Douglas said he and the other Eastern Territory union representatives have been called to a mandatory May 30 staff meeting in Chicago to discuss the issue “face to face” with the territorial staff.”
Douglas also said in that letter that he, along with other union representatives, were scheduled to meet with IAM last week in Washington, D.C., to discuss the matter
4. Why the pension says it made changes
IAM National Pension Plan Fund wrote in its April 26 letter: “As a result of a challenging investment environment and the decline of the Fund’s credit balance, the IAM National Pension Fund Board of Trustees has made the difficult but important decision to voluntarily elect to place the fund in the Red Zone for 2019. This action was taken to protect the Fund’s participants’ core retirement benefits and strengthen the Fund’s financial health over the long term.”
5. Early retirements will be eliminated once the pension plan is in the ‘Red Zone’
Douglas said in a letter to union members that he was informed that once the trustees of the IAM Pension Plan put the plan in the “Red Zone,” all early retirements by law are eliminated and no concessions can be made.
A “Red Zone” is a a label applied to plans that are in danger of insolvency within seven years and only have a 65 percent funding rate.