Special focus: National pension fund for sheet metal workers certified healthy, in the “green zone”
SMART General President Joseph Sellers meets with sheet metal workers from the UBS Arena project in Long Island, NY in September 2021.
On February 28, 2022, SMART General Chairman Joseph Sellers, Jr. shared fantastic news with local union business leaders: Effective January 1, 2022, the Sheet Metal Workers National Retirement Fund is funded at 81.5% and has been certified in the Green Zone. This means sheet metal workers and SMART retirees can be confident that their pensions are strong and healthy, giving them greater peace of mind that they can rely on the National Pension Fund (NPF) in retirement.
“Our members and our industry have sacrificed a great deal to bring FPN this far,” said President Sellers. “They saw their benefits change and they increased the necessary contributions to the pension fund. The Green Zone certification is a moment of pride for our members, local unions and employers, but we must continue to be vigilant in our management of the Fund in order to protect the retirement security of our members.
“The Green Zone certification is a proud moment for our members, local unions and employers, but we must continue to be vigilant in our management of the Fund to protect the retirement security of our members.
– CEO of SMART Joseph Sellers
The NPF has increased its funding percentage year on year for a decade, taking it from critical status – as recently as 2013 – to its current level of strength. In 2010, the Washington Examiner ranked the NPF as one of the worst-funded union pension plans in the country. Now, 12 years later, the hard work and sacrifice of participants, local unions and employers has led to an extraordinary turnaround that will benefit members for years to come. After a long period of hard work, this is a moment worth celebrating.
It is also a time of vigilance and foresight: there is still work to be done for the FPN to continue to grow. As General Chairman Sellers pointed out, the market volatility we experienced in 2022 demonstrates that we must continue to be diligent in our management of NPF in order to protect the retirement security of SMART members. Nonetheless, the growth in fundraising percentage from 52.3% in 2008 to 81.5% in 2022 is a remarkable sign of the strength and commitment of our union – now and in the future.
FPN Green Zone Certification Facts:
- Although the Funding Enhancement Plan is no longer applicable, Trustee approval continues to be required for any change in contribution rates that could reduce expected contributions to the Fund. This is a provision of the NPF Trust Document.
- Benefit enhancements or any NPF changes that increase benefits continue to be prohibited. The FPN chose a few years ago to use a depreciation extension permitted by the regulations. Until we no longer use this extension, the Internal Revenue Service prohibits any NPF enhancements unless there is a corresponding contribution increase to fund the cost of the enhancement. This prohibition applies to the Fund’s rules on post-retirement work, which means that the Fund must retain its requirement that a participant must permanently cease covered employment before beginning to receive benefits, regardless of age. .
- The NPF must also continue to enforce rules limiting retirees’ return to work to up to 40 hours per month until the April following the age of 70½.
- The NPF continues to bear the responsibility for withdrawal. Withdrawal liability arises from the fact that the FNP is not fully funded. The FNP, at 81.5%, is not fully funded.
- The NPF is not expected to go back and forth from the green zone to the yellow (endangered) zone. If, for example, 2022 continues to be a difficult year for investments and the NPF realizes an investment loss to the extent that it drops our funding level below 80%, we will not automatically fall into the yellow area. As long as the FNP is expected to return to a funding level above 80% within a reasonable timeframe, the FNP will continue to be certified in the green zone.
- For 2021, the hours are estimated at 107,000,000 and the return on investment is estimated at 15%. These figures will be certified in October 2022.