Worker Retention Program for Skilled Labor: Addressing Current Challenges
The Worker Retention Program (WRP) is a newly approved ancillary benefit aimed at retaining skilled labor amidst challenges like the historic demand for operating engineers and disruptions caused by COVID-19. Eligible members who delay retirement can accumulate WRP benefits equivalent to their accrued pension benefits, payable in monthly installments upon retirement. The program ensures active members do not miss out on pension benefits while allowing them to work beyond Normal Retirement Age.
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WORKER RETENTION PROGRAM SUNDAY, NOVEMBER 20
CURRENT ISSUES The abundance of work has created historic demand for operating engineers COVID-19 disrupted new apprentice classes Approximately 140 retirees have returned to work on waivers in each of the past several years Members are retiring early with the expectation of returning to work immediately o Increases cost of pre-Medicare retiree coverage to the Welfare Fund o Early retirement cost of 3% per year has a true cost to the Pension Fund of ~6% per year 2
APPROVED TRUSTEE PROGRAM To address the current need for skilled labor, the Trustees recently approved the creation of a new ancillary benefit, the Worker Retention Program (WRP). This new benefit would allow members who plan to work beyond their Normal Retirement Age the ability to do so as active members without missing out on pension benefits. 3
WORKER RETENTION PROGRAM (WRP) ELIGIBILITY: Members who Delay retirement for at least 12 months beyond the later of: o January 1, 2023 or o Pension Normal Retirement Age Work at least 800 hours during the initial 12 month period Continue to work at least 800 hours in Plan Years (April-March) to meet Retiree Welfare Plan rules Retire before Social Security Normal Retirement Age 4
WORKER RETENTION PROGRAM (WRP) Each month, member would accumulate WRP benefits equal to the member s accrued Pension Benefit at Pension Normal Retirement Age. WRP benefits payable in monthly installments upon retirement in addition to normal pension benefit WRP monthly installment amount cannot legally exceed your Social Security Normal Retirement benefit WRP can only be paid out until member reaches Social Security Normal Retirement Age 5
PENSION NORMAL RETIREMENT AGE: Age 65 and the fifth anniversary of Plan participation, or 10 years of Vesting Service and a minimum age based on the date entering Covered Employment: Date Entering Covered Employment Normal Retirement Age On or before March 31, 2014 60 Between April 1, 2014 and March 31, 2015 61 Between April 1, 2015 and March 31, 2016 62 Between April 1, 2016 and March 31, 2017 63 Between April 1, 2017 and March 31, 2018 On or after April 1, 2018 64 65 9
SOCIAL SECURITY NORMAL RETIREMENT AGE: SS Normal Retirement Age SS Normal Retirement Age Year of Birth Year of Birth 1937 and prior 65 1955 66 & 2 months 1938 65 & 2 months 1956 66 & 4 months 1939 65 & 4 months 1957 66 & 6 months 1940 65 & 6 months 1958 66 & 8 months 1941 65 & 8 months 1959 66 & 10 months 1942 1943-1954 65 & 10 months 66 1960 and later 67 9
EXAMPLE: CAREER HEAVY/HIGHWAY OPERATOR Pension Normal Retirement Age: 60 S.S. Normal Retirement Age: 67 Normal Retirement Age Benefit: $7,000/month ($84,000/yr) S.S. Normal Retirement Benefit: $3,000/month ($36,000/yr) Actual Retirement Age: 62 Accumulated WRP Benefit: $168,000 (2 years of $84,000) WRP Benefit Payout: $168,000 - 56 payments of $3,000* (4 years @ $36,000; 1 year @ $24,000) *monthly payments cannot exceed Social Security Normal Retirement Benefit amount
EXAMPLE: 3 YEAR DELAY Pension Normal Retirement Age: 60 S.S. Normal Retirement Age: 67 Normal Retirement Age Benefit: $3,000/month ($36,000/yr) S.S. Normal Retirement Benefit: $2,500/month ($30,000/yr) Actual Retirement Age: 63 Accumulated WRP Benefit: $108,000 (3 years of $36,000) WRP Benefit Payout: $108,000 43 payments of $2,500; 1 payment of $500* (3 years @ $30,000; 1 year @ $18,000) *monthly payments cannot exceed Social Security Normal Retirement Benefit amount
EXAMPLE: MEETS WRP LIMIT Pension Normal Retirement Age: 60 S.S. Normal Retirement Age: 67 Normal Retirement Age Benefit: $5,000/month ($60,000/yr) S.S. Normal Retirement Benefit: $3,333/month ($40,000/yr) Actual Retirement Age: 63 Accumulated WRP Benefit: $180,000 (3 years of $60,000) WRP Benefit Payout: $160,000** - 48 payments of $3,333* (4 years @ $40,000) *monthly payments cannot exceed Social Security Normal Retirement Benefit amount **payments cannot continue past Social Security Normal Retirement Age
EXAMPLE: MEETS WRP LIMIT - FIXED Pension Normal Retirement Age: 60 S.S. Normal Retirement Age: 67 Normal Retirement Age Benefit: $5,000/month ($60,000/yr) S.S. Normal Retirement Benefit: $3,333/month ($40,000/yr) Actual Retirement Age: Instead of Age 63 -> Retire at Age 62 Accumulated WRP Benefit: $120,000 (2 years of $60,000) WRP Benefit Payout: $120,000 - 36 payments of $3,333* (3 years @ $40,000) *monthly payments cannot exceed Social Security Normal Retirement Benefit amount
EXAMPLE: ALREADY REACHED PENSION NORMAL RETIREMENT AGE Pension Normal Retirement Age: 60 [Currently 63 on 1/1/2023] S.S. Normal Retirement Age: 67 Normal Retirement Age Benefit: $5,000/month ($60,000/yr) S.S. Normal Retirement Benefit: $3,333/month ($40,000/yr) Actual Retirement Age: 64 Accumulated WRP Benefit: $60,000 (1 year of $60,000) WRP Benefit Payout: $60,000 - 18 payments of $3,333* (1 year @ $40,000; 1 year @ $20,000) *monthly payments cannot exceed Social Security Normal Retirement Benefit amount
WORKER RETENTION PROGRAM (WRP) NOTES All current Pension Plan participants who meet the requirements will be eligible for the WRP. This program will likely reduce the need to bring early retirees back to work. Every retired member can un-retire once. If you are considering this, please contact the Retirement Services Group at the Fund Office. This is an ancillary non-vested benefit. Benefit can only be paid to member. If the member dies prematurely, no benefit can be paid to spouse or beneficiaries. WRP is structured as a temporary program that can end if labor conditions warrant at the discretion of the Trustees. 13
QUESTIONS? 150 14
