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Central
Pension Fund
CPF
Adopts Benefit Improvements
General
President Hanley and the Board of Trustees of the Central Pension Fund
have announced a package of three benefit improvements effective July 1,
1999. The improvements, which were permitted by
the Fund’s strong financial condition, assure that CPF will continue to
be one of the finest pension plans in the United States.
The package
of improvements will: (1) increase the pension benefits being paid
to all retirees, disabled participants and surviving spouses; (2) increase
the benefit accrual rate for all active participants; and (3) increase the
death benefits payable to the beneficiaries of non-vested participants and
vested participants without surviving spouses.
Commencing
with July benefit checks, the current benefits of all pensioners,
disabled participants, and surviving spouses have been increased. The
amount of the increase depends upon the length of time that the benefits
were in pay status prior to July 1. Benefits are increased by 1½% for
each year or portion thereof that they have been in pay status, with a
minimum increase of 3%, and no maximum. For example a participant
receiving benefits for 2 years, or any portion thereof, prior to July 1
will receive a 3% increase; 3 years - 4.5%; 4 years - 6%; 5 years -
7½%; 10 years - 15%; 20 years - 30%, etc. The purpose of this
progressive formula is to provide a greater enhancement to the benefits
of those who retired in earlier years when contribution rates and
benefit accrual formulas produced substantially smaller pensions than
today.
Currently
CPF monthly benefits accrue at the rate of 3.3% of contributions made.
Effective July 1, that accrual rate has been increased to 3.4% for all
contributions made prior to January 1, 1999. For example, if a
participant had $10,000 in contributions prior to January 1, the value
of his or her accrued benefit at retirement would have been $330 a month
(3.3% x $10,000=$330). By increasing the accrual rate to 3.4%, the value
of that accrued benefit will become $340 (3.4% x $10,000=$340). This
increase represents a 3% improvement in the accrued benefits of all
active participants.
While the
accrual rate for contributions after January 1, 1999 will remain at
3.3%, the Board of Trustees will periodically review the financial
status of the Fund to determine whether and when enhancements for post
January 1, 1999 contributions may be permitted in the future.
The final
plan improvement increases the death benefits payable to the
beneficiaries of deceased participants that either were not vested,
i.e., had less than 5 years of service, or were vested but had no
surviving spouse at the time of death. (Surviving spouses of vested
participants receive an automatic annuity for life). Previously, CPF
death benefits were based upon employer contributions made on behalf of
the participant during his or her lifetime with a maximum benefit of
$10,000. Effective with deaths occurring after July 1, 1999 the
limitation has been removed entirely and death benefits will be equal to
100% of all contributions received during the participant’s
lifetime.
At a time
when corporate pension plans are being cut back and terminated at record
rates, the CPF Board of Trustees is extremely pleased that the continued
strength and vitality of the Fund permitted these benefit improvements
Originally
published in the International Operating Engineer
May 27, 1999
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