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Central Pension Fund CPF Passes $7 Billion Mark
On September 1 of this year, the Central Pension Fund passed a noteworthy milestone when its total assets topped $7 billion for the first time in its 40-year history. This growth in assets is particularly remarkable given the fact that CPF, the flagship of a nationwide network of IUOE pension funds, was begun in 1960 with a $10,000 loan from the International Union. From those humble beginnings CPF has grown to become the fifth largest labor-management pension fund in the United States. At the present time CPF pays monthly benefits to more than 45,000 retired operating engineers, and receives monthly contributions on behalf of more than 100,000 active participants. Those active participants work at more than 8,000 locations throughout the United States. Eighty Local Unions currently participate in the Central Pension Fund, and additional Local Union plans merge into the Fund each year. While the size of the Central Pension Fund’s investment portfolio is one measure of its health, and the ratio of more than 2 to 1 active participants to pensioners is another such measure, several other statistics underscore the Fund’s status as one of the premier pension plans in the country. For instance, for the plan year ended January 1, 1999, the number of retirees in the Fund grew by 2.2%, while the number of new active participants grew by 6.2%. In other words, the number of new contributors to the Fund outnumbered new pensioners by almost 3 to 1. This growth in new participants is a reflection of the organizing gains that have been made by IUOE Local Unions throughout the country, and it is this type of growth which assures the continued vitality of any pension plan. A further reflection of the organizing success of the IUOE is the average age of CPF participants which has steadily fallen from a high in 1993 of almost 47 years of age to just over 45 years of age today. While a two-year age reduction may not seem like a lot, it is a major difference to pension planners and significantly enhances a plan’s funding ratios. In short, the greater the number of new plan participants at younger ages, the greater the long-term stability of the plan. The combination of rising assets, increasing numbers of new participants and declining average age have produced a level of vitality and confidence in the Central Pension Fund which has produced a continuing demand for increased pension contributions at the bargaining table. Indeed, for the last three years, the average hourly contribution to CPF has increased 7% per year to its current average of $2.15 an hour. In some areas of the country, the hourly contribution to the Central Pension Fund is approaching $6.00. At $6.00 per hour, an operating engineer entering CPF today at age 45, and working 2,000 hours per year for the next 20 years, will be entitled to a monthly pension benefit of $7,920--$95,040 annually--at age 65. Put in different terms, at $6.00 per hour and 2,000 hours per year a CPF participant accrues a monthly benefit of $396 for each year of service in the Fund. This level of benefit--guaranteed for life--cannot be matched by any 401(k) savings plan in America, nor can it be matched by many other pension plans of any kind. As the Central Pension Fund enters the twenty-first century, its participants can be comfortable in the knowledge that their pension fund will be providing solid retirement security not only for them but for generations of operating engineers to come. Originally
published in International Operating Engineer |