SMART General President Joseph Sellers meeting with sheet metal workers at the UBS Arena project in Long Island, N.Y. in September 2021.
On February 28, 2022, SMART General President Joseph Sellers, Jr. shared a piece of fantastic news with local union business managers: Effective January 1, 2022, the Sheet Metal Workers’ National Pension Fund is 81.5% funded and has been certified in the Green Zone. This means that SMART sheet metal workers and retirees can rest assured that their pensions are strong and healthy, giving them greater peace of mind that they can count on the National Pension Fund (NPF) in retirement.
“Our members and our industry have sacrificed a great deal to get the NPF to this place, said President Sellers. “They have seen changes to their benefits, and they have made the needed pension fund contribution increases. 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.”
“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.”
– SMART General President Joseph Sellers
The NPF has increased its funding percentage year over year for a decade, bringing it from critical status – as recently as 2013 – to its current level of strength. In 2010, the Washington Examiner listed 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 have 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 moment for vigilance and foresight: there is more work to be done to ensure the NPF continues to grow in strength. As General President Sellers pointed out, the volatile markets we have experienced in 2022 demonstrate that we must continue to be attentive in our management of the NPF in order to protect the retirement security of SMART members. Nonetheless, growth in funding percentage from 52.3% in 2008 to 81.5% in 2022 is a notable signifier of the strength and commitment of our union – now and in the future.
Facts about the NPF’s Green Zone certification:
- Although the Funding Improvement Plan is no longer applicable, Trustee approval continues to be required for any changes in contribution rates that could lower expected contributions into the Fund. This is a stipulation of the NPF Trust Document.
- Benefit improvements, or any changes to the NPF that increase benefits, continue to be prohibited. The NPF elected to utilize an amortization extension allowed by regulations some years ago. Until we are no longer using this extension, the Internal Revenue Service prohibits any improvements to the NPF unless there is a corresponding contribution increase intended to fund the cost of improvement. This prohibition applies to the Fund’s Working After Retirement rules, which means that the Fund must retain its requirement that a participant has a permanent cessation from covered employment before commencing benefits – irrespective of his or her age.
- The NPF must also continue to enforce the rules limiting retirees to returning to work for up to 40 hours per month until the April following his or her attainment of age 70½.
- The NPF continues to have withdrawal liability. Withdrawal liability is a result of the NPF not being fully funded. The NPF, at 81.5%, is not fully funded.
- The NPF is not expected to flip back and forth from the Green Zone to the Yellow Zone (endangered). If, for example, 2022 continues to be a challenging 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 Zone. As long as the NPF is projected to return to above 80% funding level within a reasonable period of time, the NPF will continue to be certified in the Green Zone.
- For 2021, hours are estimated at 107,000,000, and the investment return is estimated at 15%. These numbers will be certified in October of 2022.