Beginning in 2005 Benefits Are Based on Contribution Rates When Service is Earned
Prior to 2005, the contribution rate used to calculate your benefit for all credited service was generally the highest rate under which you worked (provided you worked at least 1,500 hours in covered employment at that rate). This highest rate feature continues to apply to benefits earned before January 1, 2005, subject to the same limitations as before.
For credit earned on and after January 1, 2005, this "highest rate" feature no longer applies. Instead, all benefits earned on or after January 1, 2005 are based on the contribution rate in effect when they are earned and the applicable schedule of benefits. In order for a specific contribution rate to apply, you must have at least one-tenth of a Pension Credit at that rate.
When you retire, your pension is the sum of the benefits you earned under all applicable schedules of benefits. The maximum Pension Credit that is used to calculate your pension under all schedules combined will continue to be 35 years. If your actual Pension Credit is more than 35 years, your pension is based on the total of the 35 years that result in the highest benefit. If you've earned a benefit based on your years of service prior to January 1, 2005, your benefit as of that date will not be reduced.
All Past Service Credit earned by participants with an initial contribution date on or after January 1, 2005 will generally be valued at the contribution rate in effect when the employee joins the Plan.
New Schedules of Benefits
The below referenced Schedules of Benefits are presented in Example of How Pensions are Calculated under the New Schedules of Benefits (see link at bottom of this page).
- Benefits earned prior to 2005 are based on the highest rate feature schedule of benefits (see Schedule A).
- Benefits earned in 2005 are based on a new schedule of benefits (see Schedule B).
- If the contribution rate increases by 25% above the level in effect at the end of 2004, benefits for 2006 and beyond are based on a different schedule (see Schedule C). But until that increase in contributions does occur, benefits earned in 2006 and beyond will continue to be based on Schedule B.
- Effective January 1, 2007, the rate of yearly benefit accruals will be increasing to 75% of the pre-2005 rate for service earned in 2007 and later, provided the contribution rate remains 25% higher than that in 2004 (see Schedule D). Schedule B continues to apply to service earned in 2007 and later without the 25% increase. Schedule C will apply to service earned in 2007 and later if the 25% increase is not effective until January 2, 2007 or later.
Benefits for New Groups
- A new group, which is part of a local union or district council that already participates in the National Pension Fund and has increased its contribution rate in effect on December 31, 2004 by 25%, will get Schedule C at its original, approved contribution rate effective the later of January 1, 2006 or the effective date of the new contribution rate.
- A new group, which is part of a local union or district council that already participates in the National Pension Fund and has not made the 25% increase, will get Schedule B until the full local union, including the new group, has made the 25% increase over the contribution rate in effect on December 31, 2004 (or its original rate as applicable).
- For new groups in local unions or district councils that did not participate in the National Pension Fund before 2005, Schedule C will apply in 2006 and Schedule D will apply in 2007 and later. The new Schedule D will also apply in 2007 and later to all new groups in participating local unions and district councils that have increased their 2004 contribution rates by 25% effective on or before January 1, 2007, and Schedule C will apply to such new groups in 2006 if the 25% contribution rate increase was in effect in the local union or district council in 2006.
- However, if a new group in a participating local union or district council commences participation under a collective bargaining agreement that did not include the National Pension Fund before 2005, and if that agreement is not the primary (master) agreement of that local union or district council, and if at the time the new group commences participation, the 25% contribution rate increase has not been made under the primary (master) agreement, the new group will get Schedule B until the 25% increase in the contribution rate is made in both the primary and in the new group's agreement. If such contribution rate increases are not made until after January 1, 2007, only Schedule C will apply to both the new and existing groups from the date the contribution rate increases are effective.
Contributions to Increase
It is expected that bargaining units will agree to a 25% contribution rate increase effective on or after January 1, 2006 to be eligible for the higher benefit schedule for 2006 and later (see Schedule C). Benefit levels for bargaining units cannot otherwise be increased until the bargaining units increase the contribution rate by the full 25%.
Benefits After a Reduction in Rates
If a bargaining unit reduces its contribution rate, the schedule of benefits for that group will not thereafter be increased, even if the Trustees give such an increase to other bargaining units; and benefit levels may be subject to further adjustment based on an actuarial study of the bargaining unit.
Once Schedule C or D is in effect, any reduction in the contribution rate under a collective bargaining agreement or other participation agreement will result in the application of Schedule B to all pension credit earned thereafter under that agreement.
Eligibility for Normal Pension Reduced to Five Years
The National Pension Plan provides for different types of pensions, depending on the circumstances of your retirement. Prior to 2005, you are eligible for a "normal" pension if you:
- had 35 or more years of pension credit,
- were 65 years old or older, and
- had at least 1,500 hours of covered employment after your contribution date.
Starting in 2005, the Pension Credit required for a normal pension was reduced to five years. As a consequence, there is no longer a need to offer a separate "reduced" pension, which was previously available to participants with at least five but fewer than 35 years of Pension Credit.
For More Information
The National Pension Fund Website (www.ppnpf.org) is available 24 hours a day for your questions (see below). You may also submit your questions about these changes or any other provision of the Plan, in writing to the Fund Administrator at The Plumbers and Pipefitters National Pension Fund, 103 Oronoco Street, Alexandria, VA 22314-2015 or you can call 1-800-638-7442.