This Summary of Material Modifications describes changes that affect your pension benefit plan and updates the Summary Plan Description (“SPD”), or employee booklet, dated November 2008, that was previously distributed to you. You should keep this summary with your current employee booklet until the booklet is updated to reflect the changes, all generally effective December 2009, unless otherwise indicated.
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I.
Pension Protection Act: Rehabilitation Plan
The Federal law, the Pension Protection Act of 2006 (the “PPA”), calls for comprehensive pension reform and requires substantial changes to restore the financial health of multiemployer pension plans like the Plan. The Plan was certified by its actuary as being in “critical status” for the Plan years beginning on January 1, 2009, and January 1, 2010. This means that the Plan’s actuary projects that, if no further action is taken, the Plan will have an “accumulated funding deficiency” for the Plan year beginning January 1, 2011. Note, “accumulated funding deficiency” means that scheduled contributions would be insufficient to satisfy Federal requirements. But it does not mean that the Plan would become insolvent and compelled to seek relief from the Pension Benefit Guaranty Corporation. Under the PPA, the Plan will no longer be in “critical status” when its actuary certifies that, generally, the Plan will not have an accumulated funding deficiency for the current Plan year and any of the 9 succeeding Plan years. As required by the PPA, on June 26, 2009, the Board of Trustees adopted a Rehabilitation Plan, consisting of a Preferred Schedule and a Default Schedule, that reflect changes in employer contributions, adjustable benefits, future benefit accruals and other areas. These changes, according to the actuary’s reasonable assumptions, are intended to allow the Plan to emerge from critical status by the end of the Rehabilitation Period, the 13-year period beginning on January 1, 2012 and ending on December 31, 2024.1 The law requires that until an employer and the Union enter into an agreement that adopts one of the Schedules, that employer must pay a surcharge on its monthly contributions. The changes under each Schedule are described below. See the Rehabilitation Plan for more detail. Certain capitalized terms not defined below are defined in the Plan or the SPD. 1.
Preferred Schedule
Section V of the SPD, “Calculating Your Pension Benefits,” pp. 40-50, will be amended to reflect the following changes to benefits attributable in Credited Future Service. Credited Future Service: The following provisions apply to you if your employer contributes at the rates under the Preferred Schedule, and your first Hour of Credited Future Service under the Plan is accrued on or after August 1, 2009.2 Except as provided below, your Credited Future Service accrual rate (i.e., the rate at which benefits are earned as a result of Credited Future Service) is 1.60% of your ten-year Average Final Pay, multiplied by the number of years of Credited Future Service. However, (i) if you were covered by a collective bargaining agreement (“CBA”) which was executed prior to August 1, 2009, or (ii) were a member of one of the bargaining units listed in Appendix A of the Plan, your Credited Future Service accrual rate is 1.85% of your five-year Average Final Pay, multiplied by the number of years of Credited Future Service, provided that: 1) you were a member of the bargaining unit as of August 1, 2009, 2) a CBA requiring that contributions be made at the Preferred Schedule Contribution Rates was in effect as of, and was executed on or before, December 1, 2009, and 3) you were or are covered by the foregoing agreement as of your Applicable Effective Date (i.e., the date your employer became obligated to contribute to the Plan on behalf your bargaining unit). “Average Final Pay” 3, p. 42 of the SPD, was amended. If you accrue your first Hour of Credited Future Service on or after August 1, 2009, “Average Final Pay” is now generally (except as delineated above) the average of Regular Pay during the last 10 Plan Years of Credited Service after your Applicable Effective Date. 2. Default Schedule The following provisions apply if your employer does not agree to contribute at the Preferred Schedule Contribution Rates, effective as of the dates specified in Appendix C of the Plan. 1
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• Credited Future Service: Your Credited Future Service accrual rate is (i) 1.76% of your five-year Average Final Pay, multiplied by the number of years of Credited Future Service earned prior to January 1, 2010, and (ii) 0.81% of your Career Average Compensation, multiplied by the number of years of Credited Future Service earned on or after January 1, 2010. SPD, Sect. V, pp. 40-50. • Early Retirement Subsidies: All early retirement subsidies (both the unreduced benefit payable at age 62 if you have 20 or more years of service and the 6% per year reduction from age 65) are eliminated. There is a higher percentage reduction under the Default Schedule. SPD, “Overview,” p. 10, Sects. IV.A and B, pp. 32-33 and V.D, p. 47.4 3.
Credited Past Service Benefit
The granting of the “Credited Past Service” benefit has been eliminated if you have an Applicable Effective Date after July 31, 2009, except if you were a member of a bargaining unit listed in Appendix B of the Plan, provided that (i) you were a member of the bargaining unit as of August 1, 2009, (ii) a CBA requiring that contributions be made at the Preferred Schedule Contribution Rates was in effect as of, and was executed on or before December 1, 2009, and (iii) you were or are covered by the foregoing agreement as of your Applicable Effective Date. SPD, Sects. II.B, pp. 20-22; V.B, pp. 44-45.5 II. If You Die Without a Spouse Before Your Pension Payments Begin and Before You Reach Age 70.5 Generally, under the Plan, unless you are age 70.5, the earliest date you can begin receiving pension payments is the later of the month following actual Retirement, or the month following the filing of your application with the Pension Fund Office (“Earliest Payment Date”). The SPD will be amended to provide a process to determine beneficiaries’ eligibility for survivor benefits in certain limited circumstances if you die prior to your “Earliest Payment Date.” The following provisions are to be reflected in the SPD. SPD, Section VI.C, p. 58 and Overview, p. 11.6 • If you have properly completed an application and a valid option election form in the 180-day period before your pension payments will begin, and you are not married at the time of death, your Beneficiary or estate will begin receiving the payments you elected on the later of two dates: (1) your Earliest Payment Date, or (2) the first of the month after the date of your death. • In this case, if you have not completed a valid option election form, but the Plan Administrator is satisfied with clear and convincing proof of your intent to select a Beneficiary, then your intended Beneficiary will receive a survivor benefit in an amount that is the least valuable under the Plan. _________________________________________________________________ This summary only highlights the key changes made to the 1199SEIU Health Care Employees Pension Fund since the last publication of the Summary Plan Description in November 2008. Summaries of material modifications together with the Summary Plan Description make up your official plan descriptions; please keep them together and refer to them as necessary. We have made every attempt to insure the accuracy of the information in this summary and the SPD. However, once the changes are incorporated into the SPD, if there is any discrepancy between them and the plan document, insurance contracts or other legal documents, the legal documents will always govern. If you would like to review the plan document or have any questions, please contact the Fund’s Member Services Representatives at (646) 473-9200 (if you are an active employee) or (646) 473-8666 (if you are retired or a former employee), Monday – Friday 9:00 am to 5:00 pm.. The plan sponsor of the 1199SEIU Health Care Employees Pension Fund reserves the right to amend or terminate the 1199SEIU Health Care Employees Pension Fund, or any part of it, at any time.
A memorandum of agreement reached between 1199SEIU United Health Care Workers East (the “Union”) and the League of Voluntary Hospitals and Homes of New York (the bargaining representative for the majority of contributing employers) incorporates the benefit changes set forth in the Rehabilitation Plan’s Preferred Schedule. Section 5.2 of the Plan. The “Normal Retirement Pension” was amended to eliminate the higher multiplier that was due to take effect in 2011 and to provide for a different accrual rate if you accrue your first Hour of Service on or after August 1, 2009. See also Appendices A and B. Section 1.6 of the Plan. Section 5.3, Subsection (c) and Appendix C of the Plan. Section 3.2, Subsection (b) of the Plan. Section 4.4 of the Plan.
Rising Costs and Lack of State Funding Mean Significant Changes for Home Care Workers with Children Your 1199SEIU National Benefit Fund for Home Care Employees is committed to providing you with the health coverage that you need and deserve. But funding the benefit package for 1199SEIU Home Care workers has never been easy. Because the cost of coverage has always been higher than the amount your employers are able to contribute, our Benefit Fund has had to rely on State funding to fill the gap. And the State has not increased its funding to us since 2008. As healthcare costs keep rising and State funding stays flat, maintaining benefits has been an ongoing struggle.While our Benefit Fund, the Union and your employers have pursued every possible option to maintain your benefits, the financial pressures have at times become unsustainable. Home Care members have experienced the consequences firsthand. First, at the State’s direction, we shifted coverage from our Benefit Fund to Fidelis Care New York through the Family Health Plus Buy-In Program in 2008. This was supposed to solve our funding problems, but it didn’t. In less than two years, our premium costs with Fidelis have risen by nearly 60 percent! Our Trustees tried to absorb these costs at first by restricting eligibility for spouses by raising the number of hours that had to be worked per month. When that was not enough, the Trustees were compelled to eliminate spousal coverage altogether, creating a member and child-only plan.
If you currently have children covered by the Benefit Fund, you already received information from the Fund regarding Child Health Plus options for your dependent children who will no longer be covered by the Benefit Fund as of January 1, 2011.
Fund News and Updates
1199SEIU HEALTH CARE EMPLOYEES PENSION FUND (THE “PLAN”) SUMMARY OF MATERIAL MODIFICATIONS 2009
The Union will do everything in its power to fight for more funding in the next State budget, but if there is no increase, it will be a challenge even to continue to maintain our members’ coverage.
Home Care Premium Increases
This past fall, however, our Fund’s actuaries informed the Trustees that there would not be enough money in 2011 to maintain the current benefit package. Since many of the children in the Fund were subsidized by Child Health Plus already, the Trustees voted to become a member-only health plan as of January 1, 2011, in order to protect the benefits of working members.
FOR YOUR BENEFIT
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