Date: Revised for WEB Posting – July 21, 2014 

 Revised Appendix C-2 – December 29, 2016 

 

 

 

 

 

To: Chris Bone 

Neela Ranade 

From: Jensen Chan 

Marcus Cleary 

Subject: Verification and Quantification of Buck’s Recommended Changes 

At PBGC’s request, Buck Consultants (Buck) conducted an independent review of PBGC’s 

Multiemployer Pension Insurance Modeling System (ME-PIMS) and, in its September 2012 report, 

recommended a number of changes to ME-PIMS to improve the quality of the model’s projections. 

This memo focuses on Buck’s recommended changes to the way ME-PIMS models (1) employer 

contribution increases and (2) the steps employers will take when a plan is or is projected to be in 

endangered or critical status.1 

After receiving the Buck recommendations, PBGC took steps to validate these recommendations by 

comparing them with calculations based on administrative data available to PBGC and to review 

them with practitioners in the multiemployer field before implementing them. The Policy, Research 

and Analysis Department (PRAD) of PBGC conducted this research. 

The material below provides brief descriptions of these recommendations, PBGC’s verification of 

them, and (when available) their impact on the mean present value of PBGC’s projected 2023 

multiemployer net position (“mean 10-year net deficit”).2 

A. Aggregate contribution limit 

For the FY 2012 Exposure Report3

, ME-PIMS did not limit overall increases in employer 

contributions. Buck noted that without such limits the model produced larger cumulative aggregate 

contribution increases than were likely to actually occur, especially when rehabilitation plans were 

1

 Buck also made recommendations in the same report as to how ME-PIMS projects its active population and 

determines the probability of mass withdrawal from a multiemployer pension plan. The former is discussed in a 

separate memo by Steve Boyce, while changes to the mass withdrawal assumptions were deferred until the FY 2014 

Projections Report. Further, PBGC adopted for the 2013 Report the Buck recommendation that PBGC reflect in its 

projections more recent data available at the time we run the model. 

2

 More detailed information about the changes to ME-PIMS and the quantitative effects of those changes are detailed in 

the FY 2013 Projections Report. 

3

 The FY 2013 Exposure Report was renamed the FY 2013 Projections Report. 
 

 

 

 

 

 

 

 


 


 


 


 


 


 


 


 


 

implemented. Buck recommended,

4 in terms of an aggregate dollar limit, that cumulative increases 

no more than double the contribution after 6-8 years and no more than triple it after 10-12 years.

5 

PRAD investigated the rehabilitation plans of the 70 largest critical status plans6 and confirmed that 

Buck’s rule of thumb is reasonable. Below is a summary of PRAD’s findings on the aggregate 

contribution limit. For more detail, please refer to Appendix C-1. 

Table 1: Limits on Cumulative Aggregate Contribution Increase Factors 

Cumulative Aggregate Contribution Increase Factor 

After ~6 Years7 After ~12 Years8 Ultimate 

Buck recommendation 2.0 3.0 N/A 

PRAD study – conservative9 1.8 2.3 N/A 

PRAD study – aggressive 2.3 3.0 N/A 

Adopted assumption 2.0 3.0 3.5 

PRAD also performed sensitivity analysis on this assumption as summarized below:
 

Table 2: Sensitivity of Results to Limits to Increases in the Aggregate Contribution
 

Sensitivity Testing 

Adopted 

Assumption 

Alternative 

Assumption 

Assumption Set: 

Limit on 6-year cumulative aggregate contribution increases 2.0 1.0 

Limit on 12-year cumulative aggregate contribution increases 3.0 1.5 

Ultimate limit on cumulative aggregate contribution 

increases10 

3.5 1.75 

Result: 

Mean 10-year net deficit (reflects all other changes to model, 

data and assumptions) $49.6 billion $59.0 billion 

4 Many of Buck’s quantitative recommendations occurred in communications subsequent to the initial report.
 5 These horizons are measured from the beginning of the most recent Schedule MB data. For the FY 2013 Projections
 

Report, the base year corresponded to the 2011 Schedule MB. For the FY 2014 Projections Report, the base year will 

correspond to the 2012 Schedule MB.

6 As measured by Current Liability. Most of the rehabilitation plans were from the 2010 Form 5500 attachments, but a
 

few were from the 2011 Form 5500.
 7 Buck’s recommendation was 6 to 8 years; the PRAD study used 7 years; and 6 years was adopted for ME-PIMS.
 8 Buck’s recommendation was 10 to 12 years; the PRAD study used 13 years; and 12 years was adopted for ME-PIMS.
 9 Details of conservative versus aggressive assumptions are in Appendix C-1. 10 Once one of these limits is exceeded, the aggregate contributions can still increase with wage growth.
 

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B. Implementation of the “Exhaustion of All Reasonable Measures” Clause 

For the FY 2012 Exposure Report, ME-PIMS assumed all critical status plans would develop 

rehabilitation plans to emerge from critical status by the end of the rehabilitation period. Available 

data have begun to make clear that many critical status plans would not be expected to emerge from 

critical status by the end of the rehabilitation period, based on reasonable assumptions and 

reasonable measures. These critical status plans did not adopt the full range of options available to 

them because they considered themselves to have “exhausted all reasonable measures” (referred to 

as “ERM” plans). Several years of post-PPA experience have produced sufficient data to enable 

PBGC to develop a more refined assumption.11 

Based on PRAD’s review of the 70 largest critical status plans,

12 22 plans (roughly 30%) are in the 

ERM category. A metric was developed to help PIMS predict which plans will be classified as 

having exhausted all reasonable measures. This metric reproduced the target 30% average when 

applied to all 349 critical status plans in our database; it reflects the ratio of inactive to active 

participants as well as whether the current employer contribution is sustainable. Please refer to 

Appendix B for more detail on the metric developed. 

C. Steps for Funding Improvement Plans/Rehabilitation Plans (FIP/RP) 

For the FY 2012 Exposure Report, ME-PIMS assumed plans would implement a series of remedial 

steps as part of their funding improvement or rehabilitation plans. These steps include per capita 

contribution increases as well as cuts to benefit accruals and subsidies as permitted under the 

Pension Protection Act of 2006 as amended (PPA). These steps, listed in Appendix A, were 

developed for ME-PIMS at a time when there was little or no FIP/RP experience available. Several 

years of post-PPA experience have produced sufficient data to enable PBGC to develop a more 

refined assumption.13 

In particular, as with the aggregate contribution, post-PPA experience has shown that the per capita 

contribution increases in critical plans assumed for the FY 2012 Exposure Report were quite 

aggressive. In addition, plans have not implemented all of the PPA tools available to critical status 

plans to help reduce liabilities (e.g., elimination of early retirement subsidies, five-year rollback of 

benefits). We summarize in the table below PRAD’s finding for the average rate of per capita 

contribution increases. For more detail about the contributions for critical status plans in our study, 

please refer to Appendix C-2. 

For the FY 2012 Exposure Report, ME-PIMS assumed that the plan would immediately bump the 

per capita contribution increase rate to 240% of the historical level.

14 For the 2013 Projections 

Report, the per capita contribution increase rate in a critical plan is the lesser of 240% of the 

historical level and the “rate cap” (i.e., 8%/12% annual increase limit in per capita contributions for 

11 The 2010 Form 5500 was the most recent available when PRAD investigated this issue.
 12 As measured by Current Liability.
 13 The 2010 Form 5500 was the most recent available when PRAD investigated this issue.
 14 E.g., if the historical per capita annual rate of increase was 3%, the plan would immediately bump per capita 

contribution increases to 7.2% (3 x 2.4).
 

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Table 3: Rate of Annual Per Capita Contribution Increase 

Rate of Annual Per Capita 

15 Increase

Contribution 

PRAD study – long term16 Average 8.5% (3% to 24%) 

PRAD study – short term17 Average 12.6% (5% to 24%) 

ME-PIMS assumption to be used in FY Initial rate at 8% increased to 12% if needed 

2013 Projections Report (7% for ERM plans18) 

non-ERM critical status plans and 7% annual increase limit in per capita contributions for ERM 

plans). 

15 These are aggregate contribution increases since per capita rates were not available.
 
 16 Includes all plans.
 17 Includes only plans with rehabilitation periods of less than 10 years.
 18 We did not have enough data to develop a credible estimate of ERM increases but the data did clearly show that ERM
 

plans have lower increases.
 

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APPENDIX A – STEPS FOR FIP/RP 

Below is a summary of the remedial measures that ME-PIMS assumed for the FY 2012 Exposure 

Report.

19 The steps are implemented in order until the plan is projected to emerge from critical 

status. 

2012 FIP or RP adoption steps (in sequence) 

(0)	 Extend all amortization charge bases by 5 years (but cap the extended period at 30 years). 

(1)*	 Eliminate early retirement subsidies on entire benefit and, prospectively, temporary 

supplements. 

(2)	 Increase the per capita contribution by a factor of 187% of plan-specific historical per capita 

increase. 

(3)	 Reduce future accruals to a floor accrual of 1% of the per capita contribution. 

(4) Increase the per capita contribution by a factor of 240% of the historical per capita increase.
 

(5)* Completely eliminate future accruals.
 

(6)* 5-year roll-back of benefits, including those in pay status. 

* For critical status plans only.
 

New (2013) steps for ERM plans 

It appears that the vast majority of ERM plans did NOT eliminate the early retirement subsidy on 

accrued benefits.

20 Thus the new hierarchy uses only steps 0, 3, and a modified step 4: 

(0)	 Implement Step 0 but do not extend bases if a plan starts out in non-green status. 

(1) Skip step 1. 

(2)	 Skip step 2 and capture any per capita contribution increases exclusively in step 4, after step 3 is 

taken. 

(3)	 Implement step 3 (i.e., no change to current code). 

(4)	 Modify step 4 to apply a cap of 7% to the per capita contribution increase rate.

21 

(5)	 Skip step 5 

(6)	 Skip step 6 

New (2013) steps for non-ERM plans 

(0)	 Implement step 0 but do not extend bases if a plan starts out in non-green status. 

(1) Implement step 1 (i.e., no change to current code). 

(2)	 Modify step 2 to apply a cap of 8% to the per capita contribution increase rate.

22 

(3)	 Implement step 3 (i.e., no change to current code). 

(4)	 Modify step 4 to apply a cap of 12% to the per capita contribution increase rate.

23 

(5)	 Skip step 5 

(6)	 Skip step 6 

19 Based on Buck’s interim recommendation of steps to use while waiting for post-PPA experience to emerge.
 20 If the subsidy was modified, the change generally applied to prospective accruals only and/or for Terminated Vested
 

Participants who are assumed by ME-PIMS to retire at NRA anyway. 21 The per capita contributions are increased to 240% of the historical increase rate, and the result is capped at 7%.
 22 The per capita contributions are increased to 187% of the historical increase rate, and the result is capped at 8%.
 23 The per capita contributions are increased to 240% of the historical increase rate, and the result is capped at 12%.
 

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APPENDIX B – EXHAUSTION OF REASONABLE MEASURES 

Of the 70 critical status plans that we researched,

24 22 (or roughly 30%) considered themselves to 

have “exhausted all reasonable measures” (ERM). The goal was to develop an unbiased metric to 

predict which plans will consider themselves ERM plans. We reviewed several plan statistics to 

determine if there were certain ones that were closely correlated with the plans that had ERM status. 

After some trial and error, we noted that the product of: (i) the ratio of inactive participants to active 

participants; and (ii) the ratio of the modified “required” contribution to the actual contribution, 

seemed to demarcate which plans were ERM plans. The modified required contribution was 

calculated as the plan’s normal cost (NC) plus interest on the plan’s unfunded accrued liability 

(UAL). 

When the product of (i) times (ii) above was greater than 4.0, we correctly identified 13 of the 22 

sampled ERM plans (or, a 59% ‘hit rate”). All 48 of the non-ERM plans sampled had products that 

fell below the 4.0 threshold. 

Contribution Statistic Considered ERM NOT Considered ERM 

Average inactive to active participant 

ratio for researched plans. 

4.4 

(22 plans) 

2.23 

(48 plans) 

Average ratio of {actuarial NC + interest 

* UAL} to {current contribution} for 

researched plans (2010 only). 

2.52 1.16 

We applied a threshold of 4.0 to the product of (i) and (ii) above for all 349 critical plans from the 

2012 Form 5500 Schedule MB filings. This test identified 105 critical status plans as being ERM 

plans. The 30% figure comported with our actual 30% of plans identified as ERM and also aligned 

with anecdotal feedback we received from practitioners. 

24 Most of the research was based on the 2010 Form 5500 and attachments. 

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APPENDIX C-1 – AGGREGATE CONTRIBUTION LIMIT 

Below are highlights from PRAD’s aggregate contribution limit study: 

•	 Breakdown of plans: 

o	 Of the 70 rehabilitation plans studied,25 32 provided information on the planned 

aggregate contribution increases over the rehabilitation period. Please refer to 

Appendix C-2 for the list of 32 plans. 

o	 Of those, 18 plans had rehabilitation periods less than 10 years26 and 14 had 

rehabilitation periods greater than or equal to 10 years. 

•	 For plans with rehabilitation periods less than 10 years: 

o	 The average annual aggregate contribution increase was 12.6% over the 

rehabilitation periods. 

o	 To put the plans on a common basis, we projected the plans to year 7 (the midpoint 

of Buck’s 6-8 years period). 

 Conservative: If aggregate contributions are projected from the end of the 

rehabilitation period to year 7 using wage growth of 4.3% (to be consistent 

with 2013 PIMS), the cumulative increase factor at year 7 is 1.8. This is close 

to Buck’s rule of thumb of 2.0 (i.e., double). 

 Aggressive: If aggregate contributions are projected from the end of the 

rehabilitation period to year 7 using the average increase of 12.6%, the 

cumulative increase factor at year 7 is 2.3. This is also close to Buck’s rule of 

thumb of 2.0 (i.e. double). 

o Next we projected the year 7 results to year 13 to calculate a long-term limit. 

 Projecting the 1.8 figure from above using wage growth of 4.3%, we get 2.3, 

which is shy of Buck’s recommendation of 3.0. 

 Projecting the 2.3 figure from above using wage growth of 4.3%, we get 3.0, 

which matches Buck’s recommendation. 

 It follows that if plan sponsors are willing to increase aggregate contributions 

by a factor of 1.8 to 2.3 after 7 years, they should be willing to increase 

aggregate contributions by 2.3 to 3.0 after 13 years. Buck’s recommendation 

of 3.0 is within this range. In addition, plans may be willing to sustain 

aggregate contribution increases more than wage growth for years 8 to 13. 

o	 Stress testing: 

 The conservative approach did not materially change by including plans with 

rehabilitation periods >= 10 years. The aggressive approach was more 

sensitive as can be seen in Appendix C-2. 

 The results did not materially change when plans that have declared 

exhaustion of all reasonable measures were excluded. 

 We did not have a way of comparing the ultimate limit of 3.5 against the 

data. However, it does not have a large impact on results. 

25 The 70 largest plans, as measured by Current Liability, were chosen. For most plans, the 2010 Form 5500 was used. 26 For a few plans, we had only the negotiated contribution increases per the collective bargaining agreement. 

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APPENDIX C-2 

RESEARCH ON CONTRIBUTION INCREASES
 

Years at 

Declaring National Cumulative 

exhaustion of Cumulative Average Cumulative Wage factor to fill up 7-Year 

reasonable contribution Years of annual factor per Increase to 7th year w/ Total cumulative 

measures? Start date End date increase increases increase rehab plan (NWI)1 NWI years factor 

Plan A No 01/01/2009 01/01/2010 49% 1 49% 1.4875 6 1.2874 7 1.9150 

Plan B Yes 04/01/2009 04/01/2011 9% 2 4% 1.0900 5 1.2343 7 1.3454 

Plan C Yes 07/01/2009 07/01/2011 26% 2 12% 1.2578 5 1.2343 7 1.5525 

Plan D Yes 01/01/2013 01/01/2016 16% 3 5% 1.1550 4 1.1834 7 1.3668 

Plan E No 01/01/2008 01/01/2011 24% 3 7% 1.2375 4 1.1834 7 1.4645 

Plan F No 08/01/2009 08/01/2012 32% 3 10% 1.3152 4 1.1834 7 1.5565 

Plan G No 01/01/2009 01/01/2012 24% 3 7% 1.2380 4 1.1834 7 1.4650 

Plan H No 12/01/2008 11/30/2012 134% 4 24% 2.3407 3 1.1346 7 2.6559 

Plan I No 01/01/2008 01/01/2012 97% 4 18% 1.9655 3 1.1346 7 2.2301 

Plan J No 08/01/2010 07/31/2014 34% 4 8% 1.3377 3 1.1346 7 1.5178 

Plan K No 05/01/2008 05/01/2012 56% 4 12% 1.5612 3 1.1346 7 1.7714 

Plan L Yes 01/01/2008 01/01/2012 55% 4 12% 1.5477 3 1.1346 7 1.7561 

Plan M No 01/01/2010 01/01/2015 74% 5 12% 1.7387 2 1.0878 7 1.8915 

Plan N No 01/01/2008 01/01/2013 113% 5 16% 2.1296 2 1.0878 7 2.3167 

Plan O No 01/01/2012 12/31/2016 125% 5 18% 2.2500 2 1.0878 7 2.4477 

Plan P No 06/30/2009 06/30/2015 123% 6 14% 2.2299 1 1.0430 7 2.3258 

Plan Q No 09/01/2008 09/01/2014 63% 6 8% 1.6279 1 1.0430 7 1.6979 

Plan R No 01/01/2010 12/31/2016 117% 7 12% 2.1667 0 1.0000 7 2.1667 

Plan S Yes 01/01/2008 12/31/2017 82% 10 6% 1.8200 -3 0.8813 7 1.6040 

Plan T No 01/01/2008 12/31/2017 97% 10 7% 1.9672 -3 0.8813 7 1.7337 

Plan U No 01/01/2012 12/31/2021 71% 10 6% 1.7093 -3 0.8813 7 1.5065 

Plan V No 01/01/2010 12/31/2019 88% 10 6% 1.8771 -3 0.8813 7 1.6544 

Plan W Yes 01/01/2010 12/31/2019 40% 10 3% 1.3977 -3 0.8813 7 1.2318 

Plan X No 01/01/2013 12/31/2022 128% 10 9% 2.2800 -3 0.8813 7 2.0095 

Plan Y No 01/01/2011 12/31/2020 63% 10 5% 1.6289 -3 0.8813 7 1.4356 

Plan Z No 01/01/2011 12/31/2020 159% 10 10% 2.5937 -3 0.8813 7 2.2860 

Plan AA No 06/01/2010 06/30/2020 177% 10 11% 2.7692 -3 0.8813 7 2.4407 

Plan BB No 08/01/2007 08/01/2017 99% 10 7% 1.9940 -3 0.8813 7 1.7574 

Plan CC No 01/01/2010 12/31/2019 89% 10 7% 1.8948 -3 0.8813 7 1.6700 

Plan DD No 01/01/2008 01/01/2020 108% 12 6% 2.0791 -5 0.8102 7 1.6845 

Plan EE No 01/01/2011 12/31/2023 58% 13 4% 1.5801 -6 0.7768 7 1.2273 

Plan FF No 01/01/2011 12/31/2023 123% 13 6% 2.2264 -6 0.7768 7 1.7294 

TOTAL/AVERAGE [ALL PLANS] 219 8.5% 224 8.4% 

CUMULATIVE FACTOR TO 7 YEARS [ALL PLANS] 1.767 1.757 

CUMULATIVE FACTOR TO 13 YEARS [ALL PLANS] 2.275 2.261 

TOTAL/AVERAGE [PLANS WITH PERIOD < 10 YEARS] 71 12.6% 126 8.9% 

CUMULATIVE FACTOR TO 7 YEARS [PLANS W/ PERIOD < 10 YEARS] 2.298 1.818 

CUMULATIVE FACTOR T0 13 YEARS [PLANS W/ PERIOD < 10 YEARS] 2.958 2.340 

1 Assumed National Wage Increase = 4.3% 

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APPENDIX D
 

ILLUSTRATION OF HOW PIMS APPLIES AGGREGATE CONTRIBUTION LIMIT AND PER CAPITA CONTRIBUTION (PCC) RATE INCREASE CAP
 

2011 aggregate contribution $ 1,000,000 

Historical increase rate ("H")1 6.0% 

"H" x 1.87 (i.e. step 2 per capita contribution increase rate)2 11.2% 

"H" x 2.4 (i.e. step 4 per capita contribution increase rate)2 14.4% 

FY13 active count 900 

FY13 hours worked [illustration based on 1500 hours per active] 1,350,000 

FY13 per capita contribution rate $1.00/hr 

FY13 aggregate contribution $ 1,350,000 

FY13 wage growth3 4.30% 

Aggregate contribution before PCC rate Aggregate contribution after PCC rate increase cap but Aggregate contribution after PCC rate increase cap and 

increase cap and before aggregate dollar limit before aggregate dollar limit after aggregate dollar limit 

(i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) 

Aggregate Aggregate Aggregate 

contribution contribtion contribution 

Uncapped Capped PCC reflecting PCC dollar limit Indexed refelcting 

PIMS Uncapped aggregate rate increase rate increase Years before aggregate dollar limit 

Fiscal FIP/RP step Total hours PCC rate Uncapped contribution PCC rate [lesser of (iv) Capped cap from reflecting contribution [lesser of (x) 

year reached4 worked5 increase PCC rate [(iii) x (v)]6 increase cap7 and (vii)] PCC rate [(iii) x (ix)] 20118 wage growth9 dollar limit10 and (xii)] 

2014 Non-ERM 2 1,350,000 11.2% $1.11/hr $ 1,501,470 8.0% 8.0% $1.08/hr $ 1,458,000 3 $ 2,000,000 $ 1,458,000 $ 1,458,000 

2015 Non-ERM 4 1,350,000 14.4% $1.27/hr $ 1,717,682 12.0% 12.0% $1.21/hr $ 1,632,960 4 $ 2,000,000 $ 1,632,960 $ 1,632,960 

2016 Non-ERM 4 1,350,000 14.4% $1.46/hr $ 1,965,028 12.0% 12.0% $1.35/hr $ 1,828,915 5 $ 2,000,000 $ 1,828,915 $ 1,828,915 

2017 Non-ERM 4 1,350,000 14.4% $1.67/hr $ 2,247,992 12.0% 12.0% $1.52/hr $ 2,048,385 6 $ 2,000,000 $ 2,000,000 $ 2,000,000 

2018 Non-ERM 4 1,350,000 14.4% $1.90/hr $ 2,571,703 12.0% 12.0% $1.70/hr $ 2,294,191 7 $ 3,000,000 $ 2,086,000 $ 2,086,000 

2019 ERM 4 1,350,000 14.4% $2.18/hr $ 2,942,028 7.0% 7.0% $1.82/hr $ 2,454,785 8 $ 3,000,000 $ 2,175,698 $ 2,175,698 

2020 ERM 4 1,350,000 14.4% $2.49/hr $ 3,365,680 7.0% 7.0% $1.95/hr $ 2,626,620 9 $ 3,000,000 $ 2,269,253 $ 2,269,253 

2021 ERM 4 1,350,000 14.4% $2.85/hr $ 3,850,338 7.0% 7.0% $2.08/hr $ 2,810,483 10 $ 3,000,000 $ 2,366,831 $ 2,366,831 

2022 ERM 4 1,350,000 14.4% $3.26/hr $ 4,404,786 7.0% 7.0% $2.23/hr $ 3,007,217 11 $ 3,000,000 $ 2,468,605 $ 2,468,605 

2023 ERM 4 1,350,000 14.4% $3.73/hr $ 5,039,076 7.0% 7.0% $2.38/hr $ 3,217,722 12 $ 3,000,000 $ 2,574,755 $ 2,574,755 

2024 ERM 4 1,350,000 14.4% $4.27/hr $ 5,764,703 7.0% 7.0% $2.55/hr $ 3,442,962 13 $ 3,500,000 $ 2,685,469 $ 2,685,469 

2025 ERM 4 1,350,000 14.4% $4.89/hr $ 6,594,820 7.0% 7.0% $2.73/hr $ 3,683,970 14 $ 3,500,000 $ 2,800,944 $ 2,800,944 

2026 ERM 4 1,350,000 14.4% $5.59/hr $ 7,544,474 7.0% 7.0% $2.92/hr $ 3,941,848 15 $ 3,500,000 $ 2,921,385 $ 2,921,385 

1 "H" is calculated just as it was for the FY12 Exposure Report (i.e. the limits and caps are layered on top of the existing logic). Technically "H" is 3/4 of the historical increase (similar to the FY12 Exposure Report). 

2 The per capita contribution increases are calculated just as they were for the FY12 Exposure Report. 

3 Technically this varies stochastically, but the example is using a mean value for simplicity. 

4 The PIMS Funding Improvement Plan/Rehabilitation Plan (FIP/RP) steps are described in Appendix A. 

5 Technically this varies stochastically, but the example is using level hours for simplicity. 

6 In other words, the contribution that would have been calculated if Buck recommendations were not implemented. 

7 For non-ERM, 8% after step 2 and 12% after step 4. For ERM, 7% cap at step 4. ERM= Exhausted (all) Reasonable Measures 

8 In general, the base year is from the most recent available Form 5500, which was generally 2011 for the FY13 Projections Report. 

9 For non-ERM, no more than double for years 1 to 6, no more than triple for years 7 to 12, and no more than 3.5 times for years 13+. For ERM, no more than 1.5 times. 

10 The dollar limit grows with wage growth once (x) exceeds (xii). For example, in the illustration above, the 3x limit is not used because the 2x limit is exceeed before year 7. 

This example does not reflect the additional contributions "boosters" (30% in initial year if critical and missing actual contributions data and 15% when step 6 failed to satisfy the RP requirement). 

It also does not reflect the additional per capita contribution increases from the projected bargaining cycle increases. 

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