Milliman Actuarial Valuation

Issued August 17, 2017

Sheet Metal Workers Local Pension Plan

May 1, 2016 Actuarial Valuation

Prepared by:

Kevin M. Campe, EA, MAAA

Principal and Consulting Actuary

Michael B. Caparoso, ASA, EA, MAAA

Associate Actuary

Milliman, Inc.

71 South Wacker Drive, Suite 3100

Chicago, Illinois 60606

Tel +1 312 726 0677

Fax +1 312 499 5695

milliman.com

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May 1, 2016 Actuarial Valuation i

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May 1, 2016 Actuarial Valuation of the

Sheet Metal Workers Local Pension Plan

The actuarial valuation of the Sheet Metal Workers Local Pension Plan (the “Plan”) for the plan year beginning 

May 1, 2016 has been completed in accordance with our understanding of the minimum funding requirements 

under ERISA and the Pension Protection Act of 2006 as well as the applicable sections of the Internal Revenue 

Code (IRC), including all regulations and guidance issued to date. It also has been completed in accordance with 

our understanding of FASB ASC Topic 960 for determining plan accounting requirements. The valuation results 

contained in this report are based on the actuarial methods (Appendix A), actuarial assumptions (Appendix B), 

and principal plan provisions (Appendix C) summarized in the appendices.

Purpose of the Valuation

In general, the actuarial valuation determines the current level of employer contributions that, taking into account 

prior funding, will accumulate assets sufficient to meet benefit payments and administrative expenses when due 

under the terms of the Plan. This report has been prepared for the Sheet Metal Workers Local Pension Plan as of 

May 1, 2016 to:

 Calculate the Minimum Required Contribution for the plan year beginning May 1, 2016.

 Calculate the Maximum Deductible Contribution for the 2016 fiscal year.

 Determine the actuarial Present Value of Accumulated Plan Benefits as of April 30, 2016 for purposes of 

disclosing the Plan’s liabilities under FASB ASC Topic 960.

 Determine the Plan’s unfunded vested benefit liability as of April 30, 2016 for withdrawal liability purposes 

calculated in accordance with the requirements of the Multiemployer Pension Plan Amendments Act of 1980.

 Review the Plan’s funded status.

 Review the experience for the plan year ending April 30, 2016, including the performance of the Plan’s assets 

during the year and changes in the Plan’s participant demographics that impact liabilities.

 Provide operational information required for governmental agencies and other interested parties.

Limited Distribution

Milliman’s work is prepared solely for the internal business use of the Board of Trustees Sheet Metal Workers 

Local Pension Plan (the “Plan Sponsor”) and the Plan’s Trustees and may not be provided to third parties without 

our prior written consent. Milliman does not intend to benefit or create a legal duty to any third party recipient of its 

work product. Milliman’s consent to release its work product to any third party may be conditioned on the third 

party signing a release, subject to the following exceptions:

 The Plan Sponsor may provide a copy of Milliman’s work, in its entirety, to the Plan’s professional service 

advisors who are subject to a duty of confidentiality and who agree to not use Milliman’s work for any purpose 

other than to benefit the Plan.

 The Plan Sponsor may distribute certain work product that Milliman and the Plan Sponsor mutually agree is 

appropriate as may be required by the Pension Protection Act of 2006.

Any third party recipient of this work product who desires professional guidance should not rely upon Milliman’s 

work product, but should engage qualified professionals for advice appropriate to its own specific needs. 

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Reliance

In preparing this report, we relied, without audit, on information (both written and oral) supplied by the Plan 

Sponsor and the Plan’s Trustees. This information includes, but is not limited to, plan documents and summaries, 

participant data, and financial information. We found this information to be reasonably consistent and comparable 

with information used for other purposes. The valuation results depend on the integrity of this information. If any of 

this information is incomplete or inaccurate, our results may be different and our calculations may need to be 

revised.

Limited Use

Actuarial computations for purposes other than determining the contribution requirements for an ongoing plan 

(such as for assessing benefit security upon potential plan termination) may yield significantly different results 

from those shown in this report. 

Future actuarial measurements may differ significantly from the current measurements presented in this report 

due to factors such as, but not limited to, the following: plan experience differing from that anticipated by the 

economic or demographic assumptions; changes in economic or demographic assumptions; increases or 

decreases expected as part of the natural operation of the methodology used for these measurements (such as 

the end of an amortization period or additional cost or contribution requirements based on plan funded status); 

and changes in plan provisions or applicable law. Due to the limited scope of the actuarial assignment, we did not 

perform an analysis of the potential range of such future measurements.

The consultants who worked on this assignment are pension actuaries. Milliman’s advice is not intended to be a 

substitute for qualified legal or accounting counsel.

Certification

In our opinion, each assumption used, other than those assumptions mandated directly by the Internal Revenue 

Code and regulations thereon, is individually reasonable (taking into account the experience of the Plan and 

reasonable expectations) and, in combination, such other assumptions offer our best estimate of anticipated 

experience under the Plan. 

On the basis of the foregoing, we hereby certify that to the best of our knowledge and belief, this report is 

complete and accurate and has been prepared in accordance with generally recognized and accepted actuarial 

principles and practices which are consistent with the principles prescribed by the Actuarial Standards Board and 

the Code of Professional Conduct and Qualification Standards for Actuaries Issuing Statements of Actuarial 

Opinion in the United States promulgated by the American Academy of Actuaries. We are members of the 

American Academy of Actuaries and meet its Qualification Standards to render the actuarial opinion contained 

herein.

Respectfully submitted,

Kevin M. Campe, EA, MAAA Michael B. Caparoso, ASA, EA, MAAA

Principal and Consulting Actuary Associate Actuary

Enrolled Actuary Number 17-05356 Enrolled Actuary Number 17-08208

August 17, 2017

Date

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Table of Contents

Summary of Results.................................................................................................................................................1

A. Overview.........................................................................................................................................................2

B. Purpose of this Report....................................................................................................................................3

C. Actuarial Methods and Assumptions ..............................................................................................................3

D. Plan Provisions ...............................................................................................................................................3

Exhibits......................................................................................................................................................................4

Summary of Income and Disbursements................................................................................................................5

Asset (Gain) / Loss for Prior Plan Year on Market Value of Assets .......................................................................6

Actuarial Value of Assets ........................................................................................................................................7

Actuarial Balance Sheet..........................................................................................................................................8

Normal Cost and Unfunded Actuarial Accrued Liability ..........................................................................................9

Current Annual Cost and Minimum Required Contribution ................................................................................. 10

Actuarial (Gain) / Loss for Prior Plan Year........................................................................................................... 11

Charges and Credits for Funding Standard Account ........................................................................................... 12

Current Liability .................................................................................................................................................... 14

Full Funding Limitation......................................................................................................................................... 15

Maximum Deductible Contribution under IRC Section 404 ................................................................................. 16

Present Value of Accumulated Plan Benefits ...................................................................................................... 17

Change in Present Value of Accumulated Plan Benefits..................................................................................... 18

Unfunded Vested Benefit Liability for Withdrawal Liability Calculations .............................................................. 19

Summary of Participant Data ............................................................................................................................... 20

Change in Participant Counts .............................................................................................................................. 21

Active Participants by Age and Service ............................................................................................................... 22

Appendices ............................................................................................................................................................ 23

Appendix A – Summary of Actuarial Methods ..................................................................................................... 24

Appendix B – Summary of Actuarial Assumptions .............................................................................................. 25

Appendix C – Summary of Principal Plan Provisions .......................................................................................... 27

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Summary of Results

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Sheet Metal Workers Local Pension Plan

A. Overview

Actuarial Valuation for Plan Year Beginning

5/1/2015 5/1/2016

Assets

Market Value of Assets (MVA)

Investment yield in prior plan year (MVA)

Actuarial Value of Assets (AVA)

Investment yield in prior plan year (AVA)

$41,508,264

7.35%

$47,518,829

1.82%

$39,751,795

0.07%

$45,566,573

(0.36%)

Valuation Liabilities

Valuation interest rate

Normal Cost

Present value of benefits (PVB)

Actuarial Accrued Liability (AAL)

Unfunded Actuarial Accrued Liability (AAL - AVA)

Present Value of Accrued Benefits (PVAB)

Funded percentage (PVAB)

 Based on Market Value of Assets (PVAB ÷ MVA)

 Based on Actuarial Value of Assets (PVAB ÷ AVA)

Present Value of Vested Benefits (PVVB)

Funded percentage (PVVB)

 Based on Market Value of Assets (PVVB ÷ MVA)

 Based on Actuarial Value of Assets (PVVB ÷ AVA)

8.00%

$259,615

83,884,650

83,884,650

36,365,821

83,884,650

49.48%

56.65%

$82,614,505

50.24%

57.52%

8.00%

$259,615

84,852,149

84,852,149

39,285,576

84,852,149

46.85%

53.70%

$83,407,813

47.66%

54.63%

Credit Balance and Contribution Information

Credit Balance at end of prior plan year

Minimum Required Contribution

Maximum Deductible Contribution

($2,245,624)

6,117,091

161,374,247

($2,148,983)

6,139,842

173,641,330

Withdrawal Liability

Present Value of Vested Benefits for withdrawal liability

Value of assets used for withdrawal liability

Unfunded Present Value of Vested Benefits

Withdrawal liability interest rate

$82,614,505

47,518,829

35,095,676

8.00%

$83,407,813

45,566,573

37,841,240

8.00%

Participant Data

Active participants

Terminated vested participants

Retired participants

Disabled participants

Beneficiaries

Total participants

648

373

418

5

101

1,545

634

379

415

6

101

1,535

Certification Status Critical & Declining Critical & Declining

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Sheet Metal Workers Local Pension Plan

B. Purpose of this Report

This report has been prepared for the Sheet Metal Workers Local Pension Plan as of May 1, 2016 to:

 Calculate the Minimum Required Contribution for the plan year beginning May 1, 2016.

 Calculate the Maximum Deductible Contribution for the 2016 fiscal year.

 Determine the actuarial present value of accumulated plan benefits as of April 30, 2016 for purposes of 

disclosing the Plan's liabilities under FASB ASC Topic 960.

 Determine the Plan’s unfunded vested benefit liability as of April 30, 2016 for withdrawal liability purposes 

calculated in accordance with the requirements of the Multiemployer Pension Plan Amendments Act of 

1980.

 Review the Plan’s funded status.

 Review the experience for the plan year ending April 30, 2016 including the performance of the Plan’s 

assets during the year and changes in the Plan’s participant demographics that impact liabilities.

 Provide operational information required for governmental agencies and other interested parties.

C. Actuarial Methods and Assumptions

The methods and assumptions used in this valuation are the same as those used in the prior valuation except as 

follows: 

 For Current Liability purposes, the interest rate was changed from 3.37% to 3.22% in accordance with 

IRS guidance. (The statutory mortality tables also have been updated as required by law).

Please see Appendix A and Appendix B for a complete summary of all methods and assumptions used in this 

valuation.

D. Plan Provisions

This valuation reflects the plan provisions in effect on May 1, 2016, which are the same provisions that were 

valued in the May 1, 2015 actuarial valuation report.

Please see Appendix C for a detailed summary of plan provisions.

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Exhibits

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Sheet Metal Workers Local Pension Plan

Exhibit 1

Summary of Income and Disbursements

The change in the Market Value of Assets from May 1, 2015 to May 1, 2016 is shown below.

1. Market Value of Assets as of May 1, 2015 $41,508,264

2. Income

a. Employer contribution for plan year

b. Dividends and interest

c. Net appreciation / (depreciation) in fair value of investments

d. Insurance company experience credit and other income

e. Total

3,815,488

502,687

(357,806)

30,370

3,990,739

3. Disbursements

a. Benefit payments to participants

b. Investment expenses

c. Administrative expenses

d. Total

5,265,389

148,360

333,459

5,747,208

4. Net increase / decrease

[(2e) - (3d)] (1,756,469)

5. Market Value of Assets as of May 1, 2016

[(1) + (4)] 39,751,795

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Sheet Metal Workers Local Pension Plan

Exhibit 2

Asset (Gain) / Loss for Prior Plan Year on Market Value of Assets

The Asset (Gain) / Loss is the difference between the expected and actual values of the Market Value of Assets. 

An asset gain is negative because it represents a decrease from the expected unfunded Actuarial Accrued 

Liability. The Asset (Gain) / Loss for the plan year ending April 30, 2016 is determined below.

1. Expected Market Value of Assets

a. Market Value of Assets as of April 30, 2015

b. Employer contributions for plan year

c. Benefit payments

d. Administrative expenses

e. Expected investment return based on 8.00% interest rate

f. Expected Market Value of Assets as of April 30, 2016

[(a) + (b) - (c) - (d) + (e)]

$41,508,264

3,815,488

5,265,389

333,459

3,253,635

42,978,539

2. Market Value of Assets as of April 30, 2016 39,751,795

3. Asset (Gain) / Loss

[(1f) - (2)] 3,226,744

4. Estimated investment return on Market Value of Assets 0.07%

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Sheet Metal Workers Local Pension Plan

Exhibit 3

Actuarial Value of Assets

The Actuarial Value of Assets is the Market Value of Assets less a weighted average of asset gains / (losses) 

over a four-year period (five-year smoothing), but it must be within 80% to 120% of the Market Value of Assets. 

The investment loss for the plan year ending May 1, 2009 is being recognized over 10 years as elected under the 

Pension Relief Act of 2010. The Actuarial Value of Assets as of May 1, 2016 is determined below.

1. Market Value of Assets as of April 30, 2016 $39,751,795

2. Unrecognized asset gains / (losses) for the plan years ending 

Plan Year Ending

a. April 30, 2016

a. April 30, 2015

b. April 30, 2014

c. April 30, 2013

d. April 30, 2009

e. Total

Gain / (Loss) for Year

($3,226,744)

(254,824)

969,977

815,275

(18,157,673)

Percent

Unrecognized

80%

60%

40%

20%

20%

Amount

Unrecognized

(2,581,395)

(152,894)

387,991

163,055

(3,631,535)

(5,814,778)

3. Preliminary Actuarial Value of Assets as of May 1, 2016

[(1) - (2e)] 45,566,573

4. Actuarial Value of Assets as of May 1, 2016

[(3), but not < 80% x (1), nor > 120% x (1)] 45,566,573

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Sheet Metal Workers Local Pension Plan

Exhibit 4

Actuarial Balance Sheet

The total plan requirements compared to the total value of plan resources as of May 1, 2016 is shown below.

Plan Requirements

1. Present value of active participant benefits

a. Retirement

b. Termination

c. Death

d. Disability

e. Total

$23,843,902

1,354,948

371,576

0

25,570,426

2. Present value of inactive participant benefits

a. Retired participants

b. Terminated vested participants

c. Beneficiaries

d. Disabled participants

e. Total

41,422,160

13,713,977

3,485,589

659,997

59,281,723

3. Total plan requirements

[(1e) + (2e) + (3)] 84,852,149

Plan Resources

4. Actuarial Value of Assets $45,566,573

5. Unfunded Actuarial Accrued Liability 39,285,576

6. Total plan resources 84,852,149

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May 1, 2016 Actuarial Valuation 9

Sheet Metal Workers Local Pension Plan

Exhibit 5

Normal Cost and Unfunded Actuarial Accrued Liability

The Normal Cost is the amount allocated to the current plan year under the Plan’s actuarial cost method. The 

Actuarial Accrued Liability is the accumulation of all prior Normal Costs. The unfunded Actuarial Accrued Liability

is the excess (deficiency) of the Actuarial Accrued Liability over the Actuarial Value of Assets. The employer 

Normal Cost and the unfunded Actuarial Accrued Liability as of May 1, 2015 and May 1, 2016 are determined 

below.

5/1/2015 5/1/2016

1. Normal Cost

a. Beginning of year Normal Cost

b. Beginning of year loading for 

administrative expenses

c. Total

$0

259,615

259,615

$0

259,615

259,615

2. Actuarial Accrued Liability

a. Active participants

b. Terminated vested participants

c. Participants in pay status

d. Total

24,548,489

13,340,432

45,995,729

83,884,650

25,570,426

13,713,977

45,567,746

84,852,149

3. Actuarial Value of Assets 47,518,829 45,566,573

4. Unfunded Actuarial Accrued Liability

[(2f) - (3)] 36,365,821 39,285,576

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May 1, 2016 Actuarial Valuation 10

Sheet Metal Workers Local Pension Plan

Exhibit 6

Current Annual Cost and Minimum Required Contribution

The Current Annual Cost is the Plan’s cost under the minimum funding requirements prior to the recognition of the 

full funding limitation and any Credit Balance. The Minimum Required Contribution is the amount needed to avoid 

a funding deficiency in the Funding Standard Account. These amounts for the plan year beginning May 1, 2016

are determined below.

1. Charges for plan year

a. Funding deficiency as of May 1, 2016

b. Normal Cost

c. Amortization charges (on $58,393,499)

d. Interest on (a), (b), and (c) to end of plan year

e. Additional funding charge

f. Total

$2,148,983

259,615

8,803,908

897,000

0

12,109,506

2. Credits for plan year

a. Amortization credits (on $21,256,906)

b. Other credits

c. Interest on (a) and (b) to end of plan year

d. Total

5,527,467

0

442,197

5,969,664

3. Current Annual Cost for plan year

[(1f) - (2d)] 6,139,842

4. Full funding credit for plan year

a. Full funding limitation

b. Full funding credit

[(3) - (4a), but not < $0]

96,183,290

0

5. Credit Balance for plan year

a. Credit Balance as of May 1, 2016

b. Interest on (a) to end of plan year

c. Total

0

0

0

6. Minimum Required Contribution for plan year

[(3) - (4b) - (5c), but not < $0] 6,139,842

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May 1, 2016 Actuarial Valuation 11

Sheet Metal Workers Local Pension Plan

Exhibit 7

Actuarial (Gain) / Loss for Prior Plan Year

The Actuarial (Gain) / Loss for the prior plan year is the difference between the expected and actual unfunded 

Actuarial Accrued Liability as of the beginning of the current plan year. The Actuarial (Gain) / Loss for the plan 

year ending April 30, 2016 is determined below.

1. Unfunded Actuarial Accrued Liability as of May 1, 2015 $36,365,821

2. Normal Cost as of May 1, 2015 259,615

3. Interest on (1) and (2) to end of plan year 2,930,031

4. Subtotal 

[(1) + (2) + (3)] 39,555,467

5. Employer contributions for plan year 3,815,488

6. Interest on (5) to end of plan year 152,620

7. Subtotal 

[(5) + (6)] 3,968,108

8. Changes in Actuarial Accrued Liability

a. Plan amendments

b. Changes in actuarial assumptions

c. Changes in cost method

d. Total

0

0

0

0

9. Expected unfunded Actuarial Accrued Liability as of May 1, 2016

[(4) - (7) + (8d)] 35,587,359

10. Actual unfunded Actuarial Accrued Liability as of May 1, 2016 39,285,576

11. Actuarial (Gain) / Loss on Actuarial Value of Assets 3,903,376

12. Actuarial (Gain) / Loss on Actuarial Accrued Liability

[(10) - (9) - (11)] (205,159)

13. Total Actuarial (Gain) / Loss for prior plan year

[(11) + (12)] 3,698,217

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May 1, 2016 Actuarial Valuation 12

Sheet Metal Workers Local Pension Plan

Exhibit 8

Charges and Credits for Funding Standard Account

The amortization charges and credits for the Funding Standard Account for the plan year beginning May 1, 2016

are determined below.

1. Charges as of May 1, 2016

Date

Established

a. 5/1/1978

b. 5/1/1979

c. 5/1/1987

d. 5/1/1988

e. 5/1/1990

f. 5/1/1991

g. 5/1/1992

h. 5/1/1994

i. 5/1/1994

j. 5/1/1995

k. 5/1/1996

l. 5/1/1997

m. 5/1/1997

n. 5/1/1998

o. 5/1/1998

p. 5/1/1999

q. 5/1/1999

r. 5/1/2001

s. 5/1/2002

t. 5/1/2002

u. 5/1/2002

v. 5/1/2003

w. 5/1/2003

x. 5/1/2004

y. 5/1/2004

z. 5/1/2005

aa. 5/1/2006

bb. 5/1/2007

cc. 5/1/2008

dd. 5/1/2008

ee. 5/1/2009

ff. 5/1/2009

Description

Initial UAL

1979 Plan Amendment

1987 Plan Amendment

1988 Assumption Change

1990 Plan Amendment

1991 Assumption Change

1992 Assumption Change

1994 Assumption Change

1994 Plan Amendment

1995 Assumption Change

1996 Assumption Change

1997 Assumption Change

1997 Plan Amendment

1998 Assumption Change

1998 Plan Amendment

1999 Assumption Change

1999 Plan Amendment

2001 Assumption Change

2002 Actuarial Loss

2002 Assumption Change

EGGTRA

2003 Actuarial Loss

2003 Assumption Change

2004 Actuarial Loss

2004 Assumption Change

2005 Actuarial Loss

2006 Actuarial Loss

2007 Actuarial Loss

2008 Actuarial Loss

2008 Assumption Change

2009 Actuarial Loss

2009 Funding Relief

Amortization

Amount

$188,600

29,566

179,024

23,793

238,529

30,663

62,278

86,304

41,025

71,707

402,641

119,240

86,887

225,355

62,455

185,150

88,361

102,262

347,477

25,749

782

686,105

303,392

432,275

134,879

325,005

261,989

113,519

221,137

511,436

176,119

1,220,305

Years

Remaining

2.00

3.00

1.00

2.00

4.00

5.00

6.00

8.00

8.00

9.00

10.00

11.00

11.00

12.00

12.00

13.00

13.00

15.00

1.00

16.00

16.00

2.00

17.00

3.00

18.00

4.00

5.00

6.00

7.00

7.00

8.00

22.00

Outstanding

Balance

$363,237

82,291

179,024

45,844

853,269

132,221

310,930

535,629

254,619

483,781

2,917,895

919,361

669,919

1,834,184

508,321

1,580,441

754,270

945,337

347,477

246,160

7,466

1,321,391

2,988,834

1,203,143

1,365,191

1,162,589

1,129,740

566,761

1,243,424

2,875,743

1,093,053

13,443,862

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May 1, 2016 Actuarial Valuation 13

Sheet Metal Workers Local Pension Plan

Date

Established Description

Amortization

Amount

Years

Remaining

Outstanding

Balance

gg. 5/1/2010

hh. 5/1/2010

ii. 5/1/2011

jj. 5/1/2011

kk. 5/1/2012

ll. 5/1/2012

mm. 5/1/2012

nn. 5/1/2013

oo. 5/1/2014

pp. 5/1/2015

qq. 5/1/2015

rr. 5/1/2016

ss. Total

2010 Assumption Change

2010 Funding Relief

2011 Assumption Change

2011 Funding Relief

2012 Actuarial Loss

2012 Assumption Change

2012 Funding Relief

2013 Funding Relief

2014 Funding Relief

2015 Actuarial Loss

2015 Assumption Change

2016 Actuarial Loss

3,893

28,216

38,035

48,914

717,515

11,048

26,968

134,048

59,537

346,115

5,554

400,056

8,803,908

9.00

22.00

10.00

22.00

11.00

11.00

22.00

22.00

22.00

14.00

14.00

15.00

26,263

310,857

275,641

538,871

5,532,103

85,177

297,095

1,476,780

655,910

3,081,726

49,452

3,698,217

58,393,499

2. Credits as of May 1, 2016

Date

Established

a. 5/1/2009

b. 8/1/2009

c. 5/1/2010

d. 5/1/2011

e. 5/1/2013

f. 5/1/2013

g. 5/1/2014

h. 5/1/2014

i. 5/1/2014

j. Total

Description

2009 Combined Bases

2009 Plan Amendment

2010 Actuarial Gain

2011 Actuarial Gain

2013 Actuarial Gain

2013 Plan Amendment

2014 Actuarial Gain

2014 Assumption Change

2014 Plan Amendment

Amortization

Amount

$3,424,466

718,328

691,917

318,604

183,632

21,541

156,785

562

11,632

5,527,467

Years

Remaining

2.00

8.25

9.00

10.00

12.00

12.00

13.00

13.00

13.00

Outstanding

Balance

$6,595,271

4,572,323

4,668,112

2,308,888

1,494,576

175,321

1,338,329

4,794

99,292

21,256,906

2. Net outstanding balance [(1ss) - (2j)] 37,136,593

3. Credit Balance as of May 1, 2016 (2,148,983)

4. Waived funding deficiency 0

5. Balance test result [(3) - (4) - (5)] 39,285,576

6. Unfunded Actuarial Accrued Liability as of May 1, 2016 39,285,576

SMW0482
Milliman

 

 Actuarial Valuation

May 1, 2016 Actuarial Valuation 14

Sheet Metal Workers Local Pension Plan

Exhibit 9

Current Liability

In accordance with IRS requirements, the Current Liability has been calculated at 3.22%. The Current Liability as 

of May 1, 2016 is determined below.

1. Current Liability

a. Active participants

b. Terminated vested participants

c. Retirees, beneficiaries, and

disabled participants

d. Total

Count

634

379

522

1,535

Vested Benefits

$55,351,886

28,914,493

69,325,487

153,591,866

All Benefits

$57,250,529

28,914,493

69,325,487

155,490,509

2. Expected increase in Current Liability for benefit accruals during year 259,615

3. Expected release from “RPA 94” Current Liability 5,747,611

4. Expected distributions during year 5,745,325

5. Market Value of Assets 39,751,795

6. Current Liability funded percentage

[(5) ÷ (1d)] 25.57%

SMW0483
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 Actuarial Valuation

May 1, 2016 Actuarial Valuation 15

Sheet Metal Workers Local Pension Plan

Exhibit 10

Full Funding Limitation

The full funding limitation (FFL) for the plan year ending April 30, 2017 and the tax year ending April 30, 2017 is 

determined below.

Minimum 

Required 

Contribution

Maximum 

Deductible 

Contribution

1. 100% Actuarial Accrued Liability (AAL) FFL

a. AAL as of 05/1/2016

b. Normal Cost to end of year

c. Value of assets as of 05/1/2016

i. Lesser of actuarial and market value

ii. Credit Balance

iii. Undeducted employer contributions

iv. Plan assets

[(i) - (ii) - (iii)]

d. Interest to 04/30/2017 at 8.00% on (a), (b), & (civ)

e. 100% AAL FFL

[(a) + (b) - (civ) + (d), but not <$0]

$84,852,149

259,615

39,751,795

0

n/a

39,751,795

3,628,797

48,988,766

$84,852,149

259,615

39,751,795

n/a

0

39,751,795

3,628,797

48,988,766

2. Estimated Current Liability as of 04/30/2017

a. Current Liability as of 05/1/2016

b. Normal Cost to end of plan year

c. Estimated benefit disbursements to 04/30/2017

d. Interest to 04/30/2017 at 3.22% on (a), (b), & (c)

e. Estimated EOY Current Liability

[(a) + (b) - (c) + (d)]

155,490,509

259,615

5,757,241

4,923,197

154,916,080

155,490,509

259,615

5,757,241

4,923,197

154,916,080

3. Estimated assets for Current Liability FFL

a. Actuarial Value of Assets as of 05/1/2016

b. Estimated employee contributions to 04/30/2017

c. Estimated return to 04/30/2017 at 8.00%

on (3a), (1ciii), (2c), & (3b)

d. Estimated assets as of 04/30/2017

[(3a) - (1ciii) - (2c) + (3b) + (3c)]

45,566,573

0

3,645,326

43,241,182

45,566,573

0

3,645,326

43,241,182

4. 90% Current Liability minimum funding limitation

a. 90% EOY RPA Current Liability [90% x (2e)]

b. 90% Current Liability FFL [(a) - (3f), but not < $0]

139,424,472

96,183,290

139,424,472

96,183,290

5. Full funding limitation [maximum of (1e) and (4b)] 96,183,290 96,183,290

SMW0484
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 Actuarial Valuation

May 1, 2016 Actuarial Valuation 16

Sheet Metal Workers Local Pension Plan

Exhibit 11

Maximum Deductible Contribution under IRC Section 404

The Maximum Deductible Contribution under IRC Section 404 for the tax year beginning May 1, 2016 is 

determined below.

1. Minimum Required Contribution for plan year beginning May 1, 2016 $6,139,842

2. Preliminary Maximum Deductible Contribution under 

IRC Section 404 for tax year

a. Normal Cost

b. 10-year amortization of unfunded Actuarial Accrued Liability

c. Interest to earlier of tax year end or plan year end

d. Total

259,615

5,421,027

454,451

6,135,093

3. Full funding limitation for tax year 96,183,290

4. Unfunded 140% of Current Liability as of April 30, 2017

a. Current Liability (for IRC Section 404 purposes) projected to end of year

b. Actuarial Value of Assets (for IRC Section 404 purposes) 

projected to end of year

c. Unfunded 140% of Current Liability

[140% × (a) - (b), but not < $0]

154,916,080

43,241,182

173,641,330

5. Maximum Deductible Contribution under IRC Section 404 for tax year

[maximum of (1) and (2d), but not > (3), nor < (4c)] 173,641,330

There are alternative calculations of the Maximum Deductible Contribution under IRC Section 404 that may

produce a different amount than illustrated above. Additionally, deductibility of contributions to a defined 

contribution plan maintained for the same employees may be affected by the 25% of pay limitation for defined 

benefit and defined contribution plans combined. Employers should consult their tax advisors regarding the 

deductibility of contributions.

SMW0485
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 Actuarial Valuation

May 1, 2016 Actuarial Valuation 17

Sheet Metal Workers Local Pension Plan

Exhibit 12

Present Value of Accumulated Plan Benefits

Accumulated Plan Benefits are benefits earned to date, based on pay history and service rendered to date, 

expected to be paid in the future to retired, terminated vested, and active participants, and beneficiaries of active 

or former participants. The Present Value of Accumulated Plan Benefits (determined on a plan continuation basis 

in accordance with FASB ASC Topic 960) as of May 1, 2015 and May 1, 2016 is shown below.

5/1/2015 5/1/2016

1. Present Value of vested Accumulated Plan Benefits

a. Participants currently receiving benefits

b. Other participants

c. Total

$45,995,729

36,618,776

82,614,505

$45,567,746

37,840,067

83,407,813

2. Present Value of non-vested 

Accumulated Plan Benefits 1,270,145 1,444,336

3. Present Value of all Accumulated Plan Benefits

[(1f) + (2)] 83,884,650 84,852,149

4. Market Value of Assets $41,508,264 $39,751,795

5. Funded percentage on Market Value of Assets

a. Vested benefits

[(4) ÷ (1f)]

b. All benefits

[(4) ÷ (3)]

50.24%

49.48%

47.66%

46.85%

6. Actuarial Value of Assets $47,518,829 $45,566,573

7. Funded percentage on Actuarial Value of Assets

a. Vested benefits

[(6) ÷ (1f)]

b. All benefits

[(6) ÷ (3)]

57.52%

56.65%

54.63%

53.70%

SMW0486
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 Actuarial Valuation

May 1, 2016 Actuarial Valuation 18

Sheet Metal Workers Local Pension Plan

Exhibit 13

Change in Present Value of Accumulated Plan Benefits

The change in the Present Value of Accumulated Plan Benefits (determined on a plan continuation basis in 

accordance with FASB ASC Topic 960) from May 1, 2015 to May 1, 2016 is shown below.

1. Present Value of all Accumulated Plan Benefits as of May 1, 2015 $83,884,650

2. Changes

a. Reduction in discount period

b. Benefits accumulated plus Actuarial (Gain) / Loss

c. Benefit payments

d. Plan amendments

e. Change in assumptions

f. Total

6,504,208

(271,320)

(5,265,389)

0

0

967,499

3. Present Value of all Accumulated Plan Benefits as of May 1, 2016

[(1) + (2f)] $84,852,149

SMW0487
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 Actuarial Valuation

May 1, 2016 Actuarial Valuation 19

Sheet Metal Workers Local Pension Plan

Exhibit 14

Unfunded Vested Benefit Liability for Withdrawal Liability Calculations

Withdrawal liability payments are based on unfunded vested benefit liability. Vested benefit liability is the present 

value of benefits earned to date, excluding benefits for non-vested participants and certain benefits such as death 

and disability benefits which are not considered vested. These liabilities have been determined as of April 30,

2015 and April 30, 2016. However, if there is a termination by mass withdrawal during the year, a separate 

calculation has to be performed.

4/30/2015 4/30/2016

1. Present Value of Vested Benefits

a. Participants currently receiving benefits

b. Other participants

c. Total vested benefits

$45,995,729

36,618,776

82,614,505

$45,567,746

37,840,067

83,407,813

2. Actuarial Value of Assets $47,518,829 $45,566,573

3. Funded ratio

[(2) ÷ (1f)] 57.52% 54.63%

4. Unfunded vested benefit liability

[(1f) - (2), but not < $0] $35,095,676 $37,841,240

5. Unamortized Portion of Value of Affected Benefits 

Disregarded under Code Section 432(e)(9)(A)* $2,514,163 $2,340,612

6. Total Effective unfunded vested benefit liability for 

Withdrawal Liability Calculations

[(4) + (5)] $37,609,839 $40,181,852

* Initial amount subject to amortization as of April 30, 2010 under “simplified method” pursuant to PBGC 

Technical Update 10-3 is $3,207,104.

SMW0488
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 Actuarial Valuation

May 1, 2016 Actuarial Valuation 20

Sheet Metal Workers Local Pension Plan

Exhibit 15

Summary of Participant Data

A summary of participant data for the plan years beginning May 1, 2015 and May 1, 2016 is shown below.

5/1/2015 5/1/2016

1. Active participants

a. Count

b. Average age

c. Average years of service

d. Prior year hours

e. Average prior year hours

648

42.8

13.2

1,050,190

1,621

634

43.2

13.1

1,070,884

1,689

2. Retired participants

a. Count

b. Average age

c. Total annual benefits

d. Average annual benefit

418

71.0

$4,812,480

11,513

415

71.2

$4,845,288

11,675

3. Terminated vested participants

a. Count

b. Average age

c. Total annual benefits

d. Average annual benefit

373

49.5

$2,498,314

6,698

379

49.9

$2,514,710

6,635

4. Beneficiaries

a. Count

b. Average age

c. Total annual benefits

d. Average annual benefit

101

72.2

$415,983

4,119

101

72.6

$439,193

4,348

5. Disabled participants

a. Count

b. Average age

c. Total annual benefits

d. Average annual benefit

5

54.6

$62,844

12,569

6

56.5

$61,824

10,304

SMW0489
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 Actuarial Valuation

May 1, 2016 Actuarial Valuation 21

Sheet Metal Workers Local Pension Plan

Exhibit 16

Change in Participant Counts

The change in participant counts from May 1, 2015 to May 1, 2016 is shown below.

Active

Terminated

Vested Retired Beneficiary Disabled Total

As of 5/1/2015 648 373 418 101 5 1,545

Retired (5) (12) 17 0 0 0

Received lump sum 

distribution 0 0 0 0 0 0

Terminated non-vested (32) 0 0 0 0 (32)

Terminated vested (24) 24 0 0 0 0

Disabled 0 0 0 0 0 0

Died with beneficiary 0 (2) (7) 9 0 0

Died without 

beneficiary 0 (1) (13) (11) 0 (25)

Rehired 3 (3) 0 0 0 0

New during plan year 44 0 0 0 0 44

Net data adjustments 0 0 0 2 1 3

As of 5/1/2016 634 379 415 101 6 1,535

The above participant counts include 16 alternate payees entitled to benefits under Qualified Domestic Relations 

Orders.

SMW0490
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 Actuarial Valuation

May 1, 2016 Actuarial Valuation 22

Sheet Metal Workers Local Pension Plan

Exhibit 17

Active Participants by Age and Service

The number of active participants summarized by attained age and years of credited service as of May 1, 2016 is 

shown below.

Years of Credited Service

Age 0 1–4 5–9 10–14 15–19 20–24 25–29 30–34 35–39 40+ Total

0–24 0 29 3 0 0 0 0 0 0 0 32

25–29 0 29 23 3 0 0 0 0 0 0 55

30–34 0 33 26 14 2 0 0 0 0 0 75

35–39 0 16 18 32 17 0 0 0 0 0 83

40–44 0 16 19 17 23 17 0 0 0 0 92

45–49 0 12 8 13 18 25 22 0 0 0 98

50–54 0 5 3 15 21 19 21 16 1 0 101

55–59 0 6 7 2 14 5 11 9 22 0 76

60–64 0 1 3 2 3 1 3 1 4 2 20

65–69 0 0 0 0 0 0 1 0 0 1 2

70+ 0 0 0 0 0 0 0 0 0 0 0

Total 0 147 110 98 98 67 58 26 27 3 634

SMW0491
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 Actuarial Valuation

May 1, 2016 Actuarial Valuation 23

Sheet Metal Workers Local Pension Plan

Appendices

SMW0492
Milliman

 

 Actuarial Valuation

 

Appendix A – Summary of Actuarial Methods

May 1, 2016 Actuarial Valuation 24

Sheet Metal Workers Local Pension Plan

Appendix A – Summary of Actuarial Methods

The ultimate cost of a pension plan is the excess of actual benefits and administrative expenses paid over actual 

net investment return on plan assets during the plan’s existence until the last payment has been made to the last 

participant. The plan’s “actuarial cost method” determines the expected incidence of actuarial costs by allocating 

portions of the ultimate cost to each plan year. The cost method is thus a budgeting tool to help ensure that the 

plan will be adequately and systematically funded and accounted for. There are several commonly-used cost 

methods which differ in how much of the ultimate cost is assigned to each prior and future year.

Actuarial Cost Method

The actuarial cost method used for determining the plan’s ERISA funding requirements is the unit credit cost 

method. Under this method, an accrued benefit is determined for each participant. The plan’s normal cost is the 

sum of the present value of the accruals that each active participant is expected to earn during the year. The 

plan’s accrued liability is the sum of the present value of the accrued benefit for each participant.

The actuarial cost method used for determining the plan sponsor’s FASB ASC Topic 960 accounting 

requirements and for current liability purposes (RPA ’94) is the unit credit method.

Asset Valuation Method

Five-year smoothing method. The actuarial value of assets is equal to the market value of assets adjusted to 

recognize differences between the expected value of assets and the actual market value of assets over 5 years at 

a rate of 20% per year. The expected value of assets for the year is the market value of assets at the valuation 

date for the prior year brought forward with interest at the valuation rate to the current year plus contributions 

minus administrative expenses and benefit payments, all adjusted with interest at the valuation rate to the 

valuation date for the current year. The actuarial value of assets cannot be less than 80% or more than 120% of 

the market value of assets.

SMW0493
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 Actuarial Valuation

 

Appendix B – Summary of Actuarial Assumptions

May 1, 2016 Actuarial Valuation 25

Sheet Metal Workers Local Pension Plan

Appendix B – Summary of Actuarial Assumptions

 Minimum funding: 8.00% per year net of investment-related expenses.

 FASB ASC Topic 960 plan accounting: Same as minimum funding.

 Withdrawal liability: Same as minimum funding.

 Current liability (RPA ’94): 3.22% per year.

Mortality

 Minimum funding: RP 2000 Combined Healthy Generational Mortality Table using scale AA with blue 

collar adjustment, set forward 1 year for males and females.

 FASB ASC Topic 960 plan accounting and withdrawal liability: Same as minimum funding.

 Current liability (RPA ’94): IRS RP-2000 annuitant and non-annuitant mortality tables (male and female 

rates) with projection for mortality improvement, updated annually, as mandated by the IRS.

Termination

Sample rates used are shown below. Rates are based on a select rates of 30% for the first two years of service 

then 15% for the next two years of service, and an ultimate rates based on age after four years of service. 

Ultimate rates are based on the T-5 Table.

Age 4 or More Years of Service: 

Ultimate Rates

20 7.88%

30 7.11

40 4.93

50 2.41

60 0.00

Retirement from Active Service

Rates as shown below:

Age Active Service 

Rates 

55 – 60 10%

61 20

62 – 64 50

65 and over 100

The weighted average retirement age using the retirement rates above is 60.5.

SMW0494
Milliman

 

 Actuarial Valuation

 

Appendix B – Summary of Actuarial Assumptions

May 1, 2016 Actuarial Valuation 26

Sheet Metal Workers Local Pension Plan

Commencement of Deferred Benefits

If a participant terminated before May 1, 1999, assumed to retire at 62. If a participant terminated on or after 

May 1, 1999, assumed to retire at 60.

Disability

None assumed.

Form of Payment

Single life annuity

Load for Pop-up

Liabilities for retired participants with a joint and survivor pop-up option are increased 1.40%.

Marital Status

100% of non-retired participants are assumed to be married. Males are assumed to be three years older than 

females.

Administrative Expenses

$270,000 payable mid-year.

Future Hours

Vested active participants are assumed to work 1,650 hours per year. Non-vested active participants are 

assumed to work 1,250 hours per year.

Terminated Vested

Termianted vested participants over age 70 at the valuation date are assumed to be deceased with no beneficiary 

payable.

Changes in Assumptions from prior Valuation

 For current liability purposes, the interest rate was changed from 3.37% to 3.22% in accordance with IRS 

guidance. (The statutory mortality tables also have been updated as required by law).

SMW0495
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 Actuarial Valuation

 

Appendix C – Summary of Principal Plan Provisions

May 1, 2016 Actuarial Valuation 27

Sheet Metal Workers Local Pension Plan

Appendix C – Summary of Principal Plan Provisions

This summary of plan provisions is intended to only describe the essential features of the plan. All eligibility 

requirements and benefit amounts shall be determined in strict accordance with the plan document itself.

Definitions

Effective Date: January 1, 1961. The plan was last restated as of May 1, 2010.

Plan Year: Twelve month period beginning May 1st and ending the following April 30th.

Union: The Sheet Metal Workers Union No. 33 of Northern Ohio and West Virginia

Employers Included:

 The Akron-Canton-Mansfield Sheet Metal and Roofing Contractors Association

 The Wheeling/Stuebenville Area Sheet Metal and Roofing Contractors Association.

 Any employer that is performing work in the sheet metal trade and has entered into a collective 

bargaining agreement with the Union.

 Any employer that makes contributions on former collectively bargained employees and has entered into 

a collective bargaining agreement with the Trustees.

Employees Included: Any person covered by collective bargaining agreements between the Employer and the 

Union who is engaged in employment with respect to which the Employer is obligated to make contributions to the 

Pension Fund.

All Employees shall become participants when they first perform an hour of work while employed by an Employer 

for which the Employer is obligated to make contributions to the Pension Fund.

Years of Service

Service prior to May 1, 1976:

 Past Service is earned for each Plan Year from May 1, 1946 to May 1, 1961 that the employee worked in 

the jurisdiction of the Union.

 Future Service is earned for each Plan Year after May 1, 1961 during which an Employer contributes to 

the Fund on the participant’s behalf.

Service from and after May 1, 1976: One year of service shall be granted for each Plan Year during which an 

Employee has at least 435 hours worked.

Accrued Benefit

The accrued benefit is the monthly benefit equal to the sum of the Past Service Benefit and Future Service 

Benefit defined as follows:

 Past Service Benefit is equal to the Years of Service during May 1, 1946 to May 1, 1961 multiplied by:

o $3.50 if the Participant is not eligible for pension benefits under the Sheet Metal Workers National 

Pension Plan

o $2.00 if the Participant is eligible for pension benefits under the Sheet Metal Workers National 

Pension Plan

SMW0496
Milliman

 

 Actuarial Valuation

 

Appendix C – Summary of Principal Plan Provisions

May 1, 2016 Actuarial Valuation 28

Sheet Metal Workers Local Pension Plan

 Future Service Benefit is equal to a percentage of the Employer contributions on the Participant’s behalf 

after May 1, 1961 according to the following schedule:

Retirement Date Percentage of Employer 

Contributions

Prior to May 1, 1982 2.20%

May 1, 1982 through April 30, 1983 2.40

May 1, 1983 through April 30, 1984 2.60

May 1, 1984 through April 30, 1987 2.80

May 1, 1987 through April 30, 1990 3.00

May 1, 1990 through April 30, 1994 3.50

May 1, 1994 through April 30, 2003 3.65

May 1, 2003 through April 30, 2006 2.20

May 1, 2006 and after 0.36

Notwithstanding the above, an active participant that retires on or after May 1, 2006, the Future Service Benefit 

shall be equal to 3.65% of Employer contributions made on the Participant’s behalf for hours worked prior to May 

1, 2003, plus 2.20% of Employer contributions made on the Participant’s behalf for hours worked between May 1, 

2003 and April 30, 2006, plus 0.36% of Employer contributions made on the Participant’s behalf for hours after 

May 1, 2006.

Effective August 1, 2013, accruals were suspended as part of the Rehabilitation Plan.

Effective May 1, 1998 each retired Participant, Beneficiary, spouse of a deceased retired Participant, or disabled 

Participant in pay status at May 1, 1998 received a 6% increase in monthly benefit.

Employer contributions were required to be raised 10% in 2009, 2010, and 2011, and 14% in 2012 as part of the 

Rehabilitation Plan.

Normal Retirement

Eligibility for Normal Retirement occurs at the earlier of:

(1) The attainment of age 62 with at least 5 years of Vesting Service, or

(2) The later of age 65 or the age of the participant as of the 5th anniversary of participant in the Plan.

Eligibility for Normal Retirement for Active participants who retire on or after January 1, 1999 occurs at the earlier 

of:

(1) The attainment of age 61 with at least 5 years of Vesting Service, or

(2) The later of age 65 or the age of the participant as of the 5th anniversary of participant in the Plan.

Participants who retire after Normal Retirement eligibility will receive the greater of the accrued benefit earned at 

the time of retirement or the actuarial equivalent of the accrued benefit earned at Normal Retirement age.

SMW0497
Milliman

 

 Actuarial Valuation

 

Appendix C – Summary of Principal Plan Provisions

May 1, 2016 Actuarial Valuation 29

Sheet Metal Workers Local Pension Plan

Normal Form of Annuity and Options

The normal form is a 5-year certain and life annuity.

Effective August 1, 2009, the normal form was changed to a single life annuity without a certain period as part of 

the Rehabilitation Plan.

The other available optional forms of payment are: 50% joint and survivor annuity with and without pop-up 

feature, 75% joint and survivor annuity with and without pop-up feature, and a 10-year certain and life annuity. A 

mandatory lump sum will be paid for lump sum values not in excess of $5,000.

Effective August 1, 2009, the pop-up subsidy was eliminated as part of the Rehabilitation Plan.

Early Retirement

Eligibility occurs upon termination after five or more years of service and attainment of age 55.

A participant’s Early Retirement benefit is based on a single-life annuity computed in the same manner as for 

Normal Retirement reduced by 3% for each year the commencement date precedes Normal Retirement.

Effective August 1, 2009, the early retirement subsidy was eliminated as part of the Rehabilitation Plan.

Total and Permanent Disability Benefit

Eligibility occurs upon total and permanent disability at any age prior to 55, after ten or more years of benefit 

eligibility service, has at least one year of service in the prior three Plan Years, and is eligible for a Social Security 

disability benefit.

A participant’s Disability Retirement benefit is equal to 80% of the Accrued Benefit. The benefit is payable 

beginning on the first day of the month following receipt of disability application by the Trustees and ending on the 

earlier of death, recovery, or age 55.

Effective September 1, 2013, the disability benefit was eliminated as part of the Rehabiliation Plan.

Vested Benefit

Eligibility occurs upon termination after five or more Years of Service and the participant has ceased to be 

employed by an Employer within the same geographic area covered by the Fund as when such benefits 

commence.

A participant’s Vested Benefit is equal to either the Normal Retirement or Early Retirement benefit depending on 

the age of the participant on the date of retirement and payable in any of the optional forms.

Death Benefit

Eligibility occurs upon being eligible for a Vested Benefit and death prior to the first month of receiving a pension 

benefit.

Death Prior to Age 55

Married Participant – The monthly benefit will be equal to the benefit if the participant had terminated 

employment on the earlier of the date of death or actual date of termination, retired upon reaching age 55 

SMW0498
Milliman

 

 Actuarial Valuation

 

Appendix C – Summary of Principal Plan Provisions

May 1, 2016 Actuarial Valuation 30

Sheet Metal Workers Local Pension Plan

with a 50% joint and survivor benefit, then died on the last day of the month in which age 55 was reached. 

The benefit will be payable for the spouse’s lifetime. The spouse may also elect to receive the benefit for 

unmarried participants under age 55.

Unmarried Participant – If the participant was not receiving the Disability Benefit at the time of death, the 

beneficiary will receive an amount equal to the Normal Retirement Benefit for 60 months payable the first 

of the month following death.

Death At or After Age 55

Married Participant – The monthly benefit will be equal to the benefit if the participant had retired on the 

day prior to death with a 50% joint and survivor benefit. The benefit will be payable for the spouse’s 

lifetime. The spouse may also elect to receive the benefit for unmarried participants under age 55.

Unmarried Participant – The beneficiary will receive an amount equal to the Normal Retirement Benefit for 

60 months payable the first of the month following death.

Effective August 1, 2009, the 60 month pre-retirement benefit was eliminated as part of the Rehabilitation Plan.

Changes in Plan Provisions During Year

There were no plan changes that affected the liability during the year.

Significant Events

To the best of our knowledge, no significant events occurred during the year.

SMW0499