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milliman.com 

July 28, 2017 

Internal Revenue Service 

Employee Plans Compliance Unit 

Group 7602 (TEGE:EP:EPCU) 

230 S. Dearborn Street 

Room 1700, 17th Floor 

Chicago, Illinois 60604 

Re: Pension Protection Act (PPA) Actuarial Certification for Plan Year Beginning 

May 1, 2017 – Sheet Metal Workers Local Pension Plan 

In accordance with IRC Section 432(b)(3)(A), we have prepared and attached an actuarial 

certification for the plan year beginning May 1, 2017 for Sheet Metal Workers Local Pension 

Plan. 

In our opinion, the assumptions used for the actuarial certification are individually reasonable 

based on the experience of the plan and on reasonable expectations of anticipated experience 

under the plan. The projections in this report are dependent on the assumptions used. 

Differences between our projections and actual amounts depend on the extent to which future 

experience conforms to the assumptions made for this analysis. It is certain that actual 

experience will not conform exactly to the assumptions used in these projections. Actual results 

will differ from projected amounts to the extent that actual experience is better or worse than 

expected. 

On the basis of the foregoing and as a member of the American Academy of Actuaries (AAA) 

who meets the Qualification Standards of the AAA to render the actuarial opinion contained 

herein, I hereby certify that, to the best of my knowledge and belief, this letter is complete and 

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

principles and practices. 

Kevin M. Campe, EA, MAAA 

Principal and Consulting Actuary 

cc: Board of Trustees 

Mr. Michael Novara 

Mr. Paul Newcomer 

Ms. Mary Weir 

Mr. Rick Bogucki 

M:\SMA\66\PPA Certification 2017.docx 

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MILLIMAN

Sheet Metal Workers Local Pension Plan 

PPA Actuarial Certification for Plan Year Beginning May 1, 2017 

Funding Status Projection Results 

Plan Year 

Beginning

Funded

Percentage Contributions

Credit Balance

at End of Year

5/1/2016 53.3% 3,915,000 (2,155,000)

5/1/2017

5/1/2018 

5/1/2019 

5/1/2020 

5/1/2021 

5/1/2022 

5/1/2023 

5/1/2024 

5/1/2025 

5/1/2026

43.0

40.8 

40.0 

38.3 

37.1 

35.5 

33.7 

31.6 

29.1 

26.3

3,850,000

3,850,000 

3,115,000 

3,115,000 

3,115,000 

3,325,000 

3,325,000 

3,325,000 

3,325,000 

3,325,000

(3,393,000)

(7,670,000) 

(12,578,000) 

(17,284,000) 

(21,990,000) 

(26,610,000) 

(30,784,000) 

(35,475,000) 

(41,297,000) 

(47,382,000)

An accumulated funding deficiency is projected to occur for the plan year ending April 30, 2017. 

The funded percentage as of May 1, 2017 is projected to be 43.0%. 

The Plan fails Critical Tests 2 and 3 (refer to the Appendix), as described under IRC Section 

432(b)(2). 

The Plan is projected to become insolvent in the plan year beginning May 1, 2031. 

PPA Certification 

Based on the actuarial assumptions and methods, financial and participant data, and Plan 

provisions, as used for the actuarial valuation for the Plan year ended April 30, 2017, I hereby 

certify that the Sheet Metal Workers Local Pension Plan is “critical and declining” for the plan 

year beginning May 1, 2017 as defined in the Pension Protection Act of 2006 as amended by the 

Multiemployer Pension Reform Act of 2014 (“MPRA”). 

Further, I hereby certify that to the best of my knowledge and belief, the actuarial assumptions 

employed in preparing this certification are individually reasonable and represent my best 

estimate of future experience. Additionally, the “projected industry activity” assumption, as 

required under IRC Section 432(b)(3)(B)(iii), has been provided by the Board of Trustees. 

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MILLIMAN

Sheet Metal Workers Local Pension Plan 

PPA Actuarial Certification for Plan Year Beginning May 1, 2017 

Scheduled Progress 

The Pension Protection Act (PPA) requires the actuary to certify whether the plan is making 

scheduled progress in meeting the requirements of its Rehabilitation Plan. The Rehabilitation 

Plan for the Sheet Metal Workers Local Pension Plan reduced certain benefits and increased the 

Plan’s contribution rates. The Trustees determined using reasonable actuarial assumptions and 

methods that they were unable to adopt a Rehabilitation Plan that would enable the Plan to 

emerge from critical status by the end of the 13-year Rehabilitation Period on April 30, 2024 

which began on May 1, 2011 (as extended three additional years under the Worker, Retiree, and 

Employer Recovery Act of 2008). 

As a result, the Trustees adopted a Rehabilitation Plan that, in their judgment, consisted of all 

reasonable measures to either emerge from critical status by a later date than the 13-year period 

mentioned above or forestall insolvency. As required under the PPA, the Trustees have been and 

will continue to review the Rehabilitation Plan annually. Based on implementation of the 

Rehabilitation Plan, assumed future contracts adopted by the bargaining parties and reflecting the 

Plan’s experience through April 30, 2017, I hereby certify that the Plan is making scheduled 

progress as of May 1, 2017 as required under IRC Section 432(b)(3)(A)(ii). 

_ July 28, 2017 

Kevin M. Campe Date 

Enrolled Actuary #17-5356 

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MILLIMAN

Sheet Metal Workers Local Pension Plan 

PPA Actuarial Certification for Plan Year Beginning May 1, 2017 

Summary of Assumptions/Methods 

1. Our forecast of future minimum funding requirements is based on: 

 May 1, 2016 participant data and preliminary May 1, 2016 actuarial valuation results. 

 April 30, 2017 unaudited asset return provided by the Fund’s administrator. The results 

reflect an estimated rate of return on market assets of 8.67% (net of investment-related 

administrative expenses) for the plan year ended September 30, 2017 and an assumed 

rate of return on market assets of 6.50% (net of investment-related administrative 

expenses) for every year after the plan year ended April 30, 2017. No future asset gains 

or losses other than the gains or losses related to the asset smoothing method are 

reflected. 

 Input from the Fund’s Board of Trustees that hours worked will be: 

 1,100,000 hours for years ending April 30, 2018 and April 30, 2019, 

 890,000 hours for the years ending April 30, 2020 through April 30, 2022, and 

 950,000 hours for each year thereafter. 

 The assumption of a stable active population for each plan year after April 30, 2016. 

 Plan provisions identical to those used in the preliminary May 1, 2016 actuarial 

valuation. 

 All other actuarial assumptions and methods being the same as those used to determine 

preliminary May 1, 2016 actuarial valuation results except for the following: 

 Mortality was updated to RP2014 Blue Collar Employee and Annuitant Mortality 

Tables adjusted to reflect Mortality Improvement Scale MP-2016 from the 2006 base 

year and projected forward using MP-2016 on a generational basis effective 

May 1, 2017. 

 The investment return assumption was lowered to 6.50% per annum effective 

May 1, 2017. 

 Administrative expenses are assumed to increase by 2.5% for each plan year after 

April 30, 2017. 

2. This actuarial certification is based on 1) the proposed Multiemployer Plan Funding 

Guidance provided by the IRS on March 18, 2008, 2) the December 2007 Practice Note 

issued by the Multiemployer Plans Subcommittee of the Pension Committee of the American 

Academy of Actuaries, and 3) action taken by the Board of Trustees on or before July 20, 

2017. 

SMW0075
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MILLIMAN

Sheet Metal Workers Local Pension Plan 

PPA Actuarial Certification for Plan Year Beginning May 1, 2017 

Plan Identification 

Name: Sheet Metal Workers Local Pension Plan 

EIN: 34-6666753 

Plan Number: 001 

Address: 1890 Venture Circle SE 

Massillon, OH 44646 

Telephone Number: (330) 833-2888 

Enrolled Actuary Identification 

Name: Mr. Kevin M. Campe 

Enrollment Number: 17-5356 

Address: Milliman, Inc. 

71 S. Wacker Drive 

 31st Floor 

 Chicago, IL 60606 

Telephone Number: (312) 726-0677 

SMW0076
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MILLIMAN

Appendix 

Sheet Metal Workers Local Pension Plan 

PPA Actuarial Certification for Plan Year Beginning May 1, 2017 

Summary of Zone Status Definitions Under PPA as Amended by MPRA 

Critical (“Red Zone”) Status - IRC Section 432(b)(2) and 432(b)(4) 

Any one of four tests under IRC Section 432(b)(2): 

Test 1 Less than 65% funded and market value of assets plus contributions for current year plus 

next following 6 plan years is less than present value of projected benefit payments and 

administrative costs over that 7-year period or 

Test 2 Projected funding deficiency in current year or next following 3 plan years (4 plan years 

if 65% funded or less)1 or 

Test 3 Present value of vested benefits (actives) is less than present value of benefits (inactives), 

and present value of projected contributions is less than the unit credit normal cost plus 

interest on the unfunded present value of accrued benefits and projected funding 

deficiency in current or next 4 plan years1 or 

Test 4 Market assets plus projected contributions over current year plus next 4 plan years is less 

than the present value of benefit payments plus administrative costs over same 5 year 

period. 

Within 30 days after the date of this certification, a plan that is not in critical status but is projected 

to be in critical status in any of the succeeding 5 plan years may elect under IRC Section 432(b)(4) to 

be in critical status effective for the current plan year. 

Critical and Declining (“Deep Red Zone”) Status – IRC Section 432(b)(6) 

In critical status and either: 

 Projected insolvency in current year or any of the 14 following plan years or 

 Projected insolvency in current year or any of the 19 following plan years if: 

o Ratio of ratio of inactive participants to active participants exceeds 2 to 1 or 

o Less than 80% funded 

Endangered (“Yellow Zone”) Status – IRC Section 432(b)(1) 

Not in critical status and either: 

 Less than 80% funded or 

 Projected funding deficiency in current plan year or next following 6 plan years2

Seriously Endangered (“Orange Zone”) Status - IRC Section 432(b)(1) 

Not in critical status and both: 

 Less than 80% funded and 

 Projected funding deficiency in current plan year or next following 6 plan years2

 

1

 Not taking into account an extension of amortization periods under IRC Section 431(d), if any 

2

 Taking into account an extension of amortization periods under IRC Section 431(d), if any 

SMW0077