Southwest Ohio Regional Council of Carpenters Pension Plan 

Checklist Item #13 

Does the application include a demonstration that the proposed suspension is equitably distributed, 

including: 

• information on the effect of the suspension on the plan in the aggregate; 

• information on the effect of the suspension for different categories or groups; 

• a list of the factors taken into account; 

• an explanation of why none of the factors listed in § 432(e)(9)(D)(vi) were taken into account (if 

applicable); 

• for each factor taken into account that is not one of the factors listed in § 432(e)(9)(D)(vi), an 

explanation why the factor is relevant; and 

• how any difference in treatment among categories or groups of individuals results from a 

reasonable application of the relevant factors. 

See Section 4.04. 

The demonstration that the proposed suspension is equitably distributed is set forth in the attached 

Document 13.1, which includes a statement of the number of participants, beneficiaries, alternate payees; 

the average monthly benefit before the suspension; the average monthly benefit after the suspension 

(determined taking into account the individual limitations); and the aggregate present value reduction in 

benefits for all individuals. 

In addition, included as an attachment to Document 13.1 are tables that illustrate the percentage reduction 

for monthly benefits as distributed between all participants, actives and retirees. 

Document 13.2 sets forth an explanation of the factors taken into account in the design and adoption of 

the proposed suspension of benefits in the "Pension Recovery Plan" adopted by the Board of Trustees of 

the Southwest Ohio Regional Council of Carpenters. 

Document 13.3 is a copy of the PowerPoint presentation titled "Understanding the Pension Recovery 

Plan" used to describe the proposed suspension of benefits to the participants and beneficiaries of the 

Southwest Ohio Regional Council of Carpenters Pension Plan. 

Document #13 

SWORCCPP-000073
Document #13 

Southwest Ohio Regional Council of Carpenters Pension Plan 

Document 13.1 

The benefit suspension tables that illustrate the percentage reduction for monthly benefits as distributed 

between all participants, actives and retirees are attached hereto as Document 13.1. 

The statement of the number of participants, beneficiaries, alternate payees; the average monthly benefit 

before the suspension; the average monthly benefit after the suspension (determined taking into account 

the individual limitations); and the aggregate present value reduction in benefits for all individuals is as 

follows: 

Status Total Participants* Average Monthly 

Benefit before 

Suspension 

Average Monthly 

Benefit after 

Suspension 

Participants 4,917 $922.23 $732.05 

Beneficiaries 580 $563.97 $532.68 

Alternate Payees 81 $521.26 $495.90 

Total 5,578 $879.16 $707.89 

As of January 1, 2018, the aggregate present value of the reduction in benefits for all individuals is 

$103,717,192. The present value is based on the assumptions, methods and plan provisions outlined in 

Document 7.1. 

*Based on data summarized in the January 1, 2016 Actuarial Valuation Report. 

SWORCCPP-000074
Southwest Ohio Regional Council of Carpenters Pension Plan 

Actives - Pension Recovery Plan 

Benefit Suspension Percentage 

Age at 

Suspend < 5% 6-10% 11-15% 16-20% 21-25% 26-30% 31-35% 36-40% 41-45% 46-50% 51-55% 56-60% 61-65% 66%+ Total 

<19 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 

20-24 0 18 3 9 0 0 0 0 0 0 0 0 0 0 30 

25-29 0 69 15 28 0 0 0 0 0 0 0 0 0 0 112 

30-34 0 70 29 63 0 0 0 0 0 0 0 0 0 0 162 

35-39 0 103 34 116 0 0 0 0 0 0 0 0 0 0 253 

40-44 0 69 21 148 0 0 0 0 0 0 0 0 0 0 238 

45-49 0 65 21 206 0 0 0 0 0 0 0 0 0 0 292 

50-54 1 39 14 214 0 0 0 0 0 0 0 0 0 0 268 

55-59 0 28 20 203 0 0 0 0 0 0 0 0 0 0 251 

60-64 0 5 6 98 0 0 0 0 0 0 0 0 0 0 109 

65-69 0 4 1 14 0 0 0 0 0 0 0 0 0 0 19 

70-74 0 0 0 1 0 0 0 0 0 0 0 0 0 0 1 

75-79 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 

80+ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 

Total 1 470 164 1,100 0 0 0 0 0 0 0 0 0 0 1,735 

* Seven participants excluded because of missing dates of birth. 

2 

SWORCCPP-000075
Southwest Ohio Regional Council of Carpenters Pension Plan 

All Participants - Pension Recovery Plan 

Benefit Suspension Percentage 

Age at 

,Suspend < 5% 6-10% 11-15% 16-20% 21-25% 26-30% 31-35% 36-40% 41-45% 46-50% 51-55% 56-60% 61-65% 66%+ Total 

<19 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 

20-24 0 18 3 9 0 0 0 0 0 0 0 0 0 0 30 

25-29 2 70 15 28 0 0 0 0 0 0 0 0 0 0 115 

30-34 3 89 32 67 0 0 0 0 0 0 0 0 0 0 191 

35-39 7 121 40 159 0 0 0 0 0 0 0 0 0 0 327 

40-44 6 78 25 251 0 0 0 0 0 0 0 0 0 0 360 

45-49 6 75 23 368 0 0 0 0 0 0 0 0 0 0 472 

50-54 31 44 17 427 1 0 0 0 0 0 0 0 0 0 520 

55-59 42 61 27 478 1 1 1 1 1 2 1 5 2 1 624 

60-64 80 94 23 323 10 4 13 21 18 30 31 24 12 2 685 

65-69 136 107 12 136 23 8 27 25 28 28 21 13 6 6 576 

70-74 147 65 12 94 16 11 11 20 21 23 13 4 5 0 442 

75-79 275 49 34 22 12 9 6 8 6 2 0 0 0 0 423 

80+ 805 0 0 0 0 0 0 0 0 0 0 0 0 0 805 

Total 1,540 871 263 2,362 63 33 58 75 74 85 66 46 25 9 5,570 

* Eight participants excluded because of missing dates of birth. 

1 

SWORCCPP-000076
Southwest Ohio Regional Council of Carpenters Pension Plan 

Retirees - Pension Recovery Plan 

Benefit Suspension Percentage 

Age at 

Suspend < 5% 6-10% 11-15% 16-20% 21-25% 26-30% 31-35% 36-40% 41-45% 46-50% 51-55% 56-60% 61-65% 66%+ Total 

<19 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 

20-24 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 

25-29 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 

30-34 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 

35-39 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 

40-44 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 

45-49 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 

50-54 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 

55-59 3 17 4 6 0 1 1 0 1 2 1 5 2 1 44 

60-64 14 58 9 42 10 4 11 20 16 30 31 23 12 2 282 

65-69 34 79 10 86 21 5 26 25 26 28 19 13 6 6 384 

70-74 53 54 12 83 14 10 9 20 21 22 13 4 5 0 320 

75-79 149 39 29 19 10 9 6 8 6 2 0 0 0 0 277 

80+ 459 0 0 0 0 0 0 0 0 0 0 0 0 0 459 

Total 712 247 64 236 55 29 53 73 70 84 64 45 25 9 1,766 

3 

SWORCCPP-000077
Southwest Ohio Regional Council of Carpenters Pension Plan 

Document 13.2 

The Board of Trustees of the Southwest Ohio Regional Council of Carpenters Pension Plan 

propose a suspension of benefits formula that applies a uniform series of steps to recalculate the 

participant or beneficiary's accrued benefit, effective as of December 31, 2017, whether the participant or 

beneficiary is presently in pay status or has not yet commenced payment of benefits. After consideration 

of the factors set forth below and several possible alternative designs, the Board of Trustees determined 

that the proposed suspension of benefits set forth in this application was equitable to the Plan's 

participants and beneficiaries and the preferred implementation for a suspension of benefits for this Plan. 

The first step of the recalculation is the application of the early retirement factors, a full actuarial 

reduction, that would have been applicable to the participant's age at retirement had the participant retired 

subject to the same Plan provisions that apply to monthly benefits with an annuity starting date on or after 

January 1, 2013 (the date of the final removal of any and all subsidies for early retirement). Similarly, 

beneficiaries presently receiving monthly benefits would have their benefits recalculated to apply the 

early retirement factors that would have been applicable on or after January 1, 2013 to the accrued benefit 

of the participant on whom the beneficiary's benefit is based. 

This purpose of the first step is to "level the playing field" and eliminate any subsidy that any 

participant or beneficiary may receive from the Plan for monthly benefits going forward. Thus, for any 

participant who retired at age 62 (Normal Retirement Age) or after January 1, 2013, the first step would 

not result in any reduction of their monthly benefit because either no early retirement reduction was 

applicable due to retirement on or after age 62 or the participant or beneficiary would be or already has 

been subject to the early retirement reduction. 

The second step of the recalculation is a uniform seventeen percent (17%) reduction of the 

monthly benefit of every participant and beneficiary. 

Each of the above steps is limited by the application of the guarantee-based limitation, described 

in 26 C.F.R. §1.432(e)(9)-1(d)(2), the age-based limitation, described in 26 C.F.R. §1.432(e)(9)-1(d)(3), 

and the disability-based limitation, described in 26 C.F.R. §1.432(e)(9)-1(d)(4). 

Basically, the proposed suspension of benefits eliminates all subsidies for all participants, 

beneficiaries for any monthly payments on or after January 1, 2018, and then applies a uniform seventeen 

percent (17%) reduction. As a result of this design for the suspension of benefits, over ninety percent 

(90%) of participants and beneficiaries have a benefit suspension that is twenty percent (20%) or less. 

Through the analysis, consideration and adoption of the proposed suspension of benefits that the 

Board of Trustees refers to as the "Pension Recovery Plan" for the Southwest Ohio Regional Council of 

Carpenters Pension Plan, the Board of Trustees considered the following factors: 

Age and Life Expectancy 

The Board of Trustees considered the age and life expectancy of the participants and 

beneficiaries, noting the protection that the age-based limitation and the disability-based limitation 

provided by the Multiemployer Pension Reform Act of 2014, and the regulations promulgated thereunder. 

The Board of Trustees did not choose to advantage or disadvantage any participant or beneficiary based 

on their life expectancy other than the removal of the subsidies for those individuals who retired prior to 

age 62 or their beneficiaries and commenced benefits prior to January 1, 2013. 

Document #13 

SWORCCPP-000078
Amount of Benefit 

The Board of Trustees reviewed and considered the impact of the amount of benefit each 

participant had accrued. However, the Board of Trustees determined a uniform percentage reduction of 

participants' accrued monthly benefit, after the elimination of the pre-2013 subsidies for those participants 

who retired prior to attaining age 62 (subject to the various statutory limitations), resulted in a more 

equitable suspension of benefits than any reduction of historical accrual rate or flat dollar reduction 

targeted at any particular group of participants or beneficiaries. 

Type of Benefit: Survivor, Normal Retirement, Early Retirement 

The Board of Trustees reviewed the possible impact of distinguishing between the various types 

of benefits. As set forth above, the Board of Trustees resolved to remove any subsidy for retirement prior 

to age 62 (Normal Retirement Age), which resulted in the imposition of early reduction factors to the 

monthly benefit of those participants, or their beneficiaries, who retired prior to January 1, 2013 and had 

not attained age 62 at retirement. However, all participants, and their beneficiaries, who retired on or after 

January 1, 2013 were already subject to those same early reduction factors. Except for the elimination of 

early retirement subsidies, the Board of Trustees did not distinguish between the type of benefit that a 

participant or beneficiary received. 

Extent to which participant or beneficiary is receiving a subsidized benefit 

The Board of Trustees determined that the Plan would remove all subsidies from early retirement 

before the imposition of additional reductions to participants' accrued benefits. The accrued benefit is the 

core promise of the Plan, and thus, the Board of Trustees determined that it would be inequitable to 

continue to provide costly subsidies to retirees that would result in more significant reductions to other 

participants' and beneficiaries' accrued benefits. 

The Board of Trustees considered the fact that the last of all of the subsidized adjustable benefits 

were removed as of January 1, 2013 and, thus, not available to any participant who retired on or after that 

date. Due to the anti-cutback rule of Internal Revenue Code §411(d)(6), significant liabilities from 

subsidized benefits existed in the form of unreduced early retirement benefits, referred to as the "Rule of 

80" (and later "Rule of 85"), that allowed participants to retire with an unreduced monthly benefit after 

meeting certain requirements (i.e. that age plus either Years of Vesting Service or continuous membership 

in the United Brotherhood of Carpenters and Joiners of America ("Union") equals or exceeds 80, or later 

85). 

In the absence of the approval and implementation of the proposed suspension of benefits, an 

additional $190 million would be paid over current retirees' expected lifetimes due to early retirement 

benefits in excess of what current active participants would receive if they retired today. Further, a 

participant with an accrued benefit of $2,000 per month who retired on or after January 1, 2013 at age 55 

would be subject to a 49.8% reduction of their monthly benefit amount. In comparison, under the 

previous available "Rule of 80", a participant who joined the Union at age 20 and worked until age 50 

with an accrued benefit of $2,000 could have retired and received an unreduced monthly benefit for five 

(5) full years until age 55 and still receive a monthly benefit almost double that of the participant with an 

identical monthly benefit solely due to the existing subsidy. 

Finally, as set forth in the final regulations, 26 C.F.R. §1.432(e)(9)-1(d)(6)(iv), the application of 

the uniform set of early retirement reduction factors through the elimination of the Plan's early retirement 

subsidy does not result in different pre-suspension or post-suspension benefit formulas; therefore, the 

Document #13 

SWORCCPP-000079
post-suspension benefit formula is a straightforward equitable reduction of each participants' and 

beneficiary's monthly benefit amount by seventeen percent (17%). 

History of benefit increases and reductions 

The Board of Trustees considered the history of benefit reductions. Prior to January 1, 2002, the 

benefit accrual rate for a Year of Credited Service was $99 per month. The benefit accrual rate for a Year 

of Credited Service was reduced to $80 for all Years of Credited Service on or after January 1, 2002. The 

Board of Trustees further reduced the benefit accrual rate to $50 per Year of Credited of Service for all 

Years of Credited Service on or after June 1, 2003. 

With consideration of the history of the reduction of the value of a Year of Credited Service, the 

Board of Trustees also considered the history of the increased amount of the hourly contribution rate. In 

1999, the contribution rate was $2.40 per hour. The rate was incrementally raised over the years to the 

current rate of $6.95 per hour. 

As a result of the reduction in the benefit accrual rate, the monthly benefit that a participant 

receives at retirement has been shrinking since 2003 and will continue to do so through 2030 (followed 

shortly thereafter by insolvency unless the proposed suspension of benefit is approved). The monthly 

benefit of a participant who worked 1,500 hours a year for 30 straight years and retired at age 62 in 2016 

would be twenty percent (20%) less than a participant who worked the same amount and retired in 2000. 

Similarly, the monthly benefit a participant who worked 1,500 hours a year for 30 straight years and 

retired at age 62 in 2030 will be forty percent (40%) less than a participant who worked the same amount 

and retired in 2000. These differences do not account for the time value of money (that a dollar in 2030 

will be worth less than in 2000). 

In addition, the increase in amount of contributions made on behalf of the participant has risen 

over the same time period. A participant who retired in 2016 would have had more than twice the 

contributions made on their behalf than a participant who worked the same amount and retired in 2000. 

Similarly, a participant who retired in 2030 would have had 3.5 times more contributed on their behalf 

than the participant who worked the same amount and retired in 2000. 

Ultimately, the Board of Trustees decided that each participant and beneficiary would have the 

same percentage, seventeen percent (17%), reduction to their monthly accrued benefit following the 

application of the standardized early retirement reduction factors, subject to the various guarantee-based, 

age-based, and disability-based limitations required by law. 

Any discrepancies between active and retiree benefits 

This factor was considered and discussed in conjunction, and with the same conclusion, as with 

the history of benefit reductions set forth in the previous paragraph. 

Extent to which active participants are reasonably likely to withdraw support for the plan, 

accelerating employer withdrawals from the plan and increasing the risk of additional benefit 

reductions for participants in and out of pay status. 

As demonstrated in the history of benefit increases and reductions above, and the summary of the 

actions taken by the Board of Trustees to avoid insolvency detailed in the response to Checklist Item #18, 

the active participants who had not retired prior to January 1, 2013, have already lost the opportunity to 

retire prior to age 62 without significant reduction in their monthly benefit, earned a smaller benefit over 

their career despite having a significant amount more contributed to the Plan on their behalf. Active 

Document #13 

SWORCCPP-000080
participants are aware that not all participants and beneficiaries have "shared the pain" imposed by the 

Rehabilitation Plan to date. The Board of Trustees was concerned that any perceived additional unfair 

allocation of benefit reductions to active participants would risk their rejection of the Pension Recovery 

Plan. 

Although some individuals who retired under the Rule of 80 or Rule of 85 advocated to the Board 

of Trustees for an uniform flat percentage reduction applied to all participants' benefits, without the 

standardization of early reduction retirement factors, the Board of Trustees did not feel that an increased 

reduction for thousands of active participants and beneficiaries to preserve the significant subsidy 

received by some retirees that was never available to the others was an equitable allocation of the 

necessary suspension of benefits. Further, the Board of Trustees had concern that the significant majority 

of the participants and beneficiaries would reach the same conclusion and not support the proposed 

Pension Recovery Plan. 

Ultimately, the Board of Trustees decided that after the application of standardized early 

retirement reduction factors, each participant and beneficiary will receive a uniform seventeen percent 

(17%) reduction to their monthly benefit, subject to the various statutory age-based, guarantee-based, and 

disability-based limitations. 

Ease of communication 

In addition to the statutory factors listed in Internal Revenue Code §432(e)(9)(D) set forth and 

described above, the Board of Trustees also considered the practical difficulties of communicating any 

adopted design for the suspension of benefits to the participants and beneficiaries of the Plan. 

The Board of Trustees considered various designs of suspensions of benefits, including various 

maximum percentage or dollar reductions, the standardization of prior accrual rate, and concluded that the 

proposed design provided the most equitable allocation of benefit reductions and remained 

FACTORS THAT WERE NOT TAKEN INTO ACCOUNT 

Through the analysis, consideration and adoption of the proposed suspension of benefits that the 

Board of Trustees refers to as the "Pension Recovery Plan" for the Southwest Ohio Regional Council of 

Carpenters Pension Plan, the Board of Trustees did not consider the following factors: 

Length of Time in Pay Status 

As set forth above, the Board of Trustees' proposed elimination of the early retirement subsidies 

that caused all participants and beneficiaries to be subject to the same early retirement reduction factors. 

After applying that reduction, the Board of Trustees did not make any further distinction regarding length 

of time in pay status. 

Extent to which participant or beneficiary has received post-retirement benefit increases 

The Board of Trustees did not consider or take into account the extent to which participant or 

beneficiaries received any post-retirement benefit increases. The last post-retirement increase was 1997 (a 

lump sum post-retirement payment of $700 was made to retirees in 1999 and again for $725 in 2000) and 

combined with the age-based limitation, attempting to make any distinguishing adjustment would not 

have been worth the additional administrative burden. 

Document #13 

SWORCCPP-000081
The Board of Trustees and the Plan's professionals were concerned that the claw back of preretirement and post-retirement increases, all of which were at least 18 years old, would cause unnecessary 

administrative difficulty trying to confirm applicable historical increases subject to reduction for 

individuals' recalculated benefits. 

Years to retirement for active employees 

The Board of Trustees did not make any distinction between the age or year of retirement of any active 

participants. All active participants are subject to the same terms and conditions for retirement, including 

early retirement reduction factors, as well as benefit accrual rate and employer hourly contribution rate. 

Extent to which benefits are attributed to service with an employer that failed to pay its full 

withdrawal liability. 

As a Plan that primarily covers individuals in the building and construction industry plan, an employer 

that ceases its obligation to contribute to the Plan and does not perform work in the jurisdiction of the 

collective bargaining agreement of the type for which contributions were due within 5 years of the 

cessation of the employer's obligation to contribute to the Plan would not owe withdrawal liability 

pursuant to ERISA §4203(b). As a result, only a few employers incurred a complete withdrawal and 

ultimately failed to pay the full amount of withdrawal liability assessed, whether due to the eventual 

bankruptcy of the employer, arbitration settlement, or other reasons. None of the failures to pay the full 

amount of assessed withdrawal liability resulted in a significant loss that compelled the Board of Trustees 

to consider imposing an additional reduction on the accrued.benefit or monthly payments of participants 

who worked for such an employer. 

Document #13 

SWORCCPP-000082
Southwest Ohio Regional Council of Carpenters Pension Plan 

Document 13.3 

"Understanding the Pension Recovery Plan" — March 16, 2017, by the Southwest Ohio Regional Council 

of Carpenters Pension Plan. 

Document #13 

SWORCCPP-000083
Southwest Ohio Carpenters Pension Fund 

Understanding the 

Pension Recovery Plan 

March 16, 2017 

SWORCCPP-000084
Today's Meeting 

•Overview 

• How We Got Here 

• Multiemployer Pension Reform Act of 2014 

■Our Proposed Pension Recovery Plan 

■What Happens Next 

Southwest Ohio Carpenters Pension Fund 2 

SWORCCPP-000085
Overview 

■ The Southwest Ohio Carpenters Pension Fund is facing 

very serious troubles because it is seriously 

underfunded 

■ If we do not take action, the Pension Plan will become 

insolvent and run out of money in 15 years or less 

• At that point, our Plan will have zero assets and will not 

be able to pay benefits to current and future retirees 

• While the Trustees have taken many steps to address 

this issue, the situation now requires a Pension 

Recovery Plan 

Southwest Ohio Carpenters Pension Fund 3 

SWORCCPP-000086
How We Got Here: 

Short-Sighted Government Regulations 

1974: ERISA passes, 

establishes anti-cutback rule 

'9 0: Multiemployer Pension Plan 

Amendments Act passes, requiring plans 

to turn surpluses into benefit increases 

• 

1970s 1980s 

1998: Our Pension Plan became more 

than 100% funded, and we were forced 

to increase benefits rather than maintain 

a "rainy day fund" 

These short-sighted regulations left us unable 

to cope with severe economic downturns 

Southwest Ohio Carpenters Pension Fund 4 

SWORCCPP-000087
How We Got Here: 

Stock Market Crashes 

MARKET VALUE OF ASSETS 

After three $380,000,000 $363,189,521 

consecutive years of 

$360,000,000 negative investment Starting in 2008, the 

$340,000,000 returns, the Pension 

Plan was only 66% 

entire construction 

industry faced a 

$320,000,000 funded in 2003 depression that lasted 

$303,177,606 for seven years 

$300,000,000 

$280,000,000 

$260,000,000 

$250,916,369 

$240,000,000 $213,252,642 

$220,000,000 

$200,000,000 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 

The Pension Plan's funding levels dropped to 45% after 

these two historic crashes and faced huge setbacks 

Southwest Ohio Carpenters Pension Fund 5 

SWORCCPP-000088
4,500 

2000: just over one 

active for each retiree 

4,000 

3,500 

3,000 

2016: three retirees for 

every active worker 2,500 

2,000 

This loss of hours and membership created losses that 

we cannot recover from without extraordinary help 

1,500 

How We Got Here: 

More Members Retiring & A Decrease In Actives 

RETIREES KEEP INCREASING AS ACTIVES DECREASE 

Actives Retirees (includes Terminated Vested Participants, Service Retirees, Disability Retirees and Beneficiaries) 

1! The effect of losing income and members was compounded by many 

Plan members retiring—the Plan became too reliant on market returns 

and vulnerable to crashes 

Southwest Ohio Carpenters Pension Fund 6 

SWORCCPP-000089
2000 L 2016 

A ctive Members Dr S pped 

3,778 

1,742 

Fa rtd]rEg Percentaqe 

Hour2 1/4irked Dropped 

3 '"'"U 

92R 

2,370, 

000 

Signatory Contractors 

Dropped 

256 

182 

How We Got Here: 

Changes That Hurt Our Pension Plan 

Southwest Ohio Carpenters Pension Fund 7 

SWORCCPP-000090
Attempts To Fix The Pension Plan 

Over the last 15-20 years, the Trustees took the actions we needed 

to keep the Pension Plan on course based on historical factors and 

legal regulations 

• Increased Contribution Rate 

— 1999: $2.40 per hour 

— 2003: $2.90 per hour 

— 2010: $5.70 per hour 

— 2012: $6.20 per hour 

— 2015: $6.95 per hour 

• 2002: Reduced the credit service benefit to $80 

• 2003: Reduced the credit service benefit to $50 

• Removed all additional adjustable benefits from the Pension Plan 

— 2010: Changes to Early Retirement, Disability and Death Benefits; No lump sums; 

Changes to suspension of benefit rules 

— 2012: Further changes to Early Retirement Benefit; Rule of 80 went to Rule of 85 

— 2013: Eliminated unreduced Early Retirement Benefit; Removed the "Rule of 85" Benefit 

Despite these steps to try to fix this problem, 

the funding shortage has become worse 

Southwest Ohio Carpenters Pension Fund 8 

SWORCCPP-000091
Plan Benefits Today 

• Benefit Credit 

• $50 per year of Credited Service effective June 1, 2003 

• Credited Service 

One year for each Plan Year in which 1,500 Hours of Service are 

earned at the base journeyman rate (pro-rated for hours other than 

1,500) 

• Base Journeymen Rate 

• Hourly contribution rate effective June 1, 2015 is $6.95 

® When Can You Retire? 

• Age 62 with 5 Years of Participation 

O Age 55 with 5 Years of Service 

— Actuarially reduced from age 62 (49.8% reduction at age 55) 

Southwest Oho Carpenters Pension Fund 9 

SWORCCPP-000092
Benefits Decreasing Over Time. . 

A Participant works 1,500 hours a year for 30 straight years and retires at age 62 

The monthly benefit that he will get at retirement has been shrinking since 2003 

and will continue to shrink through 2030 

Decreasing Monthly Benefits 

$3,000 

$2,500 

$2,000 

$1,500 

$1,000 

$500 

$0 I k I 

OO "1, Ix co Orb 0 "V cb 0 (1, Ix co 4) 0 

( OC)Ot` c1 Cl,1\4P 041\41\do 41' 41' 141' On) le "Le rt, 'V Cl' 

In Monthly Benefit 

Southwest Ohio Carpenters Pension Fund 10 

A participant who 

retired in 2016 will 

receive 20% less in 

monthly benefits than 

a Participant who 

worked the same 

amount and retired in 

2000 

Similarly, the 2030 

retiree will receive 40% 

less in monthly 

benefits than someone 

who retired in 2000 

SWORCCPP-000093
Contributions Keep lncreasina 

$3,000 

$2,500 

$2,000 

$1,500 

$1,000 

$500 

- 

n 

Despite Increasing Contributions 

Over that same time, contributions to pay for his benefits have been steadily 

increasing 

A participant who 

retired in 2016 would 

have made more than 

twice the contributions 

than a Participant who 

worked the same 

amount and retired in 

2000 

Similarly, the 2030 

retiree will contribute 

3.5 times more than 

the 2000 retiree 

0 1, bt 43 0 

S* 

el, Ix ca 43 

OHO

tu 

OC ` OtZ" 0'Z \ 0\ 01' 01 0' 0°30 ti `1, 1, I, I, "4 "1, (1, (1, 

A Participant who retires in 2030 will contribute 3.5 times more than the 2000 

retiree and receive 40% less in monthly benefit 

Southwest Ohio Carpenters Pension Fund 11 

SWORCCPP-000094
The Cost Of Subsidized Benefits 

What are subsidized benefits? 

• Unreduced Retirement Before Age 62 

® Rule of 80 Pensions 

a If you started collecting an 

unreduced pension before age 62, 

there is a cost for that benefit 

• Jimmy worked 1,500 hours a year for 

30 years and retired at age 55 in 2007; 

He collects a monthly benefit of $3,610 

until he reaches 90, for a total of 

$1,516,200 in payments from the Fund 

• His twin brother Joey also worked 

1,500 hours a year, but decided to 

work for seven more years and retired 

at age 62 in 2014; He collects a monthly 

benefit of $3,921 until he reaches 90, for 

a total of $1,317,456 in payments from 

the Fund 

Expected Lifetime Payments: 

Subsidized Pensions Are Expensive 

—Jimmy (Pre-62 Retiree)Joey (Post-62 Retiree) 

$1,600,000 

$1,400,000 

$1,200,000 

$1,000,000 

$800,000 

$600,000 

$400,000 

$200,000 

An additional $190 million will be paid over current retirees' expected 

lifetimes due to retirement benefits in excess of what current members 

can receive if they retired today 

7 2042 

Southwest Ohio Carpenters Pension Fund 12 

SWORCCPP-000095
What Is The Multiemployer Pension 

Reform Act Of 2014? 

In December 2014, the Multiemployer Pension Reform Act 

of 2014 (MPRA) was enacted and signed into law 

MPRA allows trustees of severely underfunded multiemployer 

pension funds to develop benefit suspension plans that include 

benefit reductions for both active workers and retirees, in order to 

save the funds and continue paying benefits for years to come 

Under MPRA provisions, there can be no benefit changes for retirees 

80 years of age and older or those participants receiving a disability 

benefit from a multiemployer plan 

Any proposed benefit reductions for retirees ages 

75-80 would be done on a sliding scale to minimize impact 

Southwest Ohio Carpenters Pension Fund 13 

SWORCCPP-000096
Why A MPRA Benefit Suspension? 

• The Pension Plan has been certified as in "critical and declining" status with 

the Department of Labor so it qualifies to use MPRA 

• This is the only way we can keep our Pension Plan from becoming 

insolvent—so that you won't have more cuts in the foreseeable future 

• This Pension Recovery Plan is designed to stabilize the Pension Fund's 

finances and allow it to continue to pay benefits indefinitely 

■ This is a one-time reduction 

■ This allows the Pension Plan to preserve the greatest benefit amount to all 

participants 

If circumstances improve sufficiently more active members, 

more contributions, stronger investment performance—we 

may be able to restore the suspensions we are making now 

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How Will Pensions Be Suspended? 

LE We have worked very hard to create reductions that are equitably distributed 

between all of the groups of participants and beneficiaries in the Pension Plan 

ra Because of the way the Pension Plan works, the percentage by which benefits 

will be reduced will differ based on whether a participant retired before or after 

age 62, when they retired and if they have started receiving benefits yet 

■ Active Members or Any Member Not Yet Receiving Benefits 

• You're facing an accrued benefit suspension of 17% 

■ Retired After Age 62 (Normal) 

• You're facing an accrued benefit suspension of 17% 

■ Retired Before Age 62 (Early) 

• You're facing a benefit suspension based on your age when you retired and 

what reductions you took when you began receiving benefits 

— If you retired during or after 2013, your suspension will be 17% 

— if you retired before 2013, your suspension calculation will include first applying 

reductions for Early Retirement based on your age at retirement as they exist today, 

and then applying the 17% suspension; the current reductions for retiring before age 

62 take into account the extra payments you are expected to receive by taking the 

benefit before age 62 

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Only about 150 

Participants (2.62%) 

have a suspension 

of 50% or more 

Under 10% have a 

suspension that is 

more than 20% 

Over 90% of 

Participants have a 

benefit suspension 

that is 20% or less 

146 

How Are Benefit Suspensions Distributed? 

Benefit Suspension Percentage 

4,000 

3,496 

3,500 

3,000 

2,500 

2,000 

1,540 

1,500 

1,000 

500 

154 234 

0 

Less than 5% 6%-20% 21%-35% 36%-50% Over 50% 

■ Benefit Suspension Percentage 

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What About The PBGC? 

;The Pension Benefit Guaranty Corporation's (PBGC's) 

multiemployer program protects over 10 million workers and retirees 

in about 1,400 pension plans 

>Without MPRA benefit suspensions, our Pension Plan would 

become insolvent and go to the PBGC 

If that happens, all participants would face pension cuts that average 

36%© per person, regardless of age, active or retired status, or 

disability 

If our Pension Plan goes to the PBGC, it is essentially dead and 

cannot be changed 

>And the PBGC is expected to become insolvent in 2025—so even 

these reduced benefits might disappear and our participants will be 

left with almost nothing 

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$961 

$732 $774 

$788 

$634 $638 

Actives $9 

Terminated Vesteds $9 

Participants Collecting Pensions 

What's At Stake? 

MPRA BENEFIT SUSPENSIONS ARE BETTER THAN 

PBGC PENSION CUTS 

:71 Accrued Benefit — PBGC Guarantee • PBGC Insolvency • Pension Recovery Plan 

$1,000 

$800 

(7) 

(t" $600 

$400 coa) 

$200 

$0 

If the PBGC runs out of money, 

your benefits will be reduced to almost NOTHING 

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The Vote 

• . . 

• The vote takes place within 30 days of the Pension Recovery Plan's 

approval by Treasury, and the voting period runs for 21 days 

• The Treasury Department has sole responsibility for the voting 

process, which will be conducted by a third-party administrator that 

they select 

• Voting will be completed online, by mail ballot or by phone 

• If participants vote to support the Pension Recovery Plan, it will go 

into effect around January 1, 2018 

EiIf participants do not vote to support the Pension Recovery Plan, it 

does not mean that the Pension Plan can simply continue the way it 

is today 

• Without the suspensions, the Pension Plan will become insolvent 

and participants will face far greater reductions 

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What Will Happen If The Proposed 

Pension Recovery Plan Is Rejected? 

m,The Board of Trustees, in consultation with the Pension Plan's Actuary, 

has determined that the Pension Plan will become insolvent around 2032 

or sooner if the proposed Pension Recovery Plan is not implemented in 

2018 

• When the Pension Plan becomes insolvent, the PBGC will step in and 

provide the Pension Plan with financial assistance to continue paying a 

portion of your monthly retirement benefit 

• When that happens, the PBGC will make cuts that apply to ALL 

participants; disabled participants and participants over age 75 will also 

be cut to the PBGC-guaranteed level 

El The PBGC has projected that it may run out of funds within 10 years; if 

this happens, participants and beneficiaries in pay status would be at risk 

of receiving benefits that would be dramatically lower than the maximum 

PBGC guaranteed amount 

• Your benefits could be reduced to almost nothing 

The Trustees can refile the MPRA Pension 

Recovery Plan, but this will result in deeper cuts 

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Resources Available 

® We want to share as much information with you as we can in as 

many ways as possible 

Meetings Mail Website Call Center Video 

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Conclusion 

7 This is not a case of mismanagement: A combination of external 

factors caused this situation 

aOver the last 15-20 years, the Trustees took the actions w 

needed to keep the Pension Plan on course based on historical 

factors and legal regulations 

While we are not happy at having to suspend some benefits; 

our Pension Recovery Plan is far better than the alternative 

running out of money by 2032 and having to rely on a shaky PBGC 

for an even lesser benefit or possibly nothing at all if the PBGC 

runs out of money 

We a feed you to vote for the MPRA Pensi m R covery n: If it 

fails, all participants will face much larger cuts 

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If you have questions or want more 

information after today's meeting: 

()Call the Pension Recovery Plan Hotline: 

(330) 779-8862 

0 Visit our Pension Recovery Plan Website: 

www.SORCCPensionRecovery.orq 

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