APPENDIX I – DETAIL FOR ACTUARIAL CERTIFICATION

2 

TABULAR:

(i) (ii) (iii) (iv) (v) (vi) (vii)

Assumed Benefit Payments

Period Annual Beginning WitOdraRal Future NeR Terminated Administrative Investment Ending

Beginning Return MVA ContriNutions LiaNility Payments Active Entrants Retiree Vested Beneficiary Expenses Earnings MVA

1C1C2017 12.53% $51,322,661 $632,51E $67,E07 $46,083 $0 $2,057,4E4 $113,382 $157,734 $235,267 $620,730 $50,033,

3C1C2017 3.00% 50,033,857 3,654,366 201,274 5E6,746 0 8,688,E15 543,670 652,410 1,047,0E8 1,386,768 43,747,

3C1C2018 4.00% 43,747,426 3,70E,181 200,742 840,025 0 5,273,340 56,460 382,318 607,E14 1,685,532 42,182,8

3C1C201E 5.00% 42,182,824 3,764,81E 65,506 1,07E,E80 0 5,057,23E 73,5E8 363,700 615,427 2,026,175 40,

3C1C2020 6.00% 40,84E,380 3,821,2E1 64,158 1,31E,877 0 4,844,086 E1,334 345,321 623,E85 2,352,247 3E,8

3C1C2021 6.75% 3E,862,473 3,878,611 64,158 1,563,605 0 4,632,422 107,170 327,248 633,646 2,580,453 3E,121,6

3C1C2022 6.75% 3E,121,603 3,E36,7E0 60,813 1,804,267 E7 4,422,613 124,450 30E,535 644,431 2,530,8E3 38,3

3C1C2023 6.75% 38,344,707 3,EE5,842 57,456 2,046,18E 684 4,214,E75 140,150 2E2,232 656,407 2,478,800 37,52

3C1C2024 6.75% 37,526,167 4,055,77E 57,456 2,287,704 2,288 4,00E,774 158,613 275,380 66E,674 2,423,785 36,65E

3C1C2025 6.75% 36,65E,754 4,116,616 57,456 2,51E,E24 5,320 3,807,24E 175,701 25E,014 684,208 2,365,72E 35,

3C1C2026 6.75% 35,748,13E 4,178,365 43,216 2,727,130 E,E81 3,607,62E 1E5,034 243,154 700,388 2,304,713 34,7

3C1C2027 6.75% 34,7E1,118 4,241,041 26,E76 2,E13,332 16,838 3,411,138 213,547 227,826 643,E8E 2,243,537 33,87

3C1C2028 6.75% 33,876,001 4,304,656 26,E76 3,077,415 27,364 3,218,007 22E,531 213,04E 664,731 2,183,764 32,E61

3C1C202E 6.75% 32,E61,301 4,36E,226 22,546 3,226,E74 42,103 3,028,46E 241,405 1E8,830 687,252 2,124,187 32,0

3C1C2030 6.75% 32,052,227 4,434,765 16,645 3,346,565 60,527 2,842,776 252,506 185,178 710,014 2,065,716 31,171,787

3C1C2031 6.75% 31,171,787 4,501,286 12,232 3,466,458 82,423 2,661,1E2 257,444 172,0E7 732,E44 2,00E,17E 30,3

3C1C2032 6.75% 30,321,E25 4,568,805 6,143 3,567,714 108,233 2,483,EE2 263,027 15E,5E1 757,547 1,E54,E30 

3C1C2033 6.75% 2E,511,6EE 4,637,337 6,143 3,631,56E 141,264 2,311,458 267,857 147,657 783,884 1,E04,388 28,77

3C1C2034 6.75% 28,775,877 4,706,8E7 6,143 3,675,310 183,767 2,143,880 272,317 136,2E5 812,042 1,85E,023 28,124,

3C1C2035 6.75% 28,124,331 4,777,501 6,143 3,704,621 231,437 1,E81,553 277,157 125,4E8 841,EE4 1,81E,425 27,5

3C1C2036 6.75% 27,565,13E 4,84E,163 0 3,730,872 283,81E 1,824,7E7 27E,475 115,262 873,814 1,785,655 27

3C1C2037 6.75% 27,0E1,E1E 4,E21,E01 0 3,745,431 341,57E 1,673,E3E 280,7E6 105,582 E07,475 1,757,8E

3C1C2038 6.75% 26,716,E12 4,EE5,72E 0 3,72E,278 40E,012 1,52E,317 281,347 E6,453 E42,7E1 1,737,244 

3C1C203E 6.75% 26,461,686 5,070,665 0 3,704,063 488,346 1,3E1,247 27E,738 87,86E E7E,7E8 1,724,401 26

3C1C2040 6.75% 26,325,6E1 5,146,725 0 3,673,1E3 572,145 1,260,028 277,383 7E,823 1,018,383 1,71E,410 26,310
APPENDIX I – DETAIL FOR ACTUARIAL CERTIFICATION

3 

TABULAR (continued):

(i) (ii) (iii) (iv) (v) (vi) (vii)

Benefit Payments

Plan Year Assumed Beginning Withdrawal Future New Terminated Administrative Investment End of Y

Beginning Return of Year MVA Contributions Liability Payments Active Entrants Retiree Vested Beneficiary Expenses Earnings M

3/1/2041 6.75% $26,310,872 $5,223,926 $0 $3,618,938 $659,236 $1,135,930 $274,033 $72,303 $1,058,610 $1,723,027 $26,438,7

3/1/2042 6.75% 26,438,776 5,302,285 0 3,553,933 749,630 1,019,190 271,499 65,294 1,100,576 1,736,219 26,717,1

3/1/2043 6.75% 26,717,157 5,381,819 0 3,462,864 847,900 909,968 266,585 58,783 1,143,853 1,759,979 27,169,0

3/1/2044 6.75% 27,169,003 5,462,547 0 3,366,198 958,690 808,364 261,371 52,758 1,188,483 1,794,955 27,790,6

3/1/2045 6.75% 27,790,641 5,544,485 0 3,260,845 1,071,395 714,405 253,968 47,203 1,234,157 1,841,425 28,594,5

3/1/2046 6.75% 28,594,578 5,627,652 0 3,152,211 1,185,516 628,048 244,648 42,103 1,259,648 1,900,769 29,610,8

3/1/2047 6.75% 29,610,824 5,712,067 0 3,032,952 1,301,495 549,183 234,418 37,446 1,241,864 1,975,980 30,901,5

3/1/2048 6.75% 30,901,512 5,797,748 0 2,906,379 1,424,717 477,634 224,056 33,210 1,223,710 2,069,520 32,479,0

3/1/2049 6.75% 32,479,074 5,884,714 0 2,776,793 1,561,914 413,148 213,182 29,372 1,207,018 2,181,823 34,344,1

3/1/2050 6.75% 34,344,184 5,972,985 0 2,648,129 1,699,325 355,421 201,808 25,913 1,193,866 2,313,204 36,505,9
APPENDIX II – METHODOLOGY AND ASSUMPTIONS

4 

A. Actuarial Assumptions

1. Investment Return (net of investment expenses)

Discount Rate: 6.75% per year 

Valuation Assumption: 12.95%* for the plan year ending Feb 2017; 6.75% per year 

thereafter

Stress Testing Scenario: 12.53%* for the plan year ending Feb 2017; 3.00% for the 

plan year ending Feb 2018, increasing by 1% per year for 

the next three years, followed by 6.75% thereafter

* The Investment Consultant provided the estimated Market Value of Assets in the 

portfolio as of December 31, 2016; the amount was adjusted to account for cash and 

receivables. In addition, they estimated a return of 12.34% over the first 11 months of 

the fiscal year. For the stress testing scenario, we assumed the Fund would earn 0.17% 

(based on a 2.00% assumption) for the final month for an annual return of 12.53%. 

Similarly, for the scenario where the Fund earns 6.75% in all years, we assumed the Fund 

would earn 0.55% (based on the 6.75% assumption) for the final month for an annual 

return of 12.95%. 

2. Administrative Expenses

The administrative expense assumption includes: 

• INFLATION: Based on historical experience, we assume most administrative 

expenses would increase by our inflation assumption of 1.5% per year (including 

PBGC premiums). The only exception is the medical and retirement benefits for the 

Fund Office employees, which we assume, would increase 4% per year (but limited 

to 100% of payroll). Finally, expenses are limited to 20% of expected benefit 

payments in all scenarios because at that point (which is 30 or more years out) it 

would not make sense to allow expenses to grow any further relative to benefit 

payments, and consideration could be given to annuitization. 

• PARTITION: We assume administrative fees for fiduciary insurance and certain 

professional fees will be reduced if the partition is approved. This equates to an 

approximately 15% reduction in expenses (not including PBGC premiums) in 2018 

with 1.6% annual increases thereafter. Expenses are allocated between the Original 

Plan and Successor Plan based on projected headcounts with PBGC premiums paid 

by the Original Plan for the 10-year period following the partition effective date. 

After this 10-year period, we are assuming the premium would be paid 50% by both 

the Original Plan and Successor Plan. 

• INSOLVENCY: For scenarios where the Fund is projected to become insolvent, we 

are assuming that in the Plan Year following insolvency there would be a decrease in 

fiduciary insurance, that Trustee meetings would be limited to one per year (currently 

four), and professional fees would be reduced. This equates to an approximately 30% 

reduction in expenses (not including PBGC premiums) in 2022 and then 1.6% annual 

increases thereafter.



APPENDIX II – METHODOLOGY AND ASSUMPTIONS

8 

14. Justification for Actuarial Assumptions

The rationale for our 6.75% actuarial valuation assumption is based on the investment 

manager’s capital market outlook, Trustees’ risk preference, and the Fund’s current asset 

allocation. The rationale for our stress testing scenario (12.53% for the plan year ending 

Feb 2017; 3.00% for the plan year ending Feb 2018, increasing by 1% per year for the 

next three years, followed by 6.75% thereafter) is based on recognizing current market 

conditions and future short-term expectations along with the Plan’s cash flow 

characteristics. For our demographic assumptions, the rates of termination and rates of 

retirement for active participants were initially set after a 2007 Experience Study and are 

reviewed annually. Other demographic assumptions were adjusted based on actual Plan 

experience in conjunction with the partition & suspension analysis. 

15. Changes in Assumptions Since Last Valuation

• Mortality: the prior assumption for Healthy lives was the RP2000 with blue collar 

adjustment projected five-years with scale AA. For Disabled lives the prior 

assumption used the same table with ages set-forward five years.

• Rate of Turnover: the rates remain unchanged, but we previously assumed active 

participants who terminate would retire at age 65. 

• Rates of Retirement: we previously assumed terminated vested participants 

would retire at age 65

• Marriage Assumption: we previously assumed 80% married

• Normal Form: we previously assumed all active and terminated vested 

participants elect a Single Life Annuity

B. Actuarial Funding Method

The cost method for determining liabilities for this valuation is the Unit Credit Cost method. 

This is one of a family of valuation methods known as accrued benefit methods. The chief 

characteristic of accrued benefit methods is that the funding pattern follows the pattern of 

benefit accrual. The normal cost is determined as that portion of each participant’s benefit 

attributable to service expected to be earned in the upcoming plan year. The Actuarial 

Liability, which is determined for each participant as of each valuation date, represents the 

actuarial present value of the portion of each participant’s benefit attributable to service 

earned prior to the valuation date. 


















































United Furniture Workers Pension Fund A

EIN: 13-5511877 / PN: 001

Revenue Procedure 2016-27, Section 4.01

Demonstration that Limitations on Individual Suspensions are Satisfied

As required by Section 4.01 of Revenue Procedure 2016-27, we prepared the following examples 

to illustrate how the proposed suspension effective September 1, 2017 satisfies the limitations on 

suspension. The proposed suspension does not affect participant or beneficiary who is: (1) 

currently receiving less than 110% of the PBGC guarantee, (2) over age 80 as of the effective 

date, and (3) disabled under the Plan. 

Example #1 illustrates the guarantee-based limitation under IRC §432(e)(9)(D)(i), Example #2 

the age-based limitation under IRC §432(e)(9)(D)(ii), and Example #3 the disability-based 

limitation under IRC §432(e)(9)(D)(iii). We also provided an Example #4 that combines all 

three limitations; however, given the disability there is no impact on the participant’s final 

benefit.

Please note, the Plan’s Disability Pension is payable to a participant who has been awarded a 

Social Security Disability. The monthly disability benefit is equal to the accrued benefit without 

reduction and is payable as of the date of entitlement established by Social Security. The benefit 

payable does not change upon reaching Normal Retirement Age.

These examples were prepared solely for the United Furniture Workers Pension Fund A for the 

purpose described. Other users of this information are not intended users as defined in the 

Actuarial Standards of Practice, and Cheiron assumes no duty or liability to such other users. 






APPENDIX II – METHODOLOGY AND ASSUMPTIONS

4 

A. Actuarial Assumptions

1. Investment Return (net of investment expenses)

Discount Rate: 6.75% per year 

Valuation Assumption: 12.95%* for the plan year ending Feb 2017; 6.75% per year 

thereafter

Stress Testing Scenario: 12.53%* for the plan year ending Feb 2017; 3.00% for the 

plan year ending Feb 2018, increasing by 1% per year for 

the next three years, followed by 6.75% thereafter 

* The Investment Consultant provided the estimated Market Value of Assets in the 

portfolio as of December 31, 2016; the amount was adjusted to account for cash and 

receivables. In addition, they estimated a return of 12.34% over the first 11 months of 

the fiscal year. For the stress testing scenario, we assumed the Fund would earn 0.17% 

(based on a 2.00% assumption) for the final month for an annual return of 12.53%. 

Similarly, for the scenario where the Fund earns 6.75% in all years, we assumed the Fund 

would earn 0.55% (based on the 6.75% assumption) for the final month for an annual 

return of 12.95%. 

2. Administrative Expenses 

The administrative expense assumption includes: 

• INFLATION: Based on historical experience, we assume most administrative 

expenses would increase by our inflation assumption of 1.5% per year (including 

PBGC premiums). The only exception is the medical and retirement benefits for the 

Fund Office employees, which we assume, would increase 4% per year (but limited 

to 100% of payroll). Finally, expenses are limited to 20% of expected benefit 

payments in all scenarios because at that point (which is 30 or more years out) it 

would not make sense to allow expenses to grow any further relative to benefit 

payments, and consideration could be given to annuitization. 

• PARTITION: We assume administrative fees for fiduciary insurance and certain 

professional fees will be reduced if the partition is approved. This equates to an 

approximately 15% reduction in expenses (not including PBGC premiums) in 2018 

with 1.6% annual increases thereafter. Expenses are allocated between the Original 

Plan and Successor Plan based on projected headcounts with PBGC premiums paid 

by the Original Plan for the 10-year period following the partition effective date. 

After this 10-year period, we are assuming the premium would be paid 50% by both 

the Original Plan and Successor Plan. 

• INSOLVENCY: For scenarios where the Fund is projected to become insolvent, we 

are assuming that in the Plan Year following insolvency there would be a decrease in 

fiduciary insurance, that Trustee meetings would be limited to one per year (currently 

four), and professional fees would be reduced. This equates to an approximately 30% 

reduction in expenses (not including PBGC premiums) in 2022 and then 1.6% annual 

increases thereafter.


APPENDIX II – METHODOLOGY AND ASSUMPTIONS

7 

11. Contribution Increases / Average Contribution Rate

The Rehabilitation Plan requires 5.5% annual increases each year. However, after the 

effective date of the suspension / partition, we assume that total contributions to the 

Pension Fund will increase 1.5% per year in the aggregate. These increases will be 

attributable to some combination of wage increases and contribution rate increases such 

that the total employer contributions increase by 1.5% annually. 

12. Suspension

The projection assumes the maximum suspension permitted in accordance with ERISA 

Section 305(e)(9)(D)(i) effective September 1, 2017. 

13. Partition

The projection assumes 100% of the liability associated with the terminated vested 

participants and 56% of the liability associated with the retirees and beneficiaries are 

partitioned to the Successor Plan effective September 1, 2017. All liability associated 

with the active participants would remain in the Original Plan. 

14. Justification for Actuarial Assumptions

The rationale for our 6.75% actuarial valuation assumption is based on the investment 

manager’s capital market outlook, Trustees’ risk preference, and the Fund’s current asset 

allocation. The rationale for our stress testing scenario (12.53% for the plan year ending 

Feb 2017; 3.00% for the plan year ending Feb 2018,, increasing by 1% per year for the 

next three years, followed by 6.75% thereafter) is based on recognizing current market 

conditions and future short-term expectations along with the Plan’s cash flow 

characteristics. For our demographic assumptions, the rates of termination and rates of 

retirement for active participants were initially set after a 2007 Experience Study and are 

reviewed annually. Other demographic assumptions were adjusted based on actual Plan 

experience in conjunction with the partition & suspension analysis. 

15. Changes in Assumptions Since Last Valuation

• Mortality: the prior assumption for Healthy lives was the RP2000 with blue collar 

adjustment projected five-years with scale AA. For Disabled lives the prior 

assumption used the same table with ages set-forward five years.

• Rate of Turnover: the rates remain unchanged, but we previously assumed active 

participants who terminate would retire at age 65. 

• Rates of Retirement: we previously assumed terminated vested participants 

would retire at age 65

• Marriage Assumption: we previously assumed 80% married

• Normal Form: we previously assumed all active and terminated vested 

participants elect a Single Life Annuity 
APPENDIX II – METHODOLOGY AND ASSUMPTIONS

8 

B. Actuarial Funding Method

The cost method for determining liabilities for this valuation is the Unit Credit Cost method. 

This is one of a family of valuation methods known as accrued benefit methods. The chief 

characteristic of accrued benefit methods is that the funding pattern follows the pattern of 

benefit accrual. The normal cost is determined as that portion of each participant’s benefit 

attributable to service expected to be earned in the upcoming plan year. The Actuarial 

Liability, which is determined for each participant as of each valuation date, represents the 

actuarial present value of the portion of each participant’s benefit attributable to service 

earned prior to the valuation date. 







APPENDIX I - DETAIL FOR ACTUARIAL CERTIFICATION

1 

CASH FLOW PROJECTION

Based on the assumptions in Appendix II, we provide the following long-term projection 

reflecting benefit disbursements from the Successor Plan based on the proposed partition. The 

projections assume that effective September 1, 2017 the Fund implemented the maximum 

suspension permitted (in accordance with ERISA Section 305(e)(9)(D)(i) and consistent with 

Section 305(e)(9)(D)(iv) and the regulations thereunder) and partitioned to the Successor Plan 

100% of the liability associated with the terminated vested participants and 56% of the liability 

associated with the retirees and beneficiaries. All liability associated with the active participants 

would remain in the Original Plan. 

Furthermore, we calculate the present value of all future financial assistance as a result of the 

proposed partition to be $162,559,095. As noted in Appendix II, this projection assumes the 

PBGC would provide financial assistance to the Successor Plan for the annual benefit payments 

partitioned to the Successor Plan as well as an allocation of administrative expenses.

The cash flow projection is provided on the following pages. 
APPENDIX I - DETAIL FOR ACTUARIAL CERTIFICATION

2 

TABULAR PBGC FINANCIAL ASSISTANCE:

Net Present Value as of March 1, 2016 $ 162,559,095

(i) (ii) (iii) (iv)

Benefit Payments Total

Plan Year Discount Terminated Administrative Financial

Beginning Rate Active Retiree Vested Beneficiary Expenses Assistance

3/1/2016 2.82% $0 $0 $0 $0 $0 $0

3/1/2017 2.82% 0 3,003,933 489,495 246,402 379,896 4,119,725

3/1/2018 2.82% 0 5,782,629 1,301,573 471,688 646,253 8,202,143

3/1/2019 2.82% 0 5,555,749 1,604,313 450,359 655,632 8,266,052

3/1/2020 2.82% 0 5,329,634 1,911,287 428,919 664,453 8,334,292

3/1/2021 2.82% 0 5,103,316 2,196,724 407,481 672,673 8,380,193

3/1/2022 2.82% 0 4,877,332 2,477,032 386,150 680,286 8,420,800

3/1/2023 2.82% 0 4,652,077 2,727,613 365,044 687,239 8,431,973

3/1/2024 2.82% 0 4,427,788 2,997,887 344,245 693,447 8,463,368

3/1/2025 2.82% 0 4,204,778 3,240,405 323,822 698,952 8,467,957

3/1/2026 2.82% 0 3,983,363 3,501,914 303,862 703,391 8,492,529

3/1/2027 2.82% 0 3,763,820 3,747,251 284,439 706,844 8,502,354

3/1/2028 2.82% 0 3,546,516 3,942,304 265,578 709,511 8,463,910

3/1/2029 2.82% 0 3,331,857 4,094,896 247,315 711,112 8,385,180

3/1/2030 2.82% 0 3,120,221 4,230,303 229,705 709,112 8,289,341

3/1/2031 2.82% 0 2,911,994 4,295,581 212,779 704,545 8,124,899

3/1/2032 2.82% 0 2,707,607 4,356,413 196,521 698,677 7,959,218

3/1/2033 2.82% 0 2,507,715 4,404,549 180,951 691,453 7,784,668

3/1/2034 2.82% 0 2,312,828 4,445,289 166,111 682,790 7,607,018

3/1/2035 2.82% 0 2,123,457 4,480,929 152,017 672,709 7,429,113

3/1/2036 2.95% 0 1,940,294 4,483,573 138,672 661,145 7,223,684

3/1/2037 2.95% 0 1,763,914 4,469,203 126,074 648,118 7,007,309

3/1/2038 2.95% 0 1,594,933 4,436,562 114,233 633,800 6,779,529

3/1/2039 2.95% 0 1,434,021 4,376,260 103,149 618,159 6,531,589

3/1/2040 2.95% 0 1,281,698 4,301,985 92,801 601,297 6,277,781
APPENDIX I - DETAIL FOR ACTUARIAL CERTIFICATION

3 

TABULAR PBGC FINANCIAL ASSISTANCE (continued):

(i) (ii) (iii) (iv)

Benefit Payments Total

Plan Year Discount Terminated Administrative Financial

Beginning Rate Active Retiree Vested Beneficiary Expenses Assistance

3/1/2041 2.95% $0 $1,138,478 $4,211,000 $83,180 $583,159 $6,015,817

3/1/2042 2.95% 0 1,004,810 4,124,571 74,280 563,654 5,767,315

3/1/2043 2.95% 0 881,028 4,008,590 66,091 543,181 5,498,890

3/1/2044 2.95% 0 767,382 3,884,175 58,584 521,705 5,231,846

3/1/2045 2.95% 0 663,840 3,733,651 51,738 499,515 4,948,744

3/1/2046 2.95% 0 570,294 3,561,753 45,539 476,793 4,654,380

3/1/2047 2.95% 0 486,573 3,376,706 39,955 453,762 4,356,996

3/1/2048 2.95% 0 412,283 3,190,607 34,943 430,305 4,068,138

3/1/2049 2.95% 0 346,957 2,997,670 30,472 406,746 3,781,845

3/1/2050 2.95% 0 290,077 2,801,588 26,512 383,122 3,501,299

3/1/2051 2.95% 0 240,972 2,604,417 23,021 359,752 3,228,163

3/1/2052 2.95% 0 198,996 2,409,393 19,958 336,649 2,964,996

3/1/2053 2.95% 0 163,437 2,218,508 17,289 313,941 2,713,175

3/1/2054 2.95% 0 133,545 2,032,953 14,976 291,753 2,473,227

3/1/2055 2.95% 0 108,663 1,854,239 12,970 270,145 2,246,017

3/1/2056 2.95% 0 88,119 1,683,398 11,238 249,217 2,031,972

3/1/2057 2.95% 0 71,280 1,521,184 9,745 229,025 1,831,234

3/1/2058 2.95% 0 57,586 1,368,195 8,460 209,610 1,643,852

3/1/2059 2.95% 0 46,506 1,224,907 7,353 191,023 1,469,789

3/1/2060 2.95% 0 37,574 1,091,437 6,398 173,286 1,308,695

3/1/2061 2.95% 0 30,410 967,846 5,576 156,439 1,160,271

3/1/2062 2.95% 0 24,674 854,059 4,869 140,498 1,024,100

3/1/2063 2.95% 0 20,082 749,830 4,259 125,480 899,651

3/1/2064 2.95% 0 16,408 654,797 3,731 111,398 786,335

3/1/2065 2.95% 0 13,465 568,521 3,275 98,263 683,524
APPENDIX I - DETAIL FOR ACTUARIAL CERTIFICATION

4 

TABULAR PBGC FINANCIAL ASSISTANCE (continued):

(i) (ii) (iii) (iv)

Benefit Payments Total

Plan Year Discount Terminated Administrative Financial

Beginning Rate Active Retiree Vested Beneficiary Expenses Assistance

3/1/2066 2.95% $0 $11,098 $490,522 $2,880 $86,060 $590,560

3/1/2067 2.95% 0 9,179 420,324 2,536 74,791 506,830

3/1/2068 2.95% 0 7,612 357,454 2,236 64,468 431,770

3/1/2069 2.95% 0 6,324 301,497 1,973 55,071 364,864

3/1/2070 2.95% 0 5,256 252,033 1,742 46,585 305,615

3/1/2071 2.95% 0 4,359 208,650 1,538 39,044 253,591

3/1/2072 2.95% 0 3,605 170,912 1,357 32,390 208,265

3/1/2073 2.95% 0 2,970 138,413 1,197 26,594 169,174

3/1/2074 2.95% 0 2,429 110,739 1,053 21,597 135,818

3/1/2075 2.95% 0 1,967 87,450 927 17,353 107,697

3/1/2076 2.95% 0 1,578 68,114 814 13,802 84,307

3/1/2077 2.95% 0 1,252 52,301 712 10,853 65,118

3/1/2078 2.95% 0 978 39,559 622 8,232 49,391

3/1/2079 2.95% 0 750 29,452 543 6,149 36,894

3/1/2080 2.95% 0 566 21,567 473 4,521 27,127

3/1/2081 2.95% 0 419 15,520 410 3,270 19,619

3/1/2082 2.95% 0 304 10,969 354 2,325 13,952

3/1/2083 2.95% 0 213 7,609 305 1,625 9,752

3/1/2084 2.95% 0 146 5,174 261 1,116 6,697

3/1/2085 2.95% 0 98 3,447 222 753 4,521

3/1/2086 2.95% 0 64 2,249 188 500 3,001

3/1/2087 2.95% 0 40 1,437 157 327 1,960

3/1/2088 2.95% 0 24 898 129 210 1,262

3/1/2089 2.95% 0 15 548 105 134 801

3/1/2090 2.95% 0 8 328 84 84 504
APPENDIX I - DETAIL FOR ACTUARIAL CERTIFICATION

5 

TABULAR PBGC FINANCIAL ASSISTANCE (continued):

(i) (ii) (iii) (iv)

Benefit Payments Total

Plan Year Discount Terminated Administrative Financial

Beginning Rate Active Retiree Vested Beneficiary Expenses Assistance

3/1/2091 2.95% $0 $4 $191 $66 $52 $313

3/1/2092 2.95% 0 3 109 50 32 194

3/1/2093 2.95% 0 1 61 37 20 119

3/1/2094 2.95% 0 1 33 27 12 73

3/1/2095 2.95% 0 1 18 19 8 45

3/1/2096 2.95% 0 0 9 13 4 26

3/1/2097 2.95% 0 0 5 8 3 16

3/1/2098 2.95% 0 0 2 5 1 8

3/1/2099 2.95% 0 0 1 3 1 5

3/1/2100 2.95% 0 0 1 2 1 3

3/1/2101 2.95% 0 0 0 1 0 1

3/1/2102 2.95% 0 0 0 1 0 1

3/1/2103 2.95% 0 0 0 1 0 1

3/1/2104 2.95% 0 0 0 0 0 0

3/1/2105 2.95% 0 0 0 0 0 0

3/1/2106 2.95% 0 0 0 0 0 0

3/1/2107 2.95% 0 0 0 0 0 0

3/1/2108 2.95% 0 0 0 0 0 0

3/1/2109 2.95% 0 0 0 0 0 0

3/1/2110 2.95% 0 0 0 0 0 0

3/1/2111 2.95% 0 0 0 0 0 0

3/1/2112 2.95% 0 0 0 0 0 0

3/1/2113 2.95% 0 0 0 0 0 0

3/1/2114 2.95% 0 0 0 0 0 0

3/1/2115 2.95% 0 0 0 0 0 0
APPENDIX II – METHODOLOGY AND ASSUMPTIONS

6 

A. Actuarial Assumptions

1. Investment Return (net of investment expenses)

PBGC Discount Rates: 2.82% for the first 20 years and 2.95% thereafter (effective 

for February 2016) 

2. Administrative Expenses

The administrative expense assumption includes: 

• INFLATION: Based on historical experience, we assume most administrative 

expenses would increase by our inflation assumption of 1.5% per year (including 

PBGC premiums). The only exception is the medical and retirement benefits for the 

Fund Office employees, which we assume, would increase 4% per year (but limited 

to 100% of payroll). Finally, expenses are limited to 20% of expected benefit 

payments in all scenarios because at that point (which is 30 or more years out) it 

would not make sense to allow expenses to grow any further relative to benefit 

payments, and consideration could be given to annuitization. 

• PARTITION: We assume administrative fees for fiduciary insurance and certain 

professional fees will be reduced if the partition is approved. This equates to an 

approximately 15% reduction in expenses (not including PBGC premiums) in 2018 

with 1.6% annual increases thereafter. Expenses are allocated between the Original 

Plan and Successor Plan based on projected headcounts with PBGC premiums paid 

by the Original Plan for the 10-year period following the partition effective date. 

After this 10-year period, we are assuming the premium would be paid 50% by both 

the Original Plan and Successor Plan. 

• INSOLVENCY: For scenarios where the Fund is projected to become insolvent, we 

are assuming that in the Plan Year following insolvency there would be a decrease in 

fiduciary insurance, that Trustee meetings would be limited to one per year (currently 

four), and professional fees would be reduced. This equates to an approximately 30% 

reduction in expenses (not including PBGC premiums) in 2022 and then 1.6% annual 

increases thereafter.

3. Rates of Mortality 

- PBGC Mortality: ERISA Section 4044 Healthy Mortality for 2016 and ERISA 

Section 4044 Social Security Disabled Mortality for 2016 

Terminated Vested Participants over age 80 are assumed to be deceased.


APPENDIX II – METHODOLOGY AND ASSUMPTIONS

9 

13. Partition

The projection assumes 100% of the liability associated with the terminated vested 

participants and 56% of the liability associated with the retirees and beneficiaries are 

partitioned to the Successor Plan effective September 1, 2017. All liability associated 

with the active participants would remain in the Original Plan. 

14. Justification for Actuarial Assumptions

The discount rate and mortality table used in this certification are prescribed assumptions. 

For our demographic assumptions, the rates of termination and rates of retirement for 

active participants were initially set after a 2007 Experience Study and are reviewed 

annually. Other demographic assumptions were adjusted based on actual Plan experience 

in conjunction with the partition & suspension analysis. 

15. Changes in Assumptions Since Last Valuation

• Rate of Turnover: the rates remain unchanged, but we previously assumed active 

participants who terminate would retire at age 65. 

• Rates of Retirement: we previously assumed terminated vested participants 

would retire at age 65

• Marriage Assumption: we previously assumed 80% married

• Normal Form: we previously assumed all active and terminated vested 

participants elect a Single Life Annuity 

B. Actuarial Funding Method

The cost method for determining liabilities for this valuation is the Unit Credit Cost method. 

This is one of a family of valuation methods known as accrued benefit methods. The chief 

characteristic of accrued benefit methods is that the funding pattern follows the pattern of 

benefit accrual. The normal cost is determined as that portion of each participant’s benefit 

attributable to service expected to be earned in the upcoming plan year. The Actuarial 

Liability, which is determined for each participant as of each valuation date, represents the 

actuarial present value of the portion of each participant’s benefit attributable to service 

earned prior to the valuation date. 

United Furniture Workers Pension Fund A

EIN: 13-5511877 / PN: 001

Revenue Procedure 2016-27, Section 6.03

Ten-Year Experience for Certain Critical Assumptions

On the next few pages we provide the ten-year experience for the critical assumptions required 

by Section 6.03 of Revenue Procedure 2016-27. We have also included a historical summary of 

active participants.

We first provide the ten-year history on the entire Plan; from both active and previously 

withdrawn employers. However, we also provide the historical summary on the current active 

contributing employers as well as on the two primary employers (Steinway and Sealy, Inc. are 

the two largest contributing employers; they account for 69% of contributions for the Plan Year 

Ending February 2016). The average annual change in Contribution Base Units is summarized in 

the table below. 

Plan Experience For: 1 Year 3 Years 5 Years 9 Years

Current Active & Withdrawn Employers 5.2% 3.7% 1.4% -4.5%

Current Active Employers 5.9% 7.2% 5.5% -0.5%

Steinway and Sealy, Inc. 6.3% 8.6% 6.8% -1.1%

Average Annual Change in 

Contribution Base Units Over

Note contributing employers contribute on one of three different bases: percent of Gross Wages, 

dollar per hour, or dollar per member per month. We provide the average annual change in 

Contribution Base Units over the period and summarize this at the bottom weighted by the most 

recent year’s contribution amounts. 

This information was prepared solely for the United Furniture Workers Pension Fund A for the 

purpose described herein. Other users of this information are not intended users as defined in the 

Actuarial Standards of Practice, and Cheiron assumes no duty or liability to such other users. 
1 

Revenue Procedure 2016-27, Section 6.03

Ten-Year Experience for Certain Critical Assumptions

CURRENT AND WITHDRAWN EMPLOYERS

(1) (2) (3) (4) (5) (6)

Total Contribution Base Units Average Contribution Rate

Plan Year Total Gross % of Gross Withdrawal Rate of Return Active

Ending Contributions Wages Hours Months Wages $ per Hour $ per Month Liability Payments on Plan Assets Participants

2/28/2007 $4,148,378 $55,893,761 1,813,856 3,231 4.6% $0.524 $202 $82,123 9.02% 2,819

2/29/2008 3,981,151 54,862,191 1,704,039 2,967 4.7% $0.422 $219 2,163,672 0.00% 2,617

2/28/2009 3,482,630 47,902,470 1,529,619 2,713 4.8% $0.430 $219 51,366 -24.39% 2,459

2/28/2010 3,019,883 37,844,524 1,090,222 1,934 4.9% $0.481 $219 295,620 29.16% 2,036

2/28/2011 2,966,789 35,200,497 1,029,314 1,897 5.4% $0.510 $222 994,900 15.35% 1,550

2/29/2012 3,441,065 37,025,299 795,713 1,783 6.2% $0.684 $251 657,483 2.79% 1,349

2/28/2013 3,355,143 35,061,201 682,151 1,653 6.6% $0.829 $271 97,229 7.15% 1,358

2/28/2014 3,491,482 36,365,505 333,710 1,949 7.1% $1.147 $287 4,119,266 12.51% 1,105

2/28/2015 3,654,036 40,574,442 257,554 605 7.5% $1.318 $295 910,283 6.28% 1,029

2/29/2016 3,790,599 43,102,516 250,888 55 8.0% $1.412 $152 74,140 -3.77% 1,076

Gross

Wages Hours Months Total

Contributions for

 Plan Year Ending 2/29/2016 $3,428,355 $353,892 $8,352 $3,790,599

 - as % of Total Contributions 90.5% 9.3% 0.2% 100.0%

Average Annual Change in CBUs Average Annual Change

Over 9 Years -2.8% -19.7% -36.4% -4.5% -10.1%

Over 5 Years 4.1% -24.6% -50.7% 1.4% -7.0%

Over 3 Years 7.1% -28.4% -67.8% 3.7% -7.5%

Over 1 Year 6.2% -2.6% -90.9% 5.2% 4.6%
2 

Revenue Procedure 2016-27, Section 6.03

Ten-Year Experience for Certain Critical Assumptions

CURRENT EMPLOYERS

(1) (2) (3) (4)

Contribution Base Units Average Contribution Rate

Plan Year Gross % of Gross Active

Ending Contributions Wages Hours Months Wages $ per Hour $ per Month Participants

2/28/2007 $2,616,354 $42,840,408 444,482 28 5.3% $0.814 $106 1,442

2/29/2008 2,602,470 42,803,352 383,624 46 5.3% $0.840 $105 1,366

2/28/2009 2,346,636 40,009,315 276,455 47 5.3% $0.850 $105 1,305

2/28/2010 1,987,234 33,307,493 251,218 47 5.3% $0.872 $105 1,172

2/28/2011 2,052,457 31,977,215 257,519 43 5.7% $0.897 $106 1,042

2/29/2012 2,535,788 35,363,156 283,035 46 6.3% $1.051 $112 951

2/28/2013 2,608,022 34,018,699 267,303 46 6.7% $1.202 $130 982

2/28/2014 2,896,531 35,814,009 266,969 48 7.1% $1.288 $134 954

2/28/2015 3,389,018 40,342,799 257,554 42 7.5% $1.318 $144 1,026

2/29/2016 3,790,599 43,032,503 250,888 55 8.0% $1.412 $152 1,076

Gross

Wages Hours Months Total

Contributions for

 Plan Year Ending 2/29/2016 $3,428,355 $353,892 $8,352 $3,790,599

 - as % of Total Contributions 90.5% 9.3% 0.2% 100.0%

Average Annual Change in CBUs Average Annual Change

Over 9 Years 0.0% -6.2% 7.8% -0.5% -3.2%

Over 5 Years 6.1% -0.5% 5.0% 5.5% 0.6%

Over 3 Years 8.1% -2.1% 6.1% 7.2% 3.1%

Over 1 Year 6.7% -2.6% 31.0% 5.9% 4.9%
3 

Revenue Procedure 2016-27, Section 6.03

Ten-Year Experience for Certain Critical Assumptions

STEINWAY AND SEALY, INC.

(1) (2) (3) (4)

Contribution Base Units Average Contribution Rate

Plan Year Gross % of Gross Active

Ending Contributions Wages Hours Months Wages $ per Hour $ per Month Participants

2/28/2007 $1,862,574 $27,933,632 341,005 0 5.6% $0.900 $0 876

2/29/2008 1,867,693 28,335,849 289,258 0 5.6% $0.942 $0 814

2/28/2009 1,603,371 24,713,810 201,496 0 5.7% $1.000 $0 742

2/28/2010 1,296,116 18,836,239 197,557 0 5.8% $1.000 $0 684

2/28/2011 1,352,677 18,347,722 204,614 0 6.3% $1.000 $0 581

2/29/2012 1,766,473 21,705,922 230,401 0 6.9% $1.171 $0 542

2/28/2013 1,742,236 19,840,082 225,075 0 7.3% $1.311 $0 559

2/28/2014 1,970,262 21,564,727 223,379 0 7.7% $1.421 $0 549

2/28/2015 2,323,574 24,835,110 205,718 0 8.1% $1.499 $0 586

2/29/2016 2,604,094 26,631,492 204,381 0 8.6% $1.581 $0 625

Gross

Wages Hours Months Total

Contributions for

 Plan Year Ending 2/29/2016 $2,280,881 $323,212 $0 $2,604,094

 - as % of Total Contributions 87.6% 12.4% 0.0% 100.0%

Average Annual Change in CBUs Average Annual Change

Over 9 Years -0.5% -5.5% 0.0% -1.1% -3.7%

Over 5 Years 7.7% 0.0% 0.0% 6.8% 1.5%

Over 3 Years 10.3% -3.2% 0.0% 8.6% 3.8%

Over 1 Year 7.2% -0.6% 0.0% 6.3% 6.7%







APPENDIX II – METHODOLOGY AND ASSUMPTIONS

6 

A. Actuarial Assumptions

1. Investment Return (net of investment expenses)

Discount Rate: 6.75% per year 

Valuation Assumption: 12.95%* for the plan year ending Feb 2017; 6.75% per year 

thereafter

Stress Testing Scenario: 12.53%* for the plan year ending Feb 2017; 3.00% for the 

plan year ending Feb 2018, increasing by 1% per year for 

the next three years, followed by 6.75% thereafter

* The Investment Consultant provided the estimated Market Value of Assets in the 

portfolio as of December 31, 2016; the amount was adjusted to account for cash and 

receivables. In addition, they estimated a return of 12.34% over the first 11 months of 

the fiscal year. For the stress testing scenario, we assumed the Fund would earn 0.17% 

(based on a 2.00% assumption) for the final month for an annual return of 12.53%. 

Similarly, for the scenario where the Fund earns 6.75% in all years, we assumed the Fund 

would earn 0.55% (based on the 6.75% assumption) for the final month for an annual 

return of 12.95%. 

2. Administrative Expenses

The administrative expense assumption includes: 

• INFLATION: Based on historical experience, we assume most administrative 

expenses would increase by our inflation assumption of 1.5% per year (including 

PBGC premiums). The only exception is the medical and retirement benefits for the 

Fund Office employees, which we assume, would increase 4% per year (but limited 

to 100% of payroll). Finally, expenses are limited to 20% of expected benefit 

payments in all scenarios because at that point (which is 30 or more years out) it 

would not make sense to allow expenses to grow any further relative to benefit 

payments, and consideration could be given to annuitization. 

• PARTITION: We assume administrative fees for fiduciary insurance and certain 

professional fees will be reduced if the partition is approved. This equates to an 

approximately 15% reduction in expenses (not including PBGC premiums) in 2018 

with 1.6% annual increases thereafter. Expenses are allocated between the Original 

Plan and Successor Plan based on projected headcounts with PBGC premiums paid 

by the Original Plan for the 10-year period following the partition effective date. 

After this 10-year period, we are assuming the premium would be paid 50% by both 

the Original Plan and Successor Plan. 

• INSOLVENCY: For scenarios where the Fund is projected to become insolvent, we 

are assuming that in the Plan Year following insolvency there would be a decrease in 

fiduciary insurance, that Trustee meetings would be limited to one per year (currently 

four), and professional fees would be reduced. This equates to an approximately 30% 

reduction in expenses (not including PBGC premiums) in 2022 and then 1.6% annual 

increases thereafter.



APPENDIX II – METHODOLOGY AND ASSUMPTIONS

10 

14. Justification for Actuarial Assumptions

The rationale for our 6.75% actuarial valuation assumption is based on the investment 

manager’s capital market outlook, Trustees’ risk preference, and the Fund’s current asset 

allocation. The rationale for our stress testing scenario (12.53% for the plan year ending 

Feb 2017; 3.00% for the plan year ending Feb 2018, increasing by 1% per year for the 

next three years, followed by 6.75% thereafter) is based on recognizing current market 

conditions and future short-term expectations along with the Plan’s cash flow 

characteristics. For our demographic assumptions, the rates of termination and rates of 

retirement for active participants were initially set after a 2007 Experience Study and are 

reviewed annually. Other demographic assumptions were adjusted based on actual Plan 

experience in conjunction with the partition & suspension analysis. 

15. Changes in Assumptions Since Last Valuation

• Mortality: the prior assumption for Healthy lives was the RP2000 with blue collar 

adjustment projected five-years with scale AA. For Disabled lives the prior 

assumption used the same table with ages set-forward five years.

• Rate of Turnover: the rates remain unchanged, but we previously assumed active 

participants who terminate would retire at age 65. 

• Rates of Retirement: we previously assumed terminated vested participants 

would retire at age 65

• Marriage Assumption: we previously assumed 80% married

• Normal Form: we previously assumed all active and terminated vested 

participants elect a Single Life Annuity 

B. Actuarial Funding Method

The cost method for determining liabilities for this valuation is the Unit Credit Cost method. 

This is one of a family of valuation methods known as accrued benefit methods. The chief 

characteristic of accrued benefit methods is that the funding pattern follows the pattern of 

benefit accrual. The normal cost is determined as that portion of each participant’s benefit 

attributable to service expected to be earned in the upcoming plan year. The Actuarial 

Liability, which is determined for each participant as of each valuation date, represents the 

actuarial present value of the portion of each participant’s benefit attributable to service 

earned prior to the valuation date.




APPENDIX II – METHODOLOGY AND ASSUMPTIONS

3 

A. Actuarial Assumptions

1. Investment Return (net of investment expenses)

Discount Rate: 6.75% per year 

Valuation Assumption: 12.95%* for the plan year ending Feb 2017; 6.75% per year 

thereafter

Stress Testing Scenario: 12.53%* for the plan year ending Feb 2017; 3.00% for the 

plan year ending Feb 2018, increasing by 1% per year for 

the next three years, followed by 6.75% thereafter 

* The Investment Consultant provided the estimated Market Value of Assets in the 

portfolio as of December 31, 2016; the amount was adjusted to account for cash and 

receivables. In addition, they estimated a return of 12.34% over the first 11 months of 

the fiscal year. For the stress testing scenario, we assumed the Fund would earn 0.17% 

(based on a 2.00% assumption) for the final month for an annual return of 12.53%. 

Similarly, for the scenario where the Fund earns 6.75% in all years, we assumed the Fund 

would earn 0.55% (based on the 6.75% assumption) for the final month for an annual 

return of 12.95%. 

2. Administrative Expenses

The administrative expense assumption includes: 

• INFLATION: Based on historical experience, we assume most administrative 

expenses would increase by our inflation assumption of 1.5% per year (including 

PBGC premiums). The only exception is the medical and retirement benefits for the 

Fund Office employees, which we assume, would increase 4% per year (but limited 

to 100% of payroll). Finally, expenses are limited to 20% of expected benefit 

payments in all scenarios because at that point (which is 30 or more years out) it 

would not make sense to allow expenses to grow any further relative to benefit 

payments, and consideration could be given to annuitization. 

• PARTITION: We assume administrative fees for fiduciary insurance and certain 

professional fees will be reduced if the partition is approved. This equates to an 

approximately 15% reduction in expenses (not including PBGC premiums) in 2018 

with 1.6% annual increases thereafter. Expenses are allocated between the Original 

Plan and Successor Plan based on projected headcounts with PBGC premiums paid 

by the Original Plan for the 10-year period following the partition effective date. 

After this 10-year period, we are assuming the premium would be paid 50% by both 

the Original Plan and Successor Plan. 

• INSOLVENCY: For scenarios where the Fund is projected to become insolvent, we 

are assuming that in the Plan Year following insolvency there would be a decrease in 

fiduciary insurance, that Trustee meetings would be limited to one per year (currently 

four), and professional fees would be reduced. This equates to an approximately 30% 

reduction in expenses (not including PBGC premiums) in 2022 and then 1.6% annual 

increases thereafter.



APPENDIX II – METHODOLOGY AND ASSUMPTIONS

7 

14. Justification for Actuarial Assumptions

The rationale for our 6.75% actuarial valuation assumption is based on the investment 

manager’s capital market outlook, Trustees’ risk preference, and the Fund’s current asset 

allocation. The rationale for our stress testing scenario (12.53% for the plan year ending 

Feb 2017; 3.00% for the plan year ending Feb 2018, increasing by 1% per year for the 

next three years, followed by 6.75% thereafter) is based on recognizing current market 

conditions and future short-term expectations along with the Plan’s cash flow 

characteristics. For our demographic assumptions, the rates of termination and rates of 

retirement for active participants were initially set after a 2007 Experience Study and are 

reviewed annually. Other demographic assumptions were adjusted based on actual Plan 

experience in conjunction with the partition & suspension analysis. 

15. Changes in Assumptions Since Last Valuation

• Mortality: the prior assumption for Healthy lives was the RP2000 with blue collar 

adjustment projected five-years with scale AA. For Disabled lives the prior 

assumption used the same table with ages set-forward five years.

• Rate of Turnover: the rates remain unchanged, but we previously assumed active 

participants who terminate would retire at age 65. 

• Rates of Retirement: we previously assumed terminated vested participants would 

retire at age 65

• Marriage Assumption: we previously assumed 80% married

• Normal Form: we previously assumed all active and terminated vested participants 

elect a Single Life Annuity

B. Actuarial Funding Method

The cost method for determining liabilities for this valuation is the Unit Credit Cost method. 

This is one of a family of valuation methods known as accrued benefit methods. The chief 

characteristic of accrued benefit methods is that the funding pattern follows the pattern of 

benefit accrual. The normal cost is determined as that portion of each participant’s benefit 

attributable to service expected to be earned in the upcoming plan year. The Actuarial 

Liability, which is determined for each participant as of each valuation date, represents the 

actuarial present value of the portion of each participant’s benefit attributable to service 

earned prior to the valuation date.