CARPENTERS PENSION TRUST FUND

DETROIT AND VICINITY PENSION PLAN

Actuarial Valuation Report 

For Plan Year Commencing 

May 1, 2019 

CPTF000871 CPTF - 
11590 North Meridian Street, Suite 610  Carmel, Indiana 46032-4529  (317) 580-8670  Fax (317) 580-8651

March 9, 2020 

Board of Trustees 

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

Dear Trustees: 

We have been retained by the Board of Trustees of the Carpenters Pension Trust Fund - 

Detroit and Vicinity Pension Plan to perform annual actuarial valuations of the pension plan. 

This report presents the results of our actuarial valuation for the plan year beginning 

May 1, 2019. The valuation results contained herein are based on current plan provisions 

summarized in Appendix A, the actuarial assumptions and methods listed in Appendix B 

and on financial statements audited by Bultynck & Co., P.L.L.C. Participant data was 

provided by BeneSys, Inc. While we have reviewed the data for reasonableness in 

accordance with Actuarial Standards of Practice No. 23, we have not audited it. The data 

was relied on as being both accurate and comprehensive. 

This report has been prepared in order to (1) assist the Trustees in evaluating the current 

actuarial position of the plan, (2) determine the minimum required and maximum deductible 

contribution amounts under Internal Revenue Code §431 and §404, (3) provide the fund’s 

auditor with information necessary to comply with Accounting Standards Codification 960, 

and (4) document the plan’s certified status under Internal Revenue Code §432 for the 

current year and provide the basis to certify such status for the subsequent year. In addition, 

information contained in this report will be used to prepare Schedule MB of Form 5500 that 

is filed annually with the IRS and could be used to calculate employer withdrawal liability. 

We are not responsible for the use of, or reliance upon, this report for any other purpose. 

We have prepared this report in accordance with generally accepted actuarial principles 

and practices and have performed such tests as we considered necessary to assure the 

accuracy of the results. The results have been determined on the basis of actuarial 

assumptions that, in our opinion, are appropriate for the purposes of this report, are 

individually reasonable and in combination represent our best estimate of anticipated 

experience under the plan. Actuarial assumptions may be changed from previous 

valuations due to changes in mandated requirements, plan experience resulting in changes 

in expectations about the future, and/or other factors. An assumption change does not 

indicate that prior assumptions were unreasonable when made. For purposes of current 

liability calculations, assumptions are prescribed by regulation or statute. By relying on this 

valuation report, the Trustees confirm they have accepted the assumptions contained in the 

report. 

The results are based on our best interpretation of existing laws and regulations and are 

subject to revision based on future regulatory or other guidance. 

Future actuarial measurements may differ significantly from the current measurements 

presented in this report due to such factors as the following: plan experience differing from 

that anticipated by the economic or demographic assumptions, changes in economic or 

demographic assumptions, increases or decreases expected as part of the natural 

operation of the methodology used for these measurements (such as the end of an 

amortization period or additional cost or contribution requirements based on the plan’s 

funded status), and changes in plan provisions or applicable law. 

CPTF000872 CPTF - 
Board of Trustees -2- March 9, 2020 

An application to suspend benefits pursuant to the Multiemployer Pension Reform Act 

(MPRA) is currently pending with the Treasury Department and PBGC. This actuarial 

valuation report does not reflect the proposed suspension in any way. 

United Actuarial Services, Inc. does not provide, nor charge for, investment, tax or legal 

advice. None of the comments made herein should be construed as constituting such 

advice. We are not aware of any direct or material indirect financial interest or relationship 

that could create a conflict of interest that would impair the objectivity of our work. 

The undersigned actuaries meet the Qualification Standards of the American Academy of 

Actuaries to render the actuarial opinion contained in this report. 

We are available to respond to any questions you may have about this report. 

UNITED ACTUARIAL SERVICES, INC. 

Enrolled Actuary Consultant 

Angela L. Jeffries, EA, MAAA Andrew T. Smith, FCA, ASA, EA

Consulting Actuary President 

CPTF000873 CPTF - 
TABLE OF CONTENTS

PART I: SUMMARY OF RESULTS 5

5 - Year Summary of Valuation Results 6

5 - Year Summary of Demographics 7

Changes From Prior Study 8

History of Major Assumptions 9

Experience vs. Assumptions 10

Plan Maturity 11

Unfunded Vested Benefits/Employer Withdrawal Liability 12

Contribution Allocation 13

Funding Standard Account Projection 14

Funded Ratio Projection 15

PPA Status Projections 16

Ultimate Funded Status 17

Stress Testing and Sensitivity Analysis 18

PART II: SUPPLEMENTAL STATISTICS 19

Participant Data Reconciliation 20

Hours Worked During Plan Year 21

Contributions Made During Plan Year 22

Active Information 23

Inactive Vested Information 24

Retiree Information 25

PART III: ASSET INFORMATION 27

Market and Actuarial Fund Values 28

Flow of Funds 29

Investment Gain and Loss 30

Rate of Return on Fund Assets 31

PART IV: ENROLLED ACTUARY’S REPORT 32

Normal Cost/Actuarial Liability 33

Actuarial Liability Reconciliation/Projection 34

Funded Ratios 35

Funding Period 36

Current Liability 37

Funding Standard Account 38

Funding Standard Account Without Amortization Extension 39

Full Funding Limit 40

Minimum Required Contribution and Full Funding Credit 41

Maximum Deductible Contribution 42

History of Unfunded Vested Benefits 43

Termination by Mass Withdrawal 44

ASC 960 Information 45

APPENDICES

Plan Provisions Appendix A 

Actuarial Assumptions and Methods Appendix B 

Minimum Funding Amortization Bases Appendix C 

Summary of Endangered and Critical Status Rules Appendix D 

Glossary of Common Pension Terms Appendix E 

CPTF000874 CPTF - 
Page 5 

PART I: SUMMARY OF RESULTS

CPTF000875 CPTF - 
Summary of Results 

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 6 

 

5 - YEAR SUMMARY OF VALUATION RESULTS

Actuarial Study 

as of May 1, 2019 2018 2017 2016 2015

PPA funded status Crit & Decl Crit & Decl Critical Critical Critical

Progress under FIP/RP* Yes Yes Yes Yes Yes

Improvements restricted** Yes Yes Yes Yes Yes

Funded ratio

PPA certification 34.5% 34.5% 36.4% 38.9% 42.5%

Valuation report (AVA) 34.5% 34.8% 35.5% 38.7% 41.4%

Valuation report (MVA) 34.3% 34.3% 33.4% 33.6% 36.0%

Proj. year of insolvency 2033 2033 2036 None None

Credit balance/(funding 

deficiency) ($000)

(409,159) (327,316) (258,325) (190,016) (141,912)

Date of first projected funding deficiency (with extension)

PPA certification Existing Existing Existing Existing Existing

Valuation report Existing Existing Existing Existing Existing

Net investment return

On market value 6.65% 7.87% 11.13% -0.22% 4.42%

On actuarial value 5.87% 2.56% 1.78% -0.66% 1.12%

Asset values ($ 000)

Market 772,280 761,729 734,240 712,660 746,439 

Actuarial 777,051 771,737 781,239 821,814 859,594 

Accum. ben. ($ 000) 2,253,649 2,217,888 2,199,043 2,123,936 2,076,091

* Scheduled progress for this Plan means using all reasonable measures to forestall insolvency.

** Benefit improvement restrictions due to fund being in critical and declining status and due to fund 

having an amortization extension. Restrictions will remain in place until plan is in safe status again.

CPTF000876 CPTF - 
Summary of Results 

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 7 

 

5 - YEAR SUMMARY OF DEMOGRAPHICS

Actuarial Study 

as of May 1, 2019 2018 2017 2016 2015

Participant counts

Active 5,694 5,803 5,208 5,246 5,054 

Inactive vested 6,444 6,438 6,465 6,495 6,515 

Receiving benefits 7,466 7,395 7,314 7,290 7,276 

Total 19,604 19,636 18,987 19,031 18,845 

Average entry age 28.4 28.5 28.1 28.1 27.9 

Average attained age 41.6 41.6 42.3 42.1 42.5 

Hours worked in prior plan year (thousands)

Expected hours valuation 7,249 6,825 6,908 5,983 5,953

Expected hours PPA cert 8,500 7,500 8,500 8,000 7,500

Exp. hours val projections 8,400 9,200 7,300 8,000 7,500

Actual hours worked 7,725 8,185 7,266 7,306 6,772

CPTF000877 CPTF - 
Summary of Results 

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 8 

 

CHANGES FROM PRIOR STUDY

Changes in Plan Provisions 

The plan provisions underlying this valuation are the same as those valued last year. 

Changes in Actuarial Assumptions and Methods 

The actuarial assumptions and methods used in this valuation differ from those used in the 

prior valuation in the following respects: 

 The assumed operational expenses were increased from $4,000,000 to $4,090,000 and 

are assumed to increase annually by 2.25% in order to reflect our best estimate of future 

expenses based on recent plan experience. 

 The current liability interest rate was changed from 2.99% to 3.09%. The new rate is 

within established statutory guidelines. 

CPTF000878 CPTF - 
Summary of Results 

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 9 

 

HISTORY OF MAJOR ASSUMPTIONS

Actuarial Study as of May 1,

Assumption 2019 2018 2017 2016 2015

Future rate of net 

investment return

7.50% 7.50% 7.50% 7.50% 7.50%

Mortality table RP 2006 RP 2006 RP 2006 RP 2006 RP 2006 

Adjustment 100% 100% 100% 115% 2 yr. sf

Projection scale MP-2018 MP-2018 MP-2017 MP-2016 MP-2015 

Future expenses $4,090,000 $4,000,000 $4,300,000 $4,300,000 $4,000,000

Average future hourly 

contribution rate*

Credited $5.68 $5.74 $5.72 $5.74 $5.85

Non-credited 8.89 8.99 9.78 9.81 10.00

Total $14.57 $14.73 $15.50 $15.55 $15.85

Average future annual hours

Vested 1,600 1,600 1,600 1,600 1,400

Non-vested 600 600 600 600 500

* Actual average derived from application of assumptions specified in Appendix B.

CPTF000879 CPTF - 
Summary of Results 

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 10 

 

EXPERIENCE VS. ASSUMPTIONS

Actuarial assumptions are used to project certain 

future events related to the pension plan (e.g. 

deaths, withdrawals, investment income, expenses, 

etc.). While actual results for a single plan year will 

rarely match expected experience, it is intended that 

the assumptions will provide a reasonable long term 

estimate of developing experience. 

The following table provides a comparison of expected outcomes for the prior plan year with 

the actual experience observed during the same period. This display may provide insight 

as to why the plan’s overall actuarial position may be different from expected.

Plan Year Ending 

April 30, 2019 Expected Actual

Decrements

Terminations 1,113

less: Rehires 234

Terminations (net of rehires) 950.3 879

Active retirements 107.6 82

Active disabilities 7.3 9

Pre-retirement deaths 53.8 46

Post-retirement deaths 273.2 299

Monthly benefits of deceased retirees $ 318,620 $ 287,212

Financial assumptions

Rate of net investment return on actuarial value 7.50% 5.87%

Administrative expenses $ 4,000,000 $ 4,633,812

Other demographic assumptions

Average retirement age from active (new retirees) 59.0 58.9

Average retirement age from inactive (new retirees)* 61.7 64.5

Average entry age (new entrants) 28.5 32.2

Hours worked per vested active 1,600 1,656

Hours worked per non-vested active 600 713

Total hours worked (valuation assumption) 7,249,000 7,725,209

Total hours worked (PPA certification assumption) 8,500,000 7,725,209

Unfunded liability (gain)/loss

(Gain)/loss due to asset experience $ 12,282,846

(Gain)/loss due to liability experience 11,072,484

Total (gain)/loss $ 23,355,330

* Expected average based on the average for the total group of participants.

Comparing the prior year’s 

experience to assumptions 

provides indications as to 

why overall results may 

differ from those expected 

CPTF000880 CPTF - 
Summary of Results 

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 11 

 

PLAN MATURITY

When a new pension plan is first established, its 

liabilities are typically limited to active plan 

participants. However, as people become vested 

and retire, a plan begins to develop liabilities 

attributable to nonactive participants (retirees and 

inactive vested participants). The process of adding 

nonactive liabilities (often referred to as “maturing”) 

is a natural outgrowth of the operation of the plan. As a plan matures, its liabilities tend to 

balloon in relation to its contribution base, making it more difficult to correct for adverse 

outcomes by increasing contribution rates or reducing future benefit accruals. 

Headcount ratios show the number of retiree or inactive participants supported by each 

active participant. While there is no hard and fast rule, we generally consider a plan to be 

mature if each active is supporting more than 1 retiree or more than 2 nonactives. A 

negative net cash flow (benefits payments and expenses greater than contributions) can 

also be an indicator of a mature plan. A negative cash flow, when expressed as a 

percentage of assets, in excess of the assumed rate of return on fund assets may not be 

sustainable in the long term. 

Actuarial Study 

as of May 1, 2019 2018 2017 2016 2015

Retiree/active headcount ratio 1.31 1.27 1.40 1.39 1.44

Nonactive/active headcount ratio 2.44 2.38 2.65 2.63 2.73

Cash flow

Contr.-ben.-exp. ($000) (39,068) (29,243) (54,819) (32,245) (34,373)

Percent of assets -5.06% -3.84% -7.47% -4.52% -4.60%

Liabilities of Actives, Retirees, and Inactive Vesteds 

Total Liabilities: $2,253,649,383 

Measures of plan maturity 

can play a part in 

understanding risk and a

plan’s ability to recover 

from adverse experience

CPTF000881 CPTF - 
Summary of Results 

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 12 

 

UNFUNDED VESTED BENEFITS/EMPLOYER WITHDRAWAL LIABILITY

The following table shows a history of the plan’s 

unfunded vested benefits (UVB) required to 

compute a specific employer withdrawal liability 

under the presumptive method. If all unfunded 

vested benefits since the inception of the 

Multiemployer Pension Plan Amendments Act of 1980 (MPPAA) are zero ($0) or less, there 

will be no withdrawal liability assessed to a withdrawing employer. Otherwise, an employer 

may be assessed withdrawal liability payments pursuant to MPPAA. The display does not 

reflect adjustments for prior employer withdrawals. 

In accordance with IRC Section 432(e)(9)(A) and PBGC Technical Update 10-3, the impact 

of reducing adjustable benefits is reflected by adding the unamortized portion of the value 

of affected benefits (VAB) to the most recent year’s unfunded vested benefits pool. An 

employer who is assessed withdrawal liability will be assessed a portion of the UVB and the 

VAB.

Presumptive Method ($ 000) 

April 30, 2019 2018 2017 2016 2015

Vested benefits interest 7.50% 7.50% 7.50% 7.50% 7.50%

Vested benefits 2,240,984 2,205,042 2,185,387 2,089,265 1,986,840

less: Asset value* 777,051 771,737 781,239 821,814 859,594

UVB 1,463,933 1,433,305 1,404,148 1,267,451 1,127,246

Unamortized VAB 188,473 200,929 212,515 223,293 233,318

UVB + VAB 1,652,406 1,634,234 1,616,663 1,490,744 1,360,564

* Actuarial value

** Includes VAB

An employer withdrawing 

during the coming year may

have withdrawal liability

CPTF000882 CPTF - 
Summary of Results 

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 13 

 

CONTRIBUTION ALLOCATION

The following allocation charts illustrate how the 

expected contribution rate for the coming plan year 

will be “spent” to pay for benefits being earned in the 

current year, plan expenses, and funding of past 

unfunded liabilities. 

Contribution Allocation as of May 1, 2019 

Total Average Expected Contribution Rate $14.57 

Contribution Allocation as of May 1, 2018 

Total Average Expected Contribution Rate $14.73 

These graphs show how 

the contributions are

being spent

CPTF000883 CPTF - 
Summary of Results 

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 14 

 

FUNDING STANDARD ACCOUNT PROJECTION

The funding standard account (FSA) was 

established by ERISA as a means of determining 

compliance with minimum funding standards. 

The FSA is hypothetical in the sense that it does 

not represent actual assets held by a custodian. 

Rather, a positive FSA balance (called a “credit balance”) means that the plan has 

exceeded minimum funding standards on a cumulative basis, while a negative balance 

(called a “funding deficiency”) means that the plan has fallen short of such standards.

Actuaries must project the plan’s FSA each year in order to determine PPA status. If a 

funding deficiency is projected in a future year, the plan could be forced into yellow 

(endangered) or red (critical) status depending how far into the future the first projected 

funding deficiency is. The plan’s FSA projection appears below. These projections are 

based on the assumptions summarized in the “Actuarial Assumptions used for Projections” 

section of Appendix B. 

The funding standard 

account projection is a major 

driver of PPA status

CPTF000884 CPTF - 
Summary of Results 

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 15 

 

FUNDED RATIO PROJECTION

The funded ratio is defined as the actuarial value 

of plan assets divided by the plan’s liabilities for 

accrued benefits. Along with the funding standard 

account projection, funded ratio is one of the two 

major drivers of PPA funded status. In order for a plan to enter the green zone (also called 

“safe” or “not endangered or critical”) the funded ratio must be at least 80%. An insolvency, 

which is the plan year when the plan would run out of money, occurs if the funded ratio is 

projected to be 0%. In order for a plan to enter critical and declining status, an insolvency 

needs to be projected within 20 plan years of the PPA certification (it may need to be within 

15 years under certain conditions). The projection of the funded ratio appears below. These 

projections are based on the assumptions summarized in the “Actuarial Assumptions used 

for Projections” section of Appendix B. 

The plan’s funded ratio is a 

major driver of PPA status

CPTF000885 CPTF - 
Summary of Results 

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 16 

 

PPA STATUS PROJECTIONS

The Pension Protection Act of 2006 (PPA), as amended by the Multiemployer Pension 

Reform Act of 2014 (“MPRA”), requires all multiemployer pension plans to obtain an annual 

status certification. The possible statuses are: “Safe”, “Endangered”, “Seriously 

Endangered”, “Critical” or “Critical and Declining”. The criteria for these determinations are 

outlined in Appendix D. The following graph shows PPA status deterministic projections 

based on the assumptions summarized in the “Actuarial Assumptions used for Projections” 

section of Appendix B. The second following graph shows the probability of the Plan being 

in each status for the next 20 years using a stochastic projection based on the mean and 

standard deviation of the Plan’s investment portfolio. The zone projections are based on 

the current plan and do not include any further action if the plan moves to a worse PPA 

zone. 

 

Projected PPA Status – Deterministic Projection 

Projected PPA Status – Stochastic Projection 

CPTF000886 CPTF - 
Summary of Results 

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 17 

 

ULTIMATE FUNDED STATUS

An actuarial valuation deals primarily with the ability 

of the plan to meet Internal Revenue Code 

requirements now and in the near future. As such, it 

is heavily focused on current plan assets and 

liabilities. But it is also important to keep in mind the 

true purpose of the plan funding—that is, to 

accumulate sufficient assets to pay the benefits that the plan has promised to its 

participants. The chart below looks at this long-term funding adequacy. To the current plan 

assets, we add the present value of all future contributions expected to be made for the 

current plan participants. To the value of the plan’s liabilities for benefits that have been 

previously earned, we add the present value of future benefits the current plan participants 

are expected to earn and the present value of future administrative expenses the plan is 

expected to pay. Ideally these ultimate asset and liability values will be approximately 

equal. 

An ultimate funded status of less than 100% could be an indication of generational shifting 

(i.e. the need for one generation of participants to fund the benefits of the preceding 

generation) and/or a reliance on the continued addition of new participants in order to fund 

benefits. 

Ultimate funded status is 

an indicator of the ability of 

current participants to pay 

for their own benefits

CPTF000887 CPTF - 
Summary of Results 

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 18 

 

STRESS TESTING AND SENSITIVITY ANALYSIS

Currently, the plan is in critical and declining status 

and projects insolvency during the 2033-2034 plan 

year. Considering that experience rarely matches 

our assumptions exactly, we developed the table 

below to demonstrate the impact that variations in 

certain key assumptions would have on the date of 

projected insolvency. We examined future hours 

assumptions equal to the baseline, 10% lower, and 10% higher. We examined asset 

returns for the 2019-20 plan year of 10.00%, 6.50%, 4.00%, and 0.00%. All results include 

the impact of a lower asset return of 6.50% for the next 9 years and 7.50% thereafter. 

Stochastic modeling is also available for a more detailed analysis of sensitivity to asset 

returns. 

Projected Plan Year of Insolvency 

Return for the 2019-20 PY 

(6.50% next 9 years, 7.50% thereafter)

Assumptions 10.00% 6.50% 4.00% 0.00%

10% Lower Hours

7,380,000 in 2019-20

7,200,000 in 2020-21

7,020,000 in 2021-22

6,300,000 thereafter

2032 2031 2031 2030

Baseline Hours

8,200,000 in 2019-20

8,000,000 in 2020-21

7,800,000 in 2021-22

7,000,000 thereafter

2034 2033 2033 2032

10% Higher Hours

9,020,000 in 2019-20

8,800,000 in 2020-21

8,580,000 in 2021-22

7,700,000 thereafter

2037 2036 2036 2035

The table below illustrates

the impact on the plan when 

experience varies from key 

assumptions

CPTF000888 CPTF - 
Page 19

PART II: SUPPLEMENTAL STATISTICS

CPTF000889 CPTF - 
Supplemental Statistics 

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 20 

 

PARTICIPANT DATA RECONCILIATION

The participant data reconciliation table below provides information as to how the plan’s 

covered population changed since the prior actuarial study. Such factors as the number of 

participants retiring, withdrawing and returning to work have an impact on the actuarial 

position of the pension fund. 

Participants 

Valued As Active

Inactive 

Vested

Receiving 

Benefits

Total 

Valued

May 1, 2018 5,803 6,438 7,395 19,636

Change due to:

New hire 874 - - 874

Rehire 234 (97) - 137

Termination (1,113) 254 - (859)

Disablement (9) (14) 23 - 

Retirement (82) (167) 249 - 

Death (9) (37) (299) (345)

Cash out - (4) - (4)

New beneficiary - 26 102 128

Certain pd. expired - - (7) (7)

Data adjustment (4) * 45 ** 3 *** 44

Net change (109) 6 71 (32)

May 1, 2019 5,694 6,444 7,466 19,604

* Comprised primarily of actives that had duplicate records removed.

** Comprised primarily of previously unvalued inactive vested participants and deferred beneficiaries who 

were found during data work for the MRPA application.

*** Comprised primarily of retirees and beneficiaries previously thought to be deceased or ineligible for 

benefits.

CPTF000890 CPTF - 
Supplemental Statistics 

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 21 

 

HOURS WORKED DURING PLAN YEAR

Hours Worked Per Participant 

Plan Year Ending 

April 30, 2019 Number Hours Worked

Average 

Hours Worked

Actives

Vested 3,809 6,306,055 1,656

Non-vested, continuing 1,011 884,912 875

Non-vested, new entrant 874 458,700 525

Total active 5,694 7,649,667 1,343

Others 129 75,542 586

Total for plan year 5,823 7,725,209 1,327

History of Total Actual and Expected Hours Worked (Thousands) 

Plan Year Ending 

April 30, 2020 2019 2018 2017 2016

Expected hours valuation 7,201 7,249 6,825 6,908 5,983

Expected hours PPA cert 8,200 8,500 7,500 8,500 8,000

Actual hours worked n/a 7,725 8,185 7,266 7,306

History of Average Actual and Expected Hours Worked per Participant 

CPTF000891 CPTF - 
Supplemental Statistics 

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 22 

 

CONTRIBUTIONS MADE DURING PLAN YEAR

Employer Credited Contributions Reported in Employee Data 

Plan Year Ending 

April 30, 2019 Number

Credited Contributions 

Reported

Actives

Vested 3,809 $ 36,670,643

Non-vested, continuing 1,011 4,189,874

Non-vested, new entrant 874 2,081,134

Total valued as active 5,694 42,941,651

Others 129 448,366

Total for plan year 5,823 $ 43,390,017

Average credited hourly contribution rate $ 5.62

Comparison with Audited Employer Contributions 

Employer credited contributions reported in data $ 43,390,017

Adjusted total employer contributions reported* $ 111,256,454

Total audited employer contributions** $ 113,494,825

Percent reported 98%

* Adjusted to reflect the average non-credited (“discounted”) portion of contributions of 

61%.

** Excludes employer withdrawal liability payments.

History of Actual and Expected Total Contributions Received

CPTF000892 CPTF - 
Supplemental Statistics 

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 23 

 

ACTIVE INFORMATION

Active Participants by Age and Service as of May 1, 2019 

Years of Service

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

< 25 163 333 20 - - - - - - - 516

25-29 126 331 135 10 - - - - - - 602

30-34 113 242 131 109 15 - - - - - 610

35-39 93 242 118 139 121 27 - - - - 740

40-44 69 173 103 101 167 156 5 - - - 774

45-49 63 111 71 86 178 183 74 11 - - 777

50-54 61 85 70 85 137 183 85 126 8 - 840

55-59 35 50 41 52 99 118 71 88 7 - 561

60-64 23 12 16 33 32 45 17 8 1 - 187

65-69 5 3 1 1 2 4 - - - - 16

70+ 1 - 1 - - - - - - - 2

Totals 752 1,582 707 616 751 716 252 233 16 - 5,625

Unrecorded

DOB 61 8 - - - - - - - - 69

Total

Active

Lives 813 1,590 707 616 751 716 252 233 16 - 5,694

CPTF000893 CPTF - 
Supplemental Statistics 

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 24 

 

INACTIVE VESTED INFORMATION

Inactive Vested Participants by Age as of May 1, 2019 

Age Group Number

Estimated Monthly 

Deferred Vested 

Benefits*

< 30 45 $ 5,477

30-34 151 28,175

35-39 555 220,034

40-44 919 507,963

45-49 1,103 754,055

50-54 1,231 886,664

55-59 1,217 827,496

60-64 872 496,265

65-69 220 84,910

70+ 128 48,498

Totals 6,441 3,859,537

Unrecorded birth date 3 281

Total inactive vested lives 6,444 $ 3,859,818

* Amount payable at assumed retirement age as used in the valuation process.

CPTF000894 CPTF - 
Supplemental Statistics 

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 25 

 

RETIREE INFORMATION

Benefits Being Paid by Form of Payment as of May 1, 2019 

Monthly Benefits Being Paid

Form of Payment Number Total Average Smallest Largest

Life only* 2,341 $ 4,193,846 $ 1,791 $ 32 $ 8,038

Joint & survivor 2,991 6,340,415 2,120 25 8,926

Disability 461 684,696 1,485 192 4,916

Beneficiaries 1,673 1,446,397 865 11 6,584

Totals 7,466 $ 12,665,354 $ 1,696 $ 11 $ 8,926

Retirees by Age and Form of Payment as of May 1, 2019 

Form of Benefits Being Paid

Age

Group

Life

Only*

Joint & 

Survivor Disability Beneficiaries Total

< 40 - - 5 9 14

40-44 - - 22 1 23

45-49 - - 38 10 48

50-54 - - 102 46 148

55-59 139 188 210 115 652

60-64 408 572 84 171 1,235

65-69 539 745 - 218 1,502

70-74 430 617 - 213 1,260

75-79 329 447 - 232 1,008

80-84 247 243 - 250 740

85-89 153 131 - 239 523

90-94 73 43 - 134 250

95+ 23 5 - 35 63

Totals 2,341 2,991 461 1,673 7,466

* Includes retirees receiving life and certain benefits.

CPTF000895 CPTF - 
Supplemental Statistics 

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 26 

 

RETIREE INFORMATION (CONT.)

Age of Participants Retired During Last 5 Plan Years 

(excludes beneficiaries and disability retirements) 

Age at Plan Year Ending April 30,

Retirement 2019 2018 2017 2016 2015

< 52 - - - - - 

52 - - - 1 - 

53 - - - 1 - 

54 - - - - - 

55 27 36 33 54 20

56 11 11 13 23 15

57 11 8 10 12 4

58 8 14 10 13 5

59 12 13 7 3 10

60 10 11 8 8 5

61 2 8 5 8 1

62 33 31 27 19 12

63 5 11 5 7 3

64 3 6 4 5 2

65 72 63 43 30 28

66+ 38 20 15 11 8

Totals 232 232 180 195 113

Average 

retirement age 62.5 61.5 61.1 59.7 60.7

CPTF000896 CPTF - 
Page 27

PART III: ASSET INFORMATION

CPTF000897 CPTF - 
Asset Information 

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 28 

 

MARKET AND ACTUARIAL FUND VALUES

Asset information extracted from the fund’s financial statements audited by Bultynck & Co., 

P.L.L.C. 

Market/Actuarial Value of 

Fund Investments

as of April 30, 2019 2018 2017

Invested assets

Domestic common stocks $ 92,914,949 $ 87,971,144 $ 80,476,728

Foreign common stocks 19,917,016 17,181,416 4,116,213

Mutual funds 225,594,844 215,928,174 220,011,130

Corporate securities 38,538,985 23,682,219 6,194,578

Government securities 24,953,356 16,790,217 2,745,741

Mortgage-backed corp. secur. 13,297,278 3,844,721 271,648

Mortgage-backed GSE secur. 4,012,380 - 229,070

Real estate investment trusts 2,155,395 2,495,519 2,509,454

Common/collective trusts 6,164,452 7,580,600 8,915,967

Hedge funds 31,971,224 51,799,260 64,019,094

Private equity 113,681,999 122,674,338 143,080,092

Real estate 147,478,330 173,111,462 166,638,915

Money market funds 8,144,932 10,350,601 - 

Cash and equivalents 32,599,581 18,363,564 26,550,169

Prepaid expenses 807,009 684,544 684,481

762,231,728 752,457,780 726,443,278

Net receivables* 10,048,177 9,271,229 7,796,517

Market value $ 772,279,905 $ 761,729,009 $ 734,239,795

Fund assets - Actuarial value 

Market value $ 772,279,905 $ 761,729,009 $ 734,239,795

less: Deferred investment

gains and (losses) (4,770,819) (10,007,780) (46,999,149)

Actuarial value $ 777,050,724 $ 771,736,789 $ 781,238,944

Actuarial value as a 

percentage of market value 100.62% 101.31% 106.40%

* Equals receivables, less any liabilities

CPTF000898 CPTF - 
Asset Information 

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 29 

 

FLOW OF FUNDS

Asset information extracted from the fund’s financial statements audited by Bultynck & Co., 

P.L.L.C. 

Plan Year Ending 

April 30, 2019 2018 2017

Market value at beginning of

plan year $ 761,729,009 $ 734,239,795 $ 712,660,227

Additions

Employer contributions 116,595,346 123,147,221 106,706,279

Net investment income* 49,378,345 56,604,709 76,301,511

Other income 240,815 127,168 97,527

166,214,506 179,879,098 183,105,317

Deductions

Benefits paid 151,029,798 148,373,816 157,611,626

Net expenses* 4,633,812 4,016,068 3,914,123

155,663,610 152,389,884 161,525,749

Net increase (decrease) 10,550,896 27,489,214 21,579,568

Adjustment - - - 

Market value at end of

plan year $ 772,279,905 $ 761,729,009 $ 734,239,795

Cash flow

Contr.-ben.-exp. (39,068,264) (29,242,663) (54,819,470)

Percent of assets -5.06% -3.84% -7.47%

Estimated net investment return

On market value 6.65% 7.87% 11.13%

On actuarial value 5.87% 2.56% 1.78%

* Investment expenses have been offset against gross investment income.

CPTF000899 CPTF - 
Asset Information 

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 30 

 

INVESTMENT GAIN AND LOSS

Investment Gain or Loss

Plan Year Ending April 30, 2019

Expected market value at end of plan year

Market value at beginning of plan year $ 761,729,009

Employer contributions and non-investment income 116,836,161

Benefits and expenses paid (155,663,610)

Expected investment income (at 7.50% rate of return) 55,673,646

778,575,206

Actual market value at end of plan year 772,279,905

less: Expected market value 778,575,206

Investment gain or (loss) $ (6,295,301)

History of Gains and (Losses) 

Plan Year Investment Amount

Ending Gain Recognized

April 30, or (Loss) This Year

2019 $ (6,295,301) $ (1,259,060)

2018 2,628,555 525,711

2017 24,904,067 4,980,813

2016 (56,366,691) (11,273,338)

2015 (22,531,938) (4,506,388)

Total $ (57,661,308) $ (11,532,262)

Deferred Investment Gains and (Losses) 

Plan Year

Ending Amount of Gain or (Loss) Deferred as of April 30,

April 30, 2019 2020 2021 2022

2019 $ (5,036,241) $ (3,777,181) $ (2,518,120) $ (1,259,060)

2018 1,577,133 1,051,422 525,711 - 

2017 9,961,627 4,980,813 - - 

2016 (11,273,338) - - - 

Totals $ (4,770,819) $ 2,255,054 $ (1,992,409) $ (1,259,060)

CPTF000900 CPTF - 
Asset Information 

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 31 

 

RATE OF RETURN ON FUND ASSETS

Historical Rates of Net Investment Return 

The following table shows average rates of return over various periods calculated on a 

geometric average basis. These statistics may not be appropriate for evaluating a Plan’s 

rate of return assumption as such assumption is forward-looking whereas the statistics are 

historical. Furthermore, these statistics do not reflect the internal rate of return actually 

experienced by the Fund over these periods. 

Average Rates of Net Investment Return (geometric average) 

Return on Market Value Return on Actuarial Value

Period Ending April 30, Period Ending April 30,

Period 2019 2018 2019 2018

One year 6.65% 7.87% 5.87% 2.56%

5 years 5.90% 6.66% 2.11% 2.48%

10 years 6.59% 3.55% 2.93% 2.18%

15 years 4.71% 5.18% 3.03% 3.18%

20 years 3.65% 3.75% 3.51% 3.83%

CPTF000901 CPTF - 
Page 32

PART IV: ENROLLED ACTUARY’S REPORT

CPTF000902 CPTF - 
Enrolled Actuary’s Report

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 33 

 

NORMAL COST/ACTUARIAL LIABILITY

Normal Cost as of May 1, 2019 2018

Benefit accruals $ 14,142,340 $ 14,376,040

Anticipated administrative expenses (beg. of year) 3,942,169 3,855,422

Total normal cost $ 18,084,509 $ 18,231,462

Unfunded Actuarial Liability as of May 1, 2019 2018

Actuarial liability

Participants currently receiving benefits $ 1,504,918,961 $ 1,486,101,209

Inactive vested participants 301,128,467 289,394,861

Active participants 447,601,955 442,391,581

2,253,649,383 2,217,887,651

less: Fund assets (actuarial value) 777,050,724 771,736,789

Unfunded actuarial liability (not less than 0) $ 1,476,598,659 $ 1,446,150,862

CPTF000903 CPTF - 
Enrolled Actuary’s Report

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 34 

 

ACTUARIAL LIABILITY RECONCILIATION/PROJECTION

Reconciliation of Unfunded Actuarial Liability

Expected unfunded actuarial liability as of April 30, 2019

Unfunded actuarial liability as of May 1, 2018 $ 1,446,150,862

Normal cost (including expenses) 18,231,462

Actual contributions (116,595,346)

Interest to end of plan year 105,456,351

1,453,243,329

Increase (decrease) due to:

Experience (gain) or loss 23,355,330

Plan amendment - 

Change in actuarial assumptions - 

Change in actuarial method - 

Net increase (decrease) 23,355,330

Unfunded actuarial liability as of May 1, 2019 $ 1,476,598,659

Projection of Actuarial Liability to Year End

Actuarial liability as of May 1, 2019 $ 2,253,649,383

Expected increase (decrease) due to:

Normal cost (excluding expenses) 14,142,340

Benefits paid (160,745,800)

Interest on above (4,967,292)

Interest on actuarial liability 169,023,704

Net expected increase (decrease) 17,452,952

Expected actuarial liability as of April 30, 2020 $ 2,271,102,335

CPTF000904 CPTF - 
Enrolled Actuary’s Report

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 35 

 

FUNDED RATIOS

Present Value of Accumulated Benefits/

Funded Ratios

Actuarial Study as of May 1, 2019 2018

Present value of vested accumulated benefits

Participants currently receiving benefits $ 1,504,918,961 $ 1,486,101,209

Inactive vested participants 299,421,928 287,640,501

Active participants 436,642,813 431,300,579

Total 2,240,983,702 2,205,042,289

Nonvested accumulated benefits 12,665,681 12,845,362

Present value of all accumulated benefits $ 2,253,649,383 $ 2,217,887,651

Market value of assets $ 772,279,905 $ 761,729,009

Funded ratios (Market value)

Vested benefits 34.5% 34.5%

All accumulated benefits 34.3% 34.3%

Actuarial value of assets $ 777,050,724 $ 771,736,789

Funded ratios (Actuarial value used for PPA)

Vested benefits 34.7% 35.0%

All accumulated benefits 34.5% 34.8%

Interest rate used to value benefits 7.50% 7.50%

CPTF000905 CPTF - 
Enrolled Actuary’s Report

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 36 

 

FUNDING PERIOD

The funding period is the approximate number of years that would be required to completely 

fund the unfunded entry age normal actuarial liability if future plan experience occurs 

according to the assumptions. The funding period is an indicator of the long term financial 

soundness of the plan. Historically, funds often targeted a maximum funding period of up to 

20 years. Today, asset losses are being paid off over a maximum of 15 years and are the 

primary driver for ERISA minimum funding. An ultimate target of no more than 10 years is 

recommended. A lower, more conservative funding period target can be chosen. As the 

funding period drops, the risk of having future funding issues also diminishes. 

Funding Period Calculation 

Actuarial Study as of May 1, 2019 2018

Unfunded actuarial liability

Actuarial liability $ 2,333,955,861 $ 2,301,227,465

less: Fund assets (actuarial value) 777,050,724 771,736,789

1,556,905,137 1,529,490,676

Funds available to amortize unfunded

Anticipated contributions (beg. of yr.) 101,126,117 102,922,672

less: Normal cost (including expenses) 8,140,097 8,114,992

$ 92,986,020 $ 94,807,680

Funding period (years) * * 

* Anticipated contributions are insufficient to pay normal cost and amortize unfunded liability.

CPTF000906 CPTF - 
Enrolled Actuary’s Report

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 37 

 

CURRENT LIABILITY

Current Liability is determined in a manner similar to the value of accrued benefits, but using 

an interest rate assumption within an acceptable range determined by the IRS. For this 

report we used an interest rate assumption of 3.09%. The current liability is used only in 

the determination of the maximum deductible employer contribution and full funding limit 

under the Internal Revenue Code, and is not used for any other purpose. 

Current Liability as of May 1, 2019

Vested current liability

Participants currently receiving benefits $ 2,297,129,403

Inactive vested participants 629,303,625

Active participants 972,149,092

3,898,582,120

Nonvested current liability

Inactive vested participants 2,269,782

Active participants 21,469,006

23,738,788

Total current liability $ 3,922,320,908

Projection of Current Liability to Year End

Current liability as of May 1, 2019 $ 3,922,320,908

Expected increase (decrease) due to:

Benefits accruing 35,601,532

Benefits paid (160,745,800)

Interest on above (1,383,435)

Interest on current liability 121,199,716

Net expected increase (decrease) (5,327,987)

Expected current liability as of April 30, 2020 $ 3,916,992,921 

CPTF000907 CPTF - 
Enrolled Actuary’s Report

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 38 

 

FUNDING STANDARD ACCOUNT

Funding Standard Account

Plan Year Ending April 30, 

2020

(Projected)

2019

(Final)

Charges

Prior year funding deficiency $ 409,158,686 $ 327,315,629

Normal cost (including expenses) 18,084,509 18,231,462

Amortization charges (see Appendix C) 218,399,552 218,273,664

Interest on above 48,423,204 42,286,556

Total charges 694,065,951 606,107,311

Credits

Prior year credit balance - - 

Employer contributions 119,467,109 116,595,346

Amortization credits (see Appendix C) 68,114,427 70,679,954

Interest on above 9,588,602 9,673,325

ERISA full funding credit - - 

Total credits 197,170,138 196,948,625

Credit balance (credits less charges) $ (496,895,813) $ (409,158,686)

CPTF000908 CPTF - 
Enrolled Actuary’s Report

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 39 

 

FUNDING STANDARD ACCOUNT WITHOUT AMORTIZATION EXTENSION

The Funding Standard Account on the previous page has been developed using an 

amortization extension approved by the IRS under §412(e) or §431(d) of the Code. We are 

required to report the dollar difference between the minimum required contribution with 

extension and without extension on the Schedule MB. 

Funding Standard Account

Plan Year Ending April 30, 

2020

(Projected)

2019

(Final)

Charges

Prior year funding deficiency $ 704,043,238 $ 636,739,149

Normal cost (including expenses) 18,084,509 18,231,462

Amortization charges (see Appendix C) 181,450,484 183,161,351

Interest on above 67,768,367 62,859,897

Total charges 971,346,598 900,991,859

Credits

Prior year credit balance - - 

Employer contributions 119,467,109 116,595,346

Amortization credits (see Appendix C) 68,114,427 70,679,954

Interest on above 9,588,602 9,673,321

ERISA full funding credit - - 

Total credits 197,170,138 196,948,621

Credit balance (credits less charges) $ (774,176,460) $ (704,043,238)

CPTF000909 CPTF - 
Enrolled Actuary’s Report

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 40 

 

FULL FUNDING LIMIT

Projection of Assets 

for Full Funding Limit

Market

Value

Actuarial

Value

Asset value as of May 1, 2019 $ 772,279,905 $ 777,050,724

Expected increase (decrease) due to:

Investment income 51,739,650 52,097,462

Benefits paid (160,745,800) (160,745,800)

Expenses (4,090,000) (4,090,000)

Net expected increase (decrease) (113,096,150) (112,738,338)

Expected value as of April 30, 2020* $ 659,183,755 $ 664,312,386

* Ignoring expected employer contributions (as required by regulation).

Full Funding Limit 

as of April 30, 2020

For Minimum 

Required

For Maximum 

Deductible

ERISA full funding limit (not less than 0)

Actuarial liability $ 2,271,102,335 $ 2,271,102,335

less: Assets (lesser of market or actuarial) 659,183,755 659,183,755

plus: Credit balance (w/interest to year end) - n/a

1,611,918,580 1,611,918,580

ERISA full funding limit without extension (not less than 0)

Actuarial liability 2,271,102,335 n/a

less: Assets (lesser of market or actuarial) 659,183,755 n/a

plus: Credit bal. w/o ext. (w/int. to year end) - n/a

1,611,918,580 n/a

Full funding limit override (not less than 0)

90% of current liability 3,525,293,629 3,525,293,629

less: Assets (actuarial value) 664,312,386 664,312,386

2,860,981,243 2,860,981,243

Full funding limit (greater of ERISA limit and full funding override)

With amortization extension $ 2,860,981,243 $ 2,860,981,243

Without amortization extension $ 2,860,981,243 n/a

CPTF000910 CPTF - 
Enrolled Actuary’s Report

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 41 

 

MINIMUM REQUIRED CONTRIBUTION AND FULL FUNDING CREDIT

Minimum Required Contribution

Plan Year Beginning May 1, 2019

Without 

Extension

With 

Extension

Minimum funding cost

Normal cost (including expenses) $ 18,084,509 $ 18,084,509

Net amortization of unfunded liabilities 113,336,057 150,285,125

Interest to end of plan year 9,856,539 12,627,717

141,277,105 180,997,351

Full funding limit 2,860,981,243 2,860,981,243

Net charge to funding std. acct. (lesser of above) 141,277,105 180,997,351

less: Credit balance with interest to year end (756,846,481) (439,845,587)

Minimum Required Contribution (not less than 0)* $ 898,123,586 $ 620,842,938

Effect of extension $ 277,280,648

* Excise taxes that would otherwise apply in the case of a negative credit balance are waived if the 

provisions of the rehabilitation plan are followed and the plan continues to make scheduled progress.

Full Funding Credit to Funding Standard

Account Plan Year Ending April 30, 2020

Without 

Extension

With 

Extension

Full funding credit (not less than 0)

Minimum funding cost (n.c., amort., int.) $ 141,277,105 $ 180,997,351

less: full funding limit 2,860,981,243 2,860,981,243

$ - $ - 

CPTF000911 CPTF - 
Enrolled Actuary’s Report

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 42 

 

MAXIMUM DEDUCTIBLE CONTRIBUTION

The maximum amount of tax-deductible employer contributions made to a pension plan is 

determined in accordance with Section 404(a) of the Internal Revenue Code. For a 

multiemployer pension plan, Section 413(b)(7) of the Internal Revenue Code and IRS 

Announcement 98-1 provide that, if anticipated employer contributions are less than the 

deductible limit for a plan year, then all employer contributions paid during the year are 

guaranteed to be deductible. If anticipated employer contributions exceed the deductible 

limit, the Trustees have two years from the close of the plan year in question to retroactively 

improve benefits to alleviate the problem. 

Maximum Deductible Contribution

Plan Year Beginning May 1, 2019

Preliminary deductible limit

Normal cost (including expenses) $ 18,084,509

10-year limit adjustment (using “fresh start” alternative) 200,111,298

Interest to end of plan year 16,364,685

234,560,492

Full funding limit 2,860,981,243

Maximum deductible contribution override

140% of vested current liability projected to April 30, 2020 5,450,600,931

less: Actuarial value of assets projected to April 30, 2020 664,312,386

4,786,288,545

Maximum deductible contribution* $ 4,786,288,545

Anticipated employer contributions $ 119,467,109

* Equals the lesser of the preliminary deductible limit and the full funding limit, but not less than the 

maximum deductible contribution override.

CPTF000912 CPTF - 
Enrolled Actuary’s Report

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 43 

 

HISTORY OF UNFUNDED VESTED BENEFITS

Presumptive Method 

April 30,

Vested 

Benefits

Interest Rate

Value of 

Vested 

Benefits Asset Value*

Unfunded 

Vested 

Benefits

Unamortized 

Portion of

VAB

2000 8.50% 938,572,993 1,111,005,014 (172,432,021)

2001 8.50% 1,029,784,599 1,179,424,453 (149,639,854)

2002 8.50% 1,107,078,442 1,199,112,035 (92,033,593)

2003 8.50% 1,184,327,138 1,096,149,080 88,178,058

2004 8.50% 1,275,453,703 1,135,029,517 140,424,186

2005 8.50% 1,362,988,818 1,078,562,590 284,426,228

2006 8.50% 1,443,959,383 1,050,435,719 393,523,664

2007 8.00% 1,611,741,457 1,050,682,726 561,058,731

2008 8.00% 1,694,967,827 1,080,411,426 614,556,401

2009 8.00% 1,777,493,533 925,248,368 852,245,165

2010 8.00% 1,784,003,335 1,016,672,140 767,331,195

2011 8.00% 1,868,338,612 967,427,492 900,911,120 2,737,290

2012 8.00% 1,932,955,484 869,984,478 1,062,971,006 2,636,477

2013 7.50% 2,081,917,679 861,607,040 1,220,310,639 2,527,599

2014 7.50% 1,883,082,305 883,023,972 1,000,058,333 242,642,462

2015 7.50% 1,986,839,845 859,593,662 1,127,246,183 233,317,630

2016 7.50% 2,089,265,487 821,813,612 1,267,451,875 223,292,801

2017 7.50% 2,185,386,748 781,238,944 1,404,147,804 212,515,423

2018 7.50% 2,205,042,289 771,736,789 1,433,305,500 200,929,002

2019 7.50% 2,240,983,702 777,050,724 1,463,932,978 188,472,799

* Actuarial value

CPTF000913 CPTF - 
Enrolled Actuary’s Report

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 44 

 

TERMINATION BY MASS WITHDRAWAL

If all employers were to cease to have an obligation to contribute to the plan, the plan would 

be considered “terminated due to mass withdrawal.” In this event, the Trustees would have 

the option of distributing plan assets in satisfaction of all plan liabilities through the purchase 

of annuities from insurance carriers or payment of lump sums. If assets are insufficient to 

cover liabilities, a special actuarial valuation pursuant to Section 4281 of ERISA would be 

performed as of the end of the plan year in which the mass withdrawal occurred. If the 

Section 4281 valuation indicates the value of nonforfeitable benefits exceeds the value of 

plan assets, employer withdrawal liability would be assessed. 

The ERISA Section 4281 valuation described above uses required actuarial assumptions 

that are typically more conservative than those used for valuing an on-going plan. In order 

to illustrate the impact of the mass withdrawal assumptions, we performed an illustrative 

Section 4281 valuation as if mass withdrawal had occurred during the prior plan year. The 

value of assets used below is market value without any adjustments for outstanding 

employer withdrawal liability claims. 

As required by regulation, interest rates of 3.07% for the first 20 years and 3.05% for each 

year thereafter and the GAM 94 Basic Mortality Table projected to 2029 were used. 

Illustrative Section 4281 Valuation

as of April 30, 2019

Value of nonforfeitable benefits

Participants currently receiving benefits $ 2,271,213,746

Inactive vested participants 626,549,928

Active participants 1,016,667,071

Expenses (per Section 4281 of ERISA) 25,356,065

3,939,786,810

less: Fund assets (market value) 772,279,905

Value of nonforfeitable benefits in excess of (less than) fund assets $ 3,167,506,905

CPTF000914 CPTF - 
Enrolled Actuary’s Report

Carpenters Pension Trust Fund - Detroit and Vicinity Pension Plan 

May 1, 2019 Actuarial Valuation 

Page 45 

 

ASC 960 INFORMATION

The following displays are intended to assist the fund’s auditor in complying with Accounting 

Standards Codification 960. The results shown are not necessarily indicative of the plan’s 

potential liability upon termination. 

Present Value of Accumulated Benefits

Actuarial Study as of May 1, 2019 2018

Present value of vested accumulated benefits

Participants currently receiving benefits $ 1,504,918,961 $ 1,486,101,209

Expenses on parts. currently rec. benefits 41,385,271 40,867,783

Other participants 736,064,741 718,941,080

Expenses on other participants 20,241,780 19,770,880

2,302,610,753 2,265,680,952

Present value of nonvested accumulated benefits

Nonvested accumulated benefits 12,665,681 12,845,362

Expenses on nonvested benefits 348,306 353,247

13,013,987 13,198,609

Present value of all accumulated benefits $ 2,315,624,740 $ 2,278,879,561

Market value of plan assets $ 772,279,905 $ 761,729,009

Interest rate used to value benefits 7.50% 7.50%

Changes in Present Value of Accumulated Benefits

Present value of accumulated benefits as of May 1, 2018 $ 2,278,879,561

Increase (decrease) due to:

Plan amendment - 

Change in actuarial assumptions - 

Benefits accumulated and experience gain or loss 21,492,822

Interest due to decrease in discount period 170,915,967

Benefits paid (151,029,798)

Operational expenses paid (4,633,812)

Net increase (decrease) 36,745,179

Present value of accumulated benefits as of May 1, 2019 $ 2,315,624,740

CPTF000915 CPTF - 
APPENDICES

CPTF000916 CPTF - 
Appendix A – Plan Provisions

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation

Page A-1 

PLAN HISTORY

Origins/Purpose

The Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan was established 

effective May 1, 1957 as a result of collective bargaining agreements between the 

Carpenters’ District Council of Detroit and Vicinity and various employer associations and 

other employers working within the jurisdiction of the Carpenters’ District Council.

The Pension Plan is managed under the provisions of the Labor Management Relations 

Act by a Board of Trustees consisting of an equal number of representatives from Labor 

and from Management.

Effective May 1, 2002, the Interior Systems Local 1045 Resilient Pension Fund Pension 

Plan was merged with Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan. 

Employer Contributions

The Pension Plan is financed entirely by contributions from the employers as specified in 

the applicable Collective Bargaining Agreements. Contributions began May 1, 1957 at the 

rate of 3% of wages. The rate has been increased through the years. 

Reciprocity

The Trustees adopted a “Money Follows the Man” Reciprocity Agreement with other 

signatory funds within the Third District of the United Brotherhood of Carpenters and 

Joiners of America (AFL-CIO). Also, the Trustees became a party of the International’s 

Reciprocal Agreement for Carpenters Pension Funds, which includes both the Pro-Rata 

and Money Follows the Man reciprocity types.

CPTF000917 CPTF - 
Appendix A – Plan Provisions

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation

Page A-2 

SUMMARY OF PLAN PROVISIONS

Plan year The 12-month period beginning May 1 and ending the 

following April 30

Vesting/credit year A participant shall accrue 1 vesting/credit year for each 

plan year on and after May 1, 1957, during which the 

participant is credited with 500 or more hours of service. 

500 hours of service is equivalent to 435 hours of work.

Break in service Plan year with less than 500 hours of service (435 hours 

of work)

Inactive participant No hours of service during 2 consecutive plan years

Normal retirement benefit

Eligibility Age 65 or 5th anniversary of participation, if later

Monthly amount • 4.30% of employer contributions for work performed 

prior to May 1, 2004, plus 

• 3.00% of employer contributions for work performed 

May 1, 2004 – April 30, 2007, plus 

• 1.00% of employer contributions for work performed on 

and after May 1, 2007. 

Payable for Life.

CPTF000918 CPTF - 
Appendix A – Plan Provisions

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation

Page A-3 

SUMMARY OF PLAN PROVISIONS (CONT.) 

Contribution “discounting” Contributions that are “discounted” according to the 

following schedule are not considered in determining 

benefits.

• Contributions for work performed from June 1, 2006 

through May 31, 2007 are generally “discounted” by 

22% to 23%. 

• Contributions for work performed from June 1, 2007 

through May 31, 2008 are generally “discounted” by 

16% to 17%. Some contracts are discounted by 35%.

• Contributions for work performed from June 1, 2008 

through May 31, 2009 are generally “discounted” by 

23% to 23.5%. The Floorlayers contract is discounted 

by 28%; the Millmen and some other contracts are 

discounted by 45%.

• Contributions for work performed from June 1, 2009 

through May 31, 2010 are generally “discounted” by 

37% to 37.5%. The Floorlayers contract is discounted 

by 42%; the Millmen and some other contracts are 

discounted by 45%.

• Contributions for work performed from June 1, 2010 

through May, 31, 2011 are generally “discounted” by 

45% to 46%. The Floorlayers contract is discounted by

51%; the Millmen and some other contracts are 

discounted by 50%.

• Contributions for work performed from June 1, 2011 

through May 31, 2012 are generally “discounted” by 

50% to 53%. The Floorlayers contract is discounted by

56%.

• Contributions for work performed from June 1, 2012 

through May 31, 2013 are generally “discounted” by

55% to 57.75%. The Floorlayers contract is discounted 

by 60.75%.

• Contributions for work performed on and after 

June 1, 2013 are generally “discounted” by 61%. 

Effective on and after January 1, 2019, the Liberty 

Fabricating contract is discounted by 20%.

CPTF000919 CPTF - 
Appendix A – Plan Provisions

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation

Page A-4 

SUMMARY OF PLAN PROVISIONS (CONT.)

Early retirement benefit

Eligibility Age 55 and 10 credit years or age 62 and 3 credit years, 

has not met Applicable Index Requirement, worked at least 

435 hours in the two years prior to retirement. Applicable 

Index Requirement is 80 points if participant had at least 76 

points as of May 1, 2010; otherwise 85 points.

Monthly amount Normal reduced by 5/9% for each month under age 62 

(unless eligible for grandfathered exception – see below). 

Payable for life.

Eligibility Age 55 and 10 credit years, has met Applicable Index 

Requirement, worked at least 435 hours in the two years 

prior to retirement. Applicable Index Requirement is 80 

points if participant had at least 76 points as of May 1, 2010; 

otherwise 85 points.

Monthly amount Normal reduced by 1/3rd of 1% for each month under age 62 

(unless eligible for grandfathered exception – see below). 

Payable for life.

Eligibility Grandfathered exception: Active at retirement, meets the 

Applicable Index Requirement on or before August 1, 2015

Monthly amount Early retirement benefit will not be less than normal reduced 

by 5%. Payable for life.

Vested benefit

Eligibility Three vesting years, did not work at least 435 hours in the 

two years prior to retirement

Monthly amount 20% of normal after 3 vesting years increasing 20% per year 

to 100% at 7 vesting years. Payable for life commencing at 

age 65, or reduced amount (5/9% reduction for each month 

by which commencement precedes age 65) commencing at 

early retirement age, if eligible.

CPTF000920 CPTF - 
Appendix A – Plan Provisions

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation

Page A-5 

SUMMARY OF PLAN PROVISIONS (CONT.)

Total and permanent 

disability benefit

Eligibility Under age 62, 5 credit years, disability award from the 

Social Security Administration.

Monthly amount The greater of 75% of vested accrued normal or $260, 

multiplied by vested percentage subject to the following cap:

• Capped at $525 for credit years 5-9

• Capped at $625 for credit years 10-15

• Capped at $725 for credit years 16-19

• Capped at $1,050 for credit years 20-24

• Capped at $1,350 for 25 or more credit years

Payable until age 62 (age 65 if receiving workers 

compensation benefits); terminates upon recovery or death.

Eligibility Under age 62, less than 5 credit years, disability award from 

the Social Security Administration.

Monthly amount Lump sum payment equal to actuarial equivalent of vested 

accrued benefit. Lump sums in excess of $5,000 are 

suspended while in critical status.

Pre-retirement surviving 

spouse benefit

Eligibility Death of married vested participant

Monthly or lump sum 

amount

50% of participant’s joint and 50% survivor. Payable to 

spouse for life commencing at participant’s earliest 

retirement age. Lump sums in excess of $5,000 are 

suspended while in critical status.

Optional forms • Joint and 50% survivor with pop-up

• Joint and 75% survivor with pop-up

• Joint and 100% survivor with pop-up

• Life-ten years certain

CPTF000921 CPTF - 
Appendix A – Plan Provisions

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation

Page A-6 

HISTORICAL PLAN MODIFICATIONS

One-time payment

Effective date May 1, 1994

Adoption date July 18, 1994

Provisions Retirees and beneficiaries receiving benefits as of 12/1/94 

received a one-time payment on 1/1/95 equal to the 

average 12/1/94 payment ($623).

Retiree increase

Effective date January 1, 1997 (rescinded January 1, 2010)

Adoption date December 12, 1996

Provisions Retirees and spouses receiving benefits as of 12/31/96 

shall receive an increase in monthly benefits which 

corresponds to the retiree’s years of credited service as 

described below:

Years of

Credited Service

Increase in

Monthly Benefit

0 – 9 $ 50.00

10 – 19 100.00

20 – 29 125.00

30 + 150.00

Vesting schedule

Effective date May 1, 1997

Adoption date December 12, 1996

Provisions Vesting scale changed to 20% at 3 years increasing 20% 

per year to 100% at 7 years.

Vesting for non-bargained employees remained at 100% 

for 5 years.

Normal retirement increase

Effective date May 1, 1997

Adoption date November 12, 1997

Provisions Normal retirement benefit increased from 3.9% to 4.3% of 

employer contributions.

CPTF000922 CPTF - 
Appendix A – Plan Provisions

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation

Page A-7 

HISTORICAL PLAN MODIFICATIONS (CONT.) 

Pre-retirement survivor 

annuity increase

Effective date May 1, 1997

Adoption date November 12, 1997

Provisions The pre-retirement survivor annuity increased from joint & 

50% survivor to joint and 100% survivor.

Retiree increase

Effective date May 1, 1999 (rescinded January 1, 2010)

Adoption date July 20, 2000

Provisions Retirees and beneficiaries participating in an affiliated 

healthcare plan received a $100 per month increase.

Retiree increase

Effective date May 1, 2000 (rescinded January 1, 2010)

Adoption date December 18, 2000

Provisions Retirees and beneficiaries participating in an affiliated 

healthcare plan received a $100 per month increase.

Pre-ERISA benefit

Effective date May 1, 2000

Adoption date October 19, 2000

Provisions Participants who are active on or after May 1, 2000 and 

qualify for the reinstatement of Credit Years and Vesting 

Years shall have all Plan Years of contributions that 

remained in the Fund after the participant received his 

“cash termination benefit’’ before May 1, 1976 reinstated. 

Retiree increase

Effective date July 1, 2001 (rescinded January 1, 2010)

Adoption date April 26, 2001

Provisions Retirees and beneficiaries who retired between 

May 1, 2000 and July 1, 2001 and participated in an 

affiliated healthcare plan received a $100 per month 

increase.

CPTF000923 CPTF - 
Appendix A – Plan Provisions

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation

Page A-8 

HISTORICAL PLAN MODIFICATIONS (CONT.) 

Plan merger

Effective date May 1, 2002

Adoption date March 19, 2002

Provisions Resilient Floor Decorators Local #2265 Pension Fund 

was merged into the Fund.

Joint and survivor option

Effective date January 1, 2002

Adoption date July 18, 2001

Provisions A 75% joint and survivor option was added to the plan.

Disability and employment

Effective date January 1, 2004

Adoption date April 12, 2004

Provisions The plan was amended to allow disabled participants to 

resume employment in supervisory capacity and continue 

to receive disability payments.

Normal retirement 

decrease

Effective date May 1, 2004

Adoption date April 12, 2004

Provisions The crediting rate for employer contributions for work 

performed on and after May 1, 2004 was decreased from 

4.30% to 3.00%. Contributions for work performed prior 

to May 1, 2004 are still credited at 4.30%.

Normal retirement 

decrease

Effective date June 1, 2006 

Provisions The plan was amended so that contributions for work 

performed on or after June 1, 2006 are generally 

“discounted” by 22% to 23%.

CPTF000924 CPTF - 
Appendix A – Plan Provisions

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation

Page A-9 

HISTORICAL PLAN MODIFICATIONS (CONT.) 

Normal retirement 

decrease

Effective date May 1, 2007 

Adoption date April 17, 2007

Provisions The crediting rate for employer contributions for work 

performed on and after May 1, 2008 was decreased from 

3.00% to 1.00%. 

Non-credited contribution 

rate change

Effective date Various dates 

Provisions The plan was amended so that contributions for work 

performed on or after June 1, 2007 are generally 

“discounted” by 16% to 17%. Some contracts are 

discounted by 35%.

Change to Index 85 and 

minimum age 55

Effective date January 1, 2008

Adoption date April 17, 2007

Provisions For participants who became active on or after 

January 1, 2008, the age plus service equal to 80 is 

changed to age 55 and age plus service of 85.

Non-credited contribution 

rate change

Effective date Various dates 

Provisions The plan was amended so that contributions for work 

performed on or after June 1, 2008 are generally 

“discounted” by 23% to 23.5%. The Floorlayers contract 

is discounted by 28% and the Millmen and some other 

contracts are discounted by 45%.

CPTF000925 CPTF - 
Appendix A – Plan Provisions

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation

Page A-10 

HISTORICAL PLAN MODIFICATIONS (CONT.)

Non-credited contribution 

rate change

Effective date Various dates 

Provisions The plan was amended so that contributions for work 

performed on or after June 1, 2009 are generally 

“discounted” by 37% to 37.5%. The Floorlayers contract 

is discounted by 42% and the Millmen and some other 

contracts are discounted by 45%.

Non-credited contribution 

rate change

Effective date Various dates 

Provisions The plan was amended so that contributions for work 

performed on or after June 1, 2010 are generally 

“discounted” by 45% to 46%. The Floorlayers contract is 

discounted by 51% and the Millmen and some other 

contracts are discounted by 50%.

Elimination of postretirement improvements

Effective date January 1, 2010

Adoption date March 10, 2010

Provisions Post-retirement increases granted May 1, 1999; 

May 1, 2000; June 1, 2001 and December 31 1996 are 

eliminated.

Change to Index 85 

Effective date May 1, 2010

Adoption date March 10, 2010

Provisions For participants who are not grandfathered (age plus 

service of at least 76 on May 1, 2010), the index 80 

requirement changed to index 85. Participants who joined 

the plan on or after May 1, 2007 must also be at least age 

55 in order to qualify for index 85.

CPTF000926 CPTF - 
Appendix A – Plan Provisions

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation

Page A-11 

HISTORICAL PLAN MODIFICATIONS (CONT.)

Non-credited contribution 

rate change

Effective date Various dates 

Provisions The plan was amended so that contributions for work 

performed on or after June 1, 2011 are generally 

“discounted” by 52% to 53%. The Floorlayers contract is 

discounted by 56% and the Millmen and some other 

contracts are discounted by 50%.

Non-credited contribution 

rate change

Effective date June 1, 2011

Adoption date July 12, 2012

Provisions The “cap” on the non-credited contribution rate was 

removed retroactive to June 1, 2011.

Terms of Reciprocity 

Agreement

Effective date June 1, 2012

Adoption date July 12, 2012

Provisions The reciprocity agreement with the Michigan Carpenters’ 

Pension Fund was modified so that only credited amounts 

are transferred back to the members’ home funds.

Non-credited contribution 

rate change

Effective date Various dates 

Provisions The plan was amended so that contributions for work 

performed on or after June 1, 2012 are generally 

“discounted” by 55% to 57.75%. The Floorlayers contract 

is discounted by 60.75%.

CPTF000927 CPTF - 
Appendix A – Plan Provisions

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation

Page A-12 

HISTORICAL PLAN MODIFICATIONS (CONT.)

Early retirement benefit

Effective date August 1, 2013 (retro to September 1, 2008)

Adoption date May 7, 2013

Provisions No unreduced early retirements until age 62. Participants 

can retire as early as 55 with a reduced benefit. Early 

retirement reduction will be 5/9% per month prior to age 

62 (1/3% per month if applicable Index requirement is 

satisfied). For active participants who qualify for the 

grandfather exception, the benefit will be reduced by no 

more than 5%.

Participants, surviving spouses and beneficiaries who 

entered pay status between September 1, 2008 and 

August 1, 2013 will have their benefits recalculated as if 

the new early retirement rules had been in effect at the 

time of their retirement, but the benefit will not be reduced 

by more than 5%.

Disability benefit

Effective date August 1, 2013 (retro to September 1, 2008)

Adoption date May 7, 2013

Provisions Participants must now obtain a disability award from the 

Social Security Administration in order to be eligible for 

disability benefits under the pension plan. Participants 

with disability benefits in pay status as of August 1, 2013 

that commenced on or after September 1, 2008 must 

secure a Social Security disability award by 

August 1, 2015 in order to retain their benefit.

Additionally, disability benefits commencing on or after 

September 1, 2008 will be capped in accordance with the 

following schedule:

Credit Years Cap on Monthly Benefit

5-9 $525

10-15 $625

16-19 $725

20-24 $1,050

25+ $1,350

CPTF000928 CPTF - 
Appendix A – Plan Provisions

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation

Page A-13 

HISTORICAL PLAN MODIFICATIONS (CONT.)

Vested benefit

Effective date August 1, 2013

Adoption date May 7, 2013

Provisions Participants who fail to cure a break in service by working 

435 hours in the two years prior to retirement will have 

their benefit reduced 5/9% for each month under age 65.

Death benefits

Effective date August 1, 2013

Adoption date May 7, 2013

Provisions Pre-retirement death benefits discontinued for unmarried 

participants. Surviving spouse pre-retirement death 

benefit reduced to 50% of the joint and 50% survivor 

annuity.

Pre- and post-retirement lump sum death benefits 

discontinued.

Non-credited contribution 

rate change

Effective date Various dates 

Provisions The plan was amended so that contributions for work 

performed on or after June 1, 2013 are generally 

“discounted” by 61%. 

Suspension of benefit 

rules

Effective date August 1, 2013

Adoption date May 7, 2013

Provisions Effective for early retirements that commenced on or after 

September 1, 2008, early retirees who work any hours in 

prohibited employment will have their benefits suspended 

to the extent permitted by law.

CPTF000929 CPTF - 
Appendix A – Plan Provisions

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation

Page A-14 

HISTORICAL PLAN MODIFICATIONS (CONT.)

Disability benefit

settlement

Effective date August 1, 2013

Settlement date October 18, 2016

Provisions Due to the settlement of a class action lawsuit, the 

disability benefit change effective August 1, 2013 was 

partially reversed for retirees receiving a disability benefit 

as of August 1, 2013 who had an effective date on or after 

September 1, 2008. Such retirees were restored to 95% 

of their prior disability benefit amount, and back payments 

were made retroactive to August 1, 2013.

CPTF000930 CPTF - 
Appendix B – Actuarial Assumptions and Methods

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation

Page B-1 

ACTUARIAL ASSUMPTIONS

The following assumptions are used throughout this report except as specifically noted 

herein.

Valuation date May 1, 2019

Interest rates

ERISA rate of return 

used to value liabilities

7.50% per year net of investment expenses.

Unfunded vested 

benefits

7.50% per year net of investment expenses

Current liability 3.09% (as prescribed by Section 431(c)(6) of the Internal 

Revenue Code)

Operational expenses

Funding $4,090,000 for the 2019-2020 plan year, excluding 

investment expenses. Expenses are assumed to increase 

2.25% each year.

ASC 960 A 2.75% load was applied to the accrued liabilities for 

2019.

Pop-up feature Retirees receiving a joint and survivor form of benefit have 

pop-up amounts which are individually estimated. 

Liabilities for non-retired participants’ benefits to be paid 

after retirement are increased by 0.6%.

Mortality

Assumed plan mortality RP-2014 Blue Collar Mortality Tables for employees and 

healthy annuitants adjusted backward to 2006 with the MP2014 projection scale and projected forward using the MP2018 projection scale.

Current liability Separate annuitant and non-annuitant rates based on the 

RP-2000 Mortality Tables Report developed for males and 

females as required by Section 431(c)(6) of the Internal 

Revenue Code.

CPTF000931 CPTF - 
Appendix B – Actuarial Assumptions and Methods

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation

Page B-2 

ACTUARIAL ASSUMPTIONS (CONT.) 

Withdrawal T-7 Turnover Table from The Actuary’s Pension Handbook

(less GAM 51 mortality) – specimen rates shown below. 

Assumed rate during second year of employment is 50%*, 

30% for the third year, and 15% for the fourth and fifth 

years.

Age

Withdrawal 

Rate

25 .0967

30 .0930

35 .0871

40 .0775

45 .0635

50 .0422

55 .0155

60 .0015

* All newly reported participants are considered to have 

already worked their first year of employment.

Disability 30% of the 1964 OASDI male table - specimen rates 

shown below:

Age

Disability 

Rate

25 .0003

30 .0003

35 .0005

40 .0007

45 .0011

50 .0018

55 .0030

60 .0049

CPTF000932 CPTF - 
Appendix B – Actuarial Assumptions and Methods

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation

Page B-3 

ACTUARIAL ASSUMPTIONS (CONT.) 

Retirement 

Active lives According to the following schedule:

 Age

Without

Index 80 or 85

Requirements

With

Index 80 or 85

Requirements 

55 .10 .25

56 .10 .25

57 .10 .25

58 .10 .25

59 .15 .25

60 .15 .25

61 .30 .25

62 .30 .40

63 .30 .40

64 .05 .40

65+ 1.00 1.00

Resulting in an average expected retirement age of 59.7

Inactive vested lives Age 59 if at least 10 years of service, and age 62 if less than 

10 years of service. It is assumed that inactive vested 

participants will not qualify for index 80 or 85.

Disabled lives Disability benefit assumed payable until the earliest of age 

62, recovery or death. Then normal retirement benefit 

commences.

Future hours worked

Vested lives 1,600 hours per year, 0 after assumed retirement age

Non-vested lives 600 hours per year, 0 after assumed retirement age

Future hourly contribution 

rate

Based on individual’s average rate received for the most 

recent plan year increased to reflect known bargained 

increases. Additionally, an average “discount” of 61% was 

assumed. 

Age of participants with 

unrecorded birth dates

Based on average entry age of participants with recorded 

birth dates and same vesting status.

Marriage assumptions 65% assumed married with the male spouse 2 years older 

than his wife.

CPTF000933 CPTF - 
Appendix B – Actuarial Assumptions and Methods

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation

Page B-4 

ACTUARIAL ASSUMPTIONS (CONT.) 

Optional form 

assumption

For the non-retired participants, the following table shows 

the percent assumed to elect an optional form at retirement.

Optional form

Married

Participants

Single

Participants

Life annuity 15% 85%

Life-ten year certain 5% 15%

Joint & 50% survivor 20% n/a

Joint & 75% survivor 15% n/a

Joint & 100% survivor 45% n/a

Deferred beneficiary 

lump sum payments

Benefit payments for deferred beneficiaries of deceased 

participants that are due a lump sum once the plan emerges 

from critical status are assumed to be paid 20 years after 

the valuation date.

QDRO benefits Benefits to alternate payee included with participant’s 

benefit until payment commences.

Section 415 limit 

assumptions

Dollar limit $225,000 per year

Assumed form of 

payment for those limited 

by Section 415

Qualified joint and 100% survivor annuity.

Benefits not valued Lump sum disability for participants under age 62 with less 

than 5 credit years.

CPTF000934 CPTF - 
Appendix B – Actuarial Assumptions and Methods

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation

Page B-5 

RATIONALE FOR SELECTION OF ACTUARIAL ASSUMPTIONS

The non-prescribed actuarial assumptions were selected to provide a reasonable long 

term estimate of developing experience. The assumptions are reviewed annually, 

including a comparison to actual experience. The following describes our rationale for the 

selection of each non-prescribed assumption that has a significant effect on the valuation 

results.

ERISA rate of return used 

to value liabilities

Future rates of return were modeled based on the Plan’s 

current investment policy asset allocation and composite, 

long-term capital market assumptions taken from Horizon 

Actuarial’s 2019 survey of investment consultants. 

Based on this analysis, we selected a final assumed rate 

of 7.50%, which we feel is reasonable. This rate may not 

be appropriate for other purposes such as settlement of 

liabilities.

Due to the special rules related to withdrawal liability for a 

construction industry plan and the nature of the building 

trades industry, we believe the valuation interest rate is 

also appropriate for withdrawal liability purposes.

Mortality The RP-2006 Blue Collar Mortality Tables for employees 

and healthy annuitants projected forward using the MP2018 projection scale was chosen as the base table for this 

population. The blue collar table was chosen based on the 

industry of plan participants. 

Mortality is monitored annually and no adjustments are 

deemed necessary at this time.

Retirement Actual rates of retirement by age were last studied for the 

period May 1, 2012 and April 30, 2015. The assumed 

future rates of retirement were selected based on the 

results of this study. No further adjustments were deemed 

necessary at this time.

Withdrawal Actual rates of withdrawal by age were last studied for the 

period May 1, 2013 and April 30, 2018. The assumed 

future rates of withdrawal were selected based on the 

results of this study. No adjustments were deemed 

necessary at this time.

Future hours worked Based on review of recent plan experience adjusted for 

anticipated future changes in workforce.

CPTF000935 CPTF - 
Appendix B – Actuarial Assumptions and Methods

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation

Page B-6 

ACTUARIAL ASSUMPTIONS USED FOR PROJECTIONS

The assumptions used for the credit balance, funded ratio and PPA zone projections are 

the same as used throughout the report with the following exceptions. 

Assumed return on fund 

assets

Current year projections 6.50% for the first 10 years (5/1/2019-4/30/2029)

7.50% thereafter

Prior year projections 6.20% for the first 10 years (5/1/2018-4/30/2028)

7.50% thereafter

Expenses

Current year projections $4,090,000 per year excluding investment expenses.

Expenses are assumed to increase 2.25% each year.

Prior year projections $4,000,000 per year excluding investment expenses.

Expenses are assumed to increase 2.25% each year.

Future total hours worked

Current year projections 8,200,000 for the plan year ending in 2020

8,000,000 for the plan year ending in 2021

7,800,000 for the plan year ending in 2022

7,000,000 thereafter

Prior year projections 8,400,000 for the plan year ending in 2019

8,200,000 for the plan year ending in 2020

8,000,000 for the plan year ending in 2021

7,300,000 for the plan year ending in 2022

7,000,000 thereafter

Contribution rate 

increases since prior year

None

Plan changes since prior 

year

None

Open group projections

Current year projections Projected normal costs and benefit payment amounts are 

adjusted using the open group percentage increases from 

the 2018 valuation.

Prior year projections Stable population assumed with new entrants replacing 

active participants as they withdraw, retire or die. New 

entrants are based upon entry age of the current active 

population.

CPTF000936 CPTF - 
Appendix B – Actuarial Assumptions and Methods

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation

Page B-7 

ACTUARIAL ASSUMPTIONS USED FOR PROJECTIONS (CONT.)

Stochastic modeling 500 trials. Future returns are modeled using an expected 

return of 7.46% for the first 10 years and 8.50% thereafter 

and a standard deviation of 12.13%, which is 

representative of the plan’s investment portfolio. The 

expected returns above are a one year value and are not 

representative of longer term geometric returns as 

considered when setting the ERISA return assumption.

CPTF000937 CPTF - 
Appendix B – Actuarial Assumptions and Methods

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation

Page B-8 

ACTUARIAL METHODS

Funding method

ERISA Funding Traditional unit credit cost method, effective May 1, 2003.

Funding period Individual entry age normal with costs spread as a level 

dollar amount over service.

Population valued

Actives Eligible employees with at least one hour during the 

preceding plan year.

Inactive vested Vested participants with no hours during the preceding 

plan year.

Retirees Participants and beneficiaries in pay status as of the 

valuation date.

Asset valuation method

Actuarial value Smoothed market value effective May 1, 1997. Gains and 

losses are spread over a 5-year period. The actuarial 

value is limited to not less than 80% and not more than 

120% of the actual market value of assets in any plan year.

Unfunded vested 

benefits

For the presumptive method, actuarial value, as described 

above, is used.

Pension Relief Act of 2010 • 10-year smoothing was elected with respect to the loss 

incurred during the plan year ended in 2009.

• The 130% cap on actuarial value of assets was elected 

for the plan years beginning in 2009 and 2010.

• 30-year amortization of net investment loss was 

elected with respect to the loss incurred during the plan 

year ended in 2009. The loss was allocated to future 

years using the “prospective method” of IRS. The 

amount of each allocation is shown in Appendix C.

Effective date of 

amortization extension May 1, 2008

CPTF000938 CPTF - 
Date 

Established

Source of Change in 

Unfunded Liability

Original 

Amount

Original 

Period Years Months

Outstanding 

Balance

Amortization 

Payment

Remaining Period 5/1/2019 5/1/2019

Appendix C - Minimum Funding Amortization Bases

Carpenters Pension Trust Fund-Detroit and Vicinity

May 1, 2019 Actuarial Valuation

Bases Shown: With Extension

Charges

5/1/1977 Lath. UAL 45 3 0 226,518 81,027

5/1/1977 UAL 45 3 0 13,757,314 4,921,122

5/1/1978 Amendment 45 4 0 2,795,436 776,397

5/1/1979 Amendment 45 5 0 3,975,411 914,029

5/1/1980 Amendment 45 6 0 8,132,803 1,611,770

5/1/1985 Amendment 35 1 0 1,829,126 1,829,126

5/1/1985 Lath. ben 35 1 0 6,656 6,656

5/1/1986 Amendment 35 2 0 2,051,830 1,062,993

5/1/1987 Amendment 35 3 0 7,751,457 2,772,771

5/1/1987 Method change 35 3 0 2,574,503 920,922

5/1/1989 Amendment 35 5 0 3,038,235 698,551

5/1/1990 Amendment 35 6 0 11,809,135 2,340,349

5/1/1991 Assumptions 35 7 0 7,135,211 1,253,145

5/1/1992 Amendment 35 8 0 3,628,550 576,270

5/1/1993 Assumptions 35 9 0 62,752 9,150

5/1/1994 Amendment 35 10 0 5,057,498 685,401

5/1/1995 Assumptions 35 11 0 12,308,721 1,565,182

5/1/1996 Assumptions 19,314,830 35 12 0 11,667,449 1,403,110

5/1/1997 Amendment 115,128,332 35 13 0 73,681,683 8,434,955

5/1/1997 Assumptions 2,432,702 35 13 0 1,556,916 178,234

5/1/1999 Amendment 22,642,031 35 15 0 15,941,130 1,679,932

5/1/2000 Amendment 36,206,741 35 16 0 26,516,711 2,698,320

5/1/2000 Assumptions 10,287,556 35 16 0 7,534,295 766,684

5/1/2000 Experience 5,279,519 20 1 0 394,110 394,110

5/1/2001 Experience 33,142,699 20 2 0 5,007,325 2,594,157

5/1/2002 Amendment 65,943,178 35 18 0 51,648,400 4,950,029

5/1/2002 Experience 70,475,288 20 3 0 16,013,842 5,728,304

5/1/2003 Assumptions 85,964,800 35 19 0 69,287,496 6,471,832

5/1/2003 Experience 254,431,353 20 4 0 76,769,469 21,321,738

5/1/2004 Experience 20,035,740 20 5 0 7,488,031 1,721,652

5/1/2005 Experience 116,546,347 20 6 0 51,595,933 10,225,349

5/1/2006 Assumptions 32,822,460 35 22 0 28,391,953 2,487,581

5/1/2006 Experience 61,302,815 20 7 0 31,162,996 5,473,101

5/1/2007 Assumptions 97,147,893 35 23 0 85,677,238 7,375,039

5/1/2007 Experience 36,021,921 20 8 0 20,550,379 3,263,726

Page C-1

CPTF000939 CPTF - 
Date 

Established

Source of Change in 

Unfunded Liability

Original 

Amount

Original 

Period Years Months

Outstanding 

Balance

Amortization 

Payment

Remaining Period 5/1/2019 5/1/2019

Appendix C - Minimum Funding Amortization Bases

Carpenters Pension Trust Fund-Detroit and Vicinity

May 1, 2019 Actuarial Valuation

Bases Shown: With Extension

5/1/2008 Assumptions 29,589,137 20 9 0 18,641,290 2,718,458

5/1/2008 Experience 21,904,410 20 9 0 13,799,878 2,012,435

5/1/2009 Experience 29,524,251 15 5 0 13,618,861 3,131,258

5/1/2009 Relief 09 Asset Loss 163,705,587 29 19 0 139,921,155 13,069,403

5/1/2010 Experience 16,798,389 15 6 0 8,974,675 1,778,612

5/1/2011 Assumptions 14,968,746 15 7 0 9,009,524 1,582,326

5/1/2011 Expereince 19,762,045 15 7 0 11,894,558 2,089,019

5/1/2011 Relief 09 Asset Loss 83,446,610 27 19 0 72,778,886 6,797,947

5/1/2012 Assumptions 3,586,082 15 8 0 2,383,176 378,487

5/1/2012 Experience 127,391,921 15 8 0 84,660,024 13,445,352

5/1/2012 Relief 09 Asset 9,268,532 26 19 0 8,177,266 763,802

5/1/2013 Assumptions 112,407,257 15 9 0 81,230,712 11,845,867

5/1/2013 Relief 09 Asset Loss 42,325,699 25 19 0 37,815,284 3,532,155

5/1/2014 Relief 09 Asset Loss 39,456,467 24 19 0 35,778,129 3,341,874

5/1/2015 Assumptions 66,762,182 15 11 0 55,328,770 7,035,631

5/1/2015 Experience 53,022,966 15 11 0 43,942,476 5,587,744

5/1/2016 Amendment 19,478,191 15 12 0 17,068,902 2,052,679

5/1/2016 Experience 83,462,560 15 12 0 73,138,933 8,795,575

5/1/2017 Assumptions 46,472,895 15 13 0 42,780,808 4,897,475

5/1/2017 Experience 62,924,769 15 13 0 57,925,648 6,631,231

5/1/2018 Experience 49,896,267 15 14 0 47,985,877 5,258,242

5/1/2019 Experience 23,355,330 15 15 0 23,355,330 2,461,266

Total Charges: 1,567,236,674 218,399,552

Page C-2

CPTF000940 CPTF - 
Date 

Established

Source of Change in 

Unfunded Liability

Original 

Amount

Original 

Period Years Months

Outstanding 

Balance

Amortization 

Payment

Remaining Period 5/1/2019 5/1/2019

Appendix C - Minimum Funding Amortization Bases

Carpenters Pension Trust Fund-Detroit and Vicinity

May 1, 2019 Actuarial Valuation

Bases Shown: With Extension

Credits

5/1/1990 Lath. assum 30 1 0 27,179 27,179

5/1/1992 Assumptions 30 3 0 1,146,533 410,128

5/1/1999 Assumptions 104,779,461 30 10 0 62,315,829 8,445,154

5/1/2009 Amendment 19,793,553 15 5 0 9,130,311 2,099,247

5/1/2009 Method (Relief) 77,104,031 30 20 0 66,796,844 6,095,115

5/1/2010 Amendment 101,829,896 15 6 0 54,403,431 10,781,743

5/1/2010 Relief 09 Asset Loss 55,383,209 28 19 0 47,796,431 4,464,449

5/1/2013 Amendment 186,630,145 15 9 0 134,867,620 19,667,733

5/1/2013 Experience 5,974,815 15 9 0 4,317,673 629,647

5/1/2014 Amendment 66,875,803 15 10 0 52,003,477 7,047,605

5/1/2014 Assumptions 24,371,644 15 10 0 18,951,696 2,568,369

5/1/2014 Experience 25,585,607 15 10 0 19,895,693 2,696,300

5/1/2016 Assumptions 10,447,082 15 12 0 9,154,865 1,100,950

5/1/2018 Assumptions 19,745,105 15 14 0 18,989,119 2,080,808

Total Credits: 499,796,701 68,114,427

Net Charges: 1,067,439,973 150,285,125

Less Credit Balance:

Less Reconciliation Balance:

Unfunded Actuarial Liability:

-409,158,686

0

1,476,598,659

Page C-3

CPTF000941 CPTF - 
Date 

Established

Source of Change in 

Unfunded Liability

Original 

Amount

Original 

Period Years Months

Outstanding 

Balance

Amortization 

Payment

Remaining Period 5/1/2019 5/1/2019

Appendix C - Minimum Funding Amortization Bases

Carpenters Pension Trust Fund-Detroit and Vicinity

May 1, 2019 Actuarial Valuation

Bases Shown: Without Extension

Charges

5/1/1980 Amendment 40 1 0 1,968,335 1,968,335

5/1/1990 Amendment 30 1 0 2,858,095 2,858,095

5/1/1991 Assumptions 30 2 0 2,893,032 1,498,800

5/1/1992 Amendment 30 3 0 1,892,397 676,928

5/1/1993 Assumptions 30 4 0 38,099 10,582

5/1/1994 Amendment 30 5 0 3,400,071 781,747

5/1/1995 Assumptions 30 6 0 8,899,222 1,763,658

5/1/1996 Assumptions 19,314,830 30 7 0 8,905,807 1,564,111

5/1/1997 Amendment 115,128,332 30 8 0 58,641,261 9,313,161

5/1/1997 Assumptions 2,432,702 30 8 0 1,239,112 196,791

5/1/1999 Amendment 22,642,031 30 10 0 13,465,972 1,824,932

5/1/2000 Amendment 36,206,741 30 11 0 22,892,415 2,911,009

5/1/2000 Assumptions 10,287,556 30 11 0 6,504,505 827,116

5/1/2002 Amendment 65,943,178 30 13 0 46,096,382 5,277,036

5/1/2003 Assumptions 85,964,800 30 14 0 62,640,517 6,864,082

5/1/2005 Experience 116,546,347 15 1 0 12,487,456 12,487,456

5/1/2006 Assumptions 32,822,460 30 17 0 26,416,962 2,604,837

5/1/2006 Experience 61,302,815 15 2 0 12,635,292 6,545,995

5/1/2007 Assumptions 97,147,893 30 18 0 80,293,182 7,695,370

5/1/2007 Experience 36,021,921 15 3 0 10,717,651 3,833,805

5/1/2008 Assumptions 29,589,137 15 4 0 11,318,470 3,143,561

5/1/2008 Experience 21,904,410 15 4 0 8,378,899 2,327,132

5/1/2009 Experience 29,524,251 15 5 0 13,618,861 3,131,258

5/1/2009 Relief08 Asset Loss 163,705,587 29 19 0 139,921,155 13,069,403

5/1/2010 Experience 16,798,389 15 6 0 8,974,675 1,778,612

5/1/2011 Assumptions 14,968,746 15 7 0 9,009,524 1,582,326

5/1/2011 Experience 19,762,045 15 7 0 11,894,558 2,089,019

5/1/2011 Relief 09 Asset Loss 83,446,610 27 19 0 72,778,886 6,797,947

5/1/2012 Assumptions 3,586,082 15 8 0 2,383,176 378,487

5/1/2012 Experience 127,391,917 15 8 0 84,660,018 13,445,352

5/1/2012 Relief 09 Asset Loss 9,268,532 26 19 0 8,177,266 763,802

5/1/2013 Assumptions 112,407,257 15 9 0 81,230,712 11,845,867

5/1/2013 Relief 09 Asset Loss 42,325,699 25 19 0 37,815,284 3,532,155

5/1/2014 Relief 09 Asset Loss 39,456,467 24 19 0 35,778,129 3,341,874

5/1/2015 Assumptions 66,762,182 15 11 0 55,328,770 7,035,631

Page C-4

CPTF000942 CPTF - 
Date 

Established

Source of Change in 

Unfunded Liability

Original 

Amount

Original 

Period Years Months

Outstanding 

Balance

Amortization 

Payment

Remaining Period 5/1/2019 5/1/2019

Appendix C - Minimum Funding Amortization Bases

Carpenters Pension Trust Fund-Detroit and Vicinity

May 1, 2019 Actuarial Valuation

Bases Shown: Without Extension

5/1/2015 Experience 53,022,966 15 11 0 43,942,476 5,587,744

5/1/2016 Amendment 19,478,191 15 12 0 17,068,902 2,052,679

5/1/2016 Experience 83,462,560 15 12 0 73,138,933 8,795,575

5/1/2017 Assumptions 46,472,895 15 13 0 42,780,808 4,897,475

5/1/2017 Experience 62,924,769 15 13 0 57,925,648 6,631,231

5/1/2018 Experience 49,896,267 15 14 0 47,985,877 5,258,242

5/1/2019 Experience 23,355,330 15 15 0 23,355,330 2,461,266

Total Charges: 1,272,352,122 181,450,484

Credits

5/1/1990 Lath. assum 30 1 0 27,179 27,179

5/1/1992 Assumptions 30 3 0 1,146,533 410,128

5/1/1999 Assumptions 104,779,461 30 10 0 62,315,829 8,445,154

5/1/2009 Amendment 19,793,553 15 5 0 9,130,311 2,099,247

5/1/2009 Method (Relief) 77,104,031 30 20 0 66,796,844 6,095,115

5/1/2010 Amendment 101,829,896 15 6 0 54,403,431 10,781,743

5/1/2010 Relief08 Asset Loss 55,383,209 28 19 0 47,796,431 4,464,449

5/1/2013 Amendment 186,630,145 15 9 0 134,867,620 19,667,733

5/1/2013 Experience 5,974,815 15 9 0 4,317,673 629,647

5/1/2014 Amendment 66,875,803 15 10 0 52,003,477 7,047,605

5/1/2014 Assumptions 24,371,644 15 10 0 18,951,696 2,568,369

5/1/2014 Experience 25,585,607 15 10 0 19,895,693 2,696,300

5/1/2016 Assumptions 10,447,082 15 12 0 9,154,865 1,100,950

5/1/2018 Assumptions 19,745,105 15 14 0 18,989,119 2,080,808

Total Credits: 499,796,701 68,114,427

Net Charges: 772,555,421 113,336,057

Less Credit Balance:

Less Reconciliation Balance:

Unfunded Actuarial Liability:

-704,043,238

0

1,476,598,659

Page C-5

CPTF000943 CPTF - 
Appendix D – Summary of Endangered and Critical Status Rules

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation

Page D-1 

RULES FOR ENDANGERED AND CRITICAL STATUS

Background

The Pension Protection Act of 2006 (“PPA”), enacted in August 2006, established special 

rules for plans in “Endangered” or “Critical” status. These rules become effective with the 

plan year beginning in 2008 and were originally scheduled to “sunset” in 2015.

The Multiemployer Pension Reform Act of 2014 (“MPRA”), enacted in December 2014, 

made the provisions contained in the PPA permanent. MPRA also made numerous 

changes to the PPA rules, including adding a new status for deeply troubled plans: Critical 

and Declining.

Informally, Critical Status is often referred to as “red zone” and Endangered Status as 

“yellow zone.” A plan that is neither Critical nor Endangered is said to be “green zone.”

Criteria for Endangered and Critical

The table below summarizes the criteria for these categorizations. Projected deficiencies 

are calculated as of the last day of each plan year and are based on contribution rates 

codified in bargaining agreements and, if applicable, wage allocations. 

Critical Status (“Red Zone”) Endangered Status (“Yellow Zone”)

GETTING IN:

Plan is Critical if it is described in one or 

more of the following:

• Funded percentage is less than 65%, 

and, inability to pay nonforfeitable 

benefits and expenses for next 7 years, 

or

• Projected funding deficiency (not

recognizing extensions) in the current 

year or next 3 years (next 4 years if 

funded at less than 65%), or

• (1) Contributions are less than current 

year costs (i.e. “normal cost”) plus 

interest on any unfunded past liabilities, 

and, (2) value of vested benefits for 

non-actives is greater than for actives, 

and, (3) projected funding deficiency

(not recognizing extensions) in the 

current year or next 4 years, or

• Inability to pay all benefits and 

expenses for next 5 years.

Plan is Endangered if it is not Critical and it is 

described in one of the following:

• Funded percentage is less than 80%, or

• Projected funding deficiency in the current 

year or next 6 years.

A non-critical plan that meets both of the 

preceding criteria is considered “Seriously 

Endangered” 

A plan that meets one of the two Endangered 

Status criteria above, but was not in Critical or 

Endangered for the preceding year, will 

remain not Critical or Endangered (i.e. it will 

be in “green zone”) provided it is not projected 

to meet either of the two Endangered Status 

criteria as of the end of the 10th plan year 

following the certification year

CPTF000944 CPTF - 
Appendix D – Summary of Endangered and Critical Status Rules

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation

Page D-2 

RULES FOR ENDANGERED AND CRITICAL STATUS (CONT.)

Critical Status (“Red Zone”) Endangered Status (“Yellow Zone”)

GETTING IN (cont.): 

A plan with a 5-year amortization extension 

under IRC Section 431(d) that previously 

emerged from Critical Status in PYB 2015 or 

later will re-enter Critical Status only if it is 

described in one of the following:

• Projected funding deficiency in the 

current year or next 9 years (including

amortization extensions), or, 

• Projected insolvency within the next 30 

years

GETTING OUT:

Plan emerges from Critical Status when it 

meets all of the following:

• No longer meets any of the Critical 

Status tests, and, 

• No projected funding deficiencies in the 

current year or next 9 years (including

amortization extensions), and, 

• No projected insolvencies in the next 30 

years

A plan with a 5-year amortization extension 

under IRC Section 431(d) emerges from 

Critical Status when it meets all the 

following:

• No projected funding deficiencies in the 

current year or next 9 years (including

amortization extensions), and, 

• No projected insolvencies in the next 30 

years

Plan emerges from Endangered Status when 

it no longer meets the requirements to be 

classified as Endangered or when it enters 

Critical Status

CPTF000945 CPTF - 
Appendix D – Summary of Endangered and Critical Status Rules

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation

Page D-3 

RULES FOR ENDANGERED AND CRITICAL STATUS (CONT.)

Restrictions for Endangered and Critical Plans

The Trustees of a plan that is in Endangered or Critical status face a number of restrictions in plan 

improvements that can be adopted and bargaining agreements that can be accepted.

Period Endangered/Critical Restrictions

Date of first certification 

through adoption of funding 

improvement/rehabilitation 

plan (“plan adoption period”)

• No reduction in level of contributions for any participants

• No suspension of contributions

• No exclusion of new or younger employees

• No amendment that increases the liabilities of the plan by 

reason of any increase in benefits, change in accrual, or 

change in vesting unless required by law

After adoption of a funding 

improvement/rehabilitation 

plan until end of funding 

improvement/rehabilitation 

period

• Cannot be amended so as to be inconsistent with funding 

improvement/rehabilitation plan

• No amendment that increases benefits, including future 

accruals, unless actuary certifies as being paid for with 

contributions not contemplated in funding improvement/

rehabilitation plan and still expected to meet applicable 

benchmark after considering the amendment

Additionally, Critical status plans cannot pay benefits greater than the single life 

annuity once the initial red zone notice is sent unless the benefit is eligible for 

automatic cash-out.

Critical and Declining Plans

Beginning in 2015, plans that are in Critical Status and are projecting insolvency within the 

next 15 years (20 years in some circumstances) are certified by the actuary as being in 

“Critical and Declining.” These plans may have access to new tools that will allow them 

to reduce many previously-untouchable benefits, including benefits for participants in pay 

status. However, these expanded benefit reductions require government approval, must 

not be rejected by a majority of all participants through a vote, and are subject to a number 

of other requirements and limitations.

Selected Other MPRA Changes (effective with 2015 plan years)

• Plans projected to be Critical within the next 5 years can elect to be in Critical Status 

immediately

• New contribution rate increases required by a funding improvement or rehabilitation 

plan are not considered in calculating an employer’s withdrawal liability or payment 

schedule

• If, upon the expiration of a collective bargaining agreement under a funding 

improvement or rehabilitation plan, bargaining parties do not adopt a new agreement 

consistent with an updated schedule, the Trustees must implement the update to the 

schedule previously adopted.

CPTF000946 CPTF - 
Appendix E – Glossary of Common Pension Terms

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation 

Page E-1 

GLOSSARY OF COMMON PENSION TERMS

Benefits

Accrued Benefit: A benefit that an employee has earned (or accrued) through past 

participation in the plan. It is the amount payable at normal retirement age. 

Why it matters: Under the law, Accrued Benefits generally may not be reduced 

by plan amendment (note that special rules allowing for limited reduction and/or 

suspension of accrued benefits apply to critical status, critical and declining 

status and insolvent plans). 

Actuarial Equivalence: Given a set of actuarial assumptions, when two different sets 

of payment scenarios have an equal present value.

Early Retirement Reduction Factor: A retirement benefit that begins before normal 

retirement age may be reduced. The plan document defines the amount of the 

reduction by formula or a table of factors. This reduction may or may not be actuarially 

equivalent, but its present value can be no less than actuarially equivalent to the benefit 

payable at normal retirement age. 

Benefit Crediting (Accrual) Rate: A general reference to the calculation of the amount 

of monthly retirement benefit earned per dollar contributed or per year or hour worked. 

Assets

Market Value of Assets: This is the fair value of all assets in the fund on an accrued, 

not cash basis. The market value of assets matches the value in the plan audit.

Actuarial Value of Assets: The amount of assets recognized for actuarial valuation 

purposes. Recent changes in market value may be partially recognized (there are 

variations allowed on the exact recognition). Generally the actuarial value is limited to 

not be less than 80% or more than 120% of the market value. 

Why it matters: Many funding calculations use this “smoothed” asset value 

method to lessen the impact of volatility in the market value of plan assets.

Assumed Rate of Return: Long term assumption of the rate of return on assets based 

upon the diversification mix of invested assets. 

Why it matters: This assumption is used in calculating the present values 

discussed in the Liabilities section below. The Assumed Rate of Return has an 

inverse relationship with plan liabilities. In other words, a lower Assumed Rate 

of Return increases liabilities, while a higher Assumed Rate of Return decreases 

plan Liabilities.

CPTF000947 CPTF - 
Appendix E – Glossary of Common Pension Terms

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation 

Page E-2 

GLOSSARY OF COMMON PENSION TERMS (CONT.)

Liabilities

Present Value of Accrued Benefits: The discounted value of benefit payments due 

in the future but based only on the current Accrued Benefits of each participant. The 

value is based on actuarial assumptions including an assumed rate of investment 

return. 

Why it matters: This liability is one of the primary factors in determining a plan’s 

annual PPA funded status (see Funded Ratio).

Present Value of Vested Benefits: The discounted value of Accrued Benefits that 

are considered vested (non-forfeitable). Benefits that are not vested include those of 

participants who have not satisfied the plan vesting requirement (usually five years of 

service). In addition under the law some death and temporary disability benefits are 

also considered non-vested regardless of service because they are not considered 

protected benefits. 

Why it matters: This liability is the primary driver of a plan’s Employer Withdrawal 

Liability.

Actuarial (Accrued) Liability: For inactive members this is the same as the Present 

Value of Accrued Benefits above. For active members this depends on the cost 

method selected by the actuary. Under the accrued benefit or traditional unit credit 

cost method this is also the same as the Present Value of Accrued Benefits. Under 

other cost methods (including most commonly entry age normal) this represents an 

alternate allocation of projected benefit cost over the working lifetime of active 

members. Under the entry age normal cost method, the active Actuarial Liability is 

larger than the Present Value of Accrued Benefits. 

Unfunded Actuarial Liability: The Actuarial Liability less the Actuarial Value of 

Assets. 

Current Liability: This is similar to the Present Value of Accrued Benefits, but uses a 

statutory, significantly lower, interest rate (equivalent to an expected rate of return on 

a bond only-type portfolio) and statutory mortality tables. The lower interest rate 

means that Current Liability tends to be significantly higher than the Present Value of 

Accrued Benefits. This number has very little impact on multiemployer plans. 

Normal Cost: The present value of all benefits that are expected to accrue or to be 

earned under the plan during the plan year. The way in which a benefit is considered 

to be earned varies with the actuarial cost method.

Risk: The potential of future deviation of actual results from expectations derived from 

actuarial assumptions.

CPTF000948 CPTF - 
Appendix E – Glossary of Common Pension Terms

Carpenters Pension Trust Fund – Detroit and Vicinity Pension Plan

May 1, 2019 Actuarial Valuation 

Page E-3 

GLOSSARY OF COMMON PENSION TERMS (CONT.)

Funding

Funded Ratio (Funded Percentage): Actuarial Value of Assets divided by the 

Present Value of Accrued Benefits. This is one of two key measures used to determine 

a plan’s annual PPA funded status. This may also be referred to as PPA Funded Ratio. 

This must be greater than 80% to avoid endangered status.

Credit Balance: The accumulated excess of actual contributions over legally required 

minimum contributions as maintained in the funding standard account. The funding 

standard account is maintained by the actuary in the valuation process and reported 

annually in schedule MB to the Form 5500 filing. A negative credit balance is known 

as an accumulated funding deficiency. Prior to PPA, an accumulated funding 

deficiency caused an immediate excise tax (waiver under PPA if certain conditions are 

met). After PPA, a current or projected funding deficiency is one of the key measures 

used in determining the annual PPA status. It can eventually trigger an excise tax 

levied on contributing employers.

Withdrawal Liability

Unfunded Vested Benefits (UVB): Present Value of Vested Benefits less the value 

of plan assets determined on either an actuarial or market value basis. The selection 

of asset measurement is part of the withdrawal liability method of the Plan.

Employer Withdrawal Liability (EWL): An employer that withdraws from a 

multiemployer plan is liable for its proportionate share of Unfunded Vested Benefits, 

determined as of the date of withdrawal. 

Why it matters: If a contributing employer leaves the plan while it has Unfunded 

Vested Benefits liability, that employer’s allocated share of Employer Withdrawal 

Liability is either assessed, as applicable, or reallocated among the plan’s 

remaining active employers if the presumptive method is used. A construction 

employer withdrawing from a construction industry plan will not be assessed 

unless they continue performing work within the jurisdiction of the CBA or restart 

such work within a period of 5 years. Small amounts (under $150,000) are 

generally reduced or eliminated pursuant to the “de minimis rule.”

CPTF000949 CPTF -