International Association of Machinists Motor City Pension Fund

EIN/Plan #: 38-6237143/001

Checklist Item #39 – 7.09 Copy of Rehabilitation Plan and 2 Most Recent Actuarial Valuations

Does the application include the most recently updated rehabilitation plan? See section 7.09.

Document 39.1 provides a complete history of the rehabilitation plan including the most recent 

update. The rehabilitation plan has only one schedule, the Default Schedule, and one 

contribution rate increase schedule.

Document 39.2(1) and 39.2(2) provide a copy of the two most recent actuarial valuation reports, 

which are the July 1, 2015 and July 1, 2016 actuarial valuations. They are included here because 

we did not see otherwise where they should be attached.
International Association of Machinists Motor City Pension Fund

EIN/Plan #: 38-6237143/001

Checklist Item #39 – 7.09 Copy of Rehabilitation Plan and 2 Most Recent Actuarial Valuations

Document 39.1

The Most Recently Updated

Rehabilitation Plan

Please refer to the following pages.

39.1

39.3
39.4
39.5
39.6

International Association of Machinists Motor City Pension Fund

EIN/Plan #: 38-6237143/001

Checklist Item #39 – 7.09 Copy of Rehabilitation Plan and 2 Most Recent Actuarial Valuations

Document 39.2(1)

The July 1, 2015 Actuarial

Valuation Report

Please refer to the following pages.

39.8
INTERNATIONAL ASSOCIATION OF MACHINISTS

MOTOR CITY PENSION FUND

Actuarial Valuation Report 

For Plan Year Commencing 

July 1, 2015 

39.9


TABLE OF CONTENTS

PART I: SUMMARY OF RESULTS 1

5 - Year Summary of Valuation Results 2

5 - Year Summary of Demographics 3

Changes From Prior Study 4

History of Major Assumptions 5

Experience vs. Assumptions 6

Rate of Return on Fund Assets 7

Unfunded Vested Benefits/Employer Withdrawal Liability 8

Termination by Mass Withdrawal 9

Contribution Allocation 10

Funded Ratios 11

Funding Standard Account 12

Projection of Credit Balance and Funded Ratio 13

PPA Funding Status Report 14

Ultimate Funded Status 15

Sensitivity Analysis 16

PART II: SUPPLEMENTAL STATISTICS 17

Participant Data Reconciliation 18

Weeks Worked During Plan Year 19

Contributions Made During Plan Year 20

Active Information 21

Inactive Vested Information 22

Retiree Information 23

PART III: ASSET INFORMATION 25

Market and Actuarial Fund Values 26

Flow of Funds 27

Investment Gain and Loss 28

PART IV: ENROLLED ACTUARY’S REPORT 29

Normal Cost/Actuarial Liability 30

Actuarial Liability Reconciliation/Projection 31

Funding Period 32

Current Liability 33

Full Funding Limit 34

Minimum Required Contribution and Full Funding Credit 35

Maximum Deductible Contribution 36

History of Unfunded Vested Benefits 37

ASC 960 Information 38

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

39.12
Page 1 

PART I: SUMMARY OF RESULTS

39.13
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page 2 

 

5 - YEAR SUMMARY OF VALUATION RESULTS

Actuarial Study 

as of July 1, 2015 2014 2013 2012 2011

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

Progress under FIP/RP Yes Yes No No Yes

Funded ratio

PPA certification 0.61 0.63 0.64 0.66 0.70 

Valuation report 0.56 0.63 0.63 0.66 0.70 

Date of first projected funding deficiency

PPA certification 6/30/16 6/30/15 6/30/14 6/30/12 6/30/12 

Valuation report 6/30/16* 6/30/15 6/30/14 6/30/13 6/30/12 

Asset values ($ 000)

Market 50,999 57,104 54,250 54,122 61,178 

Actuarial 57,793 60,051 61,187 63,986 69,237 

Accumulated ben. ($ 000) 103,418 95,774 96,373 97,452 98,472 

* Based on assumptions used for the credit balance projection graph as shown on page B-6

39.14
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page 3 

 

5 - YEAR SUMMARY OF DEMOGRAPHICS

Actuarial Study 

as of July 1, 2015 2014 2013 2012 2011

Active 133 219 208 188 188 

Inactive vested 387 329 332 339 351 

Receiving benefits 644 649 657 655 652 

Total 1,164 1,197 1,197 1,182 1,191 

Active/retiree ratio 0.21 0.34 0.32 0.29 0.29 

Active/inactive ratio 0.13 0.22 0.21 0.19 0.19 

Unrecorded dates of birth - 3 15 - - 

Average entry age 30.9 30.2 30.8 31.0 30.1 

Average attained age 44.1 44.1 45.3 47.2 46.7 

History of Weeks 

39.15
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page 4 

 

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: 

 We updated the assumed contribution rates to those shown in Appendix A. 

 The assumed healthy mortality rates were changed from the RP-2000 Combined 

Healthy Generational Mortality Table projected using scale AA with blue collar 

adjustment and a 2-year set forward to the RP-2014 Blue Collar Generational Mortality 

Table for employees and healthy annuitants with a 2-year set forward projected using 

the MP-2014 projection scale. This change was made in order to better reflect 

anticipated improvements in mortality rates for each future year due to medical 

advances and lifestyle changes. 

 The assumed disabled mortality rates were changed from the RP-2000 Combined 

Disabled Generational Mortality Table using scale AA with blue collar adjustment and 

a 2-year set forward to the RP-2014 Disabled Generational Mortality Table with a 2-

year set forward projected using the MP-2014 projection scale. This change was 

made in order to better reflect anticipated improvements in mortality rates for each 

future year due to medical advances and lifestyle changes. 

 The assumed withdrawal rates were changed to add a select rate of 15% for 

participants with three or less years of service and also to otherwise lower rates at 

younger ages and raise rates at older ages. Additionally, the withdrawal rates now 

include disablement experience, so the disablement rates were eliminated. These 

changes reflect our best estimate of future withdrawal patterns based on recent plan 

experience. 

 The pop-up load was increased on liabilities for retirees receiving a joint and survivor 

form of benefit who retired before 2009 from 1.5% to 2.3%. 

 The ERISA rate of return assumption used to value liabilities was changed from 8.00% 

to 7.50% to provide our best estimate of the future rate of net investment return based 

on the Plan’s current investment policy and asset allocation. 

 The current liability interest rate was changed from 3.59% to 3.34%. The new rate is 

within established statutory guidelines. 

39.16
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page 5 

 

HISTORY OF MAJOR ASSUMPTIONS

Actuarial Study as of July 1,

Assumption 2015 2014 2013 2012 2011

Future rate of net 

investment return

7.50% 8.00% 8.00% 8.00% 8.00%

Mortality table RP-2014G

w/BCA +2

& MP-2014

RP-2000G 

w/BCA +2 

RP-2000G 

w/BCA +2

RP-2000G 

w/BCA +2

RP-2000G 

w/BCA +2

Future expenses $ 240,000 $ 240,000 $ 240,000 $ 240,000 $ 240,000 

Average future weekly 

contribution rate*

Credited $124.34 $105.85 $107.82 $109.36 $111.44

Non-credited 144.70 110.50 104.11 93.33 72.48

Total $269.04 $216.35 $211.93 $202.69 $183.92

Average future 

annual weeks* 45 45 43 49 49

Average expected retirement age**

Actives 63.1 62.9 60.1 60.1 59.9

Inactive vested 60.5 60.3 64.7 64.7 64.6

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

** Resulting from the application of the retirement probabilities shown in Appendix B to active 

participants.

39.17
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page 6 

 

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 

June 30, 2015 Expected Actual

Decrements

Terminations 99 

less: Rehires - 

Terminations (net of rehires) 6.7 99 

Retirements 4.1 5 

Disabilities 2.2 - 

Deaths - pre-retirement 2.2 2 

Deaths - post-retirement 29.3 25 

Asset assumptions

Rate of net investment return on actuarial value 8.00% 6.37%

Net expenses $ 240,000 $ 227,660 

Other demographic assumptions

Average retirement age from active (new retirees) 60.5 60.2

Average retirement age from inactive (new retirees)* 60.3 61.2

Average entry age (new entrants) 30.2 34.7

Weeks worked per vested active 45 49 

Weeks worked per non-vested active - 39 

Total weeks worked (valuation assumption) 9,935 8,106 

Total weeks worked (PPA certification assumption) 8,946 8,106 

Unfunded liability (gain)/loss

(Gain)/loss due to asset experience $ 931,923 

(Gain)/loss due to liability experience 264,917 

Total (gain)/loss $ 1,196,840 

* 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 

39.18
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page 7 

 

RATE OF RETURN ON FUND ASSETS

Historical Rates of Net Investment Return 

Average Rates of Net Investment Return (dollar weighted) 

Return on Market Value Return on Actuarial Value

Period Ending June 30, Period Ending June 30,

Period 2015 2014 2015 2014

One year -0.39% 17.39% 6.37% 8.46%

5 years 11.26% 13.63% 5.81% 6.87%

10 years 4.90% 5.62% 4.18% 4.26%

15 years 3.52% 3.18% n/a n/a

20 years 6.64% 7.69% n/a n/a

39.19
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page 8 

 

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 rolling 5 method. 

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. 

Rolling 5 Method ($ 000) 

June 30, 2015 2014 2013 2012 2011

Vested benefits interest 7.50% 8.00% 8.00% 8.00% 8.00%

Vested benefits 103,136 94,669 95,368 96,321 97,203 

less: Asset value* 50,999 57,104 61,187 63,986 69,237 

UVB 52,137 37,565 34,181 32,335 27,966 

Unamortized VAB 1,680 1,805 1,920 2,027 2,126 

* Actuarial Value through 2013, Market Value thereafter

An employer withdrawing 

during the coming year may 

have withdrawal liability

39.20
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page 9 

 

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 2.71% for the first 20 years and 2.78% for each year thereafter and the GAM 94 Basic 

Table projected to 2025 mortality table were used. 

Illustrative Section 4281 Valuation

as of June 30, 2015

Value of nonforfeitable benefits

Participants currently receiving benefits $ 126,710,981 

Inactive vested participants 35,251,645 

Active participants 12,699,410 

Expenses (per Section 4281 of ERISA) 1,141,347 

175,803,383 

less: Fund assets (market value) 50,999,106 

Value of nonforfeitable benefits in excess of (less than) fund assets $ 124,804,277 

Under mass withdrawal 

assumptions, plan assets do 

not exceed plan liabilities

39.21
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page 10 

 

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 July 1, 2015 

Contribution Allocation as of July 1, 2014 

These graphs show how 

the contributions are

being spent

39.22
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page 11 

 

FUNDED RATIOS

The present value of vested accumulated benefits is the 

amount that would have to be invested as of the 

valuation date in order to pay, when due, the benefits 

accrued and vested as of the valuation date. This 

calculation assumes fund assets will earn interest at the 

assumed rate and all other aspects of the fund’s 

experience will follow the actuarial assumptions. Similarly, the present value of all 

accumulated benefits is the amount necessary to fund all benefits accrued as of the 

valuation date. 

The extent to which the value of vested, accumulated benefits and total accumulated 

benefits are funded provides a “snapshot” measure of the plan’s funded status as of the 

valuation date. 

Present Value of Accumulated Benefits/

Funded Ratios

Actuarial Study as of July 1, 2015 2014

Present value of vested accumulated benefits

Participants currently receiving benefits $ 81,113,698 $ 75,230,024 

Inactive vested participants 16,492,151 12,673,235 

Active participants 5,530,478 6,766,131 

Total 103,136,327 94,669,390 

Nonvested accumulated benefits 281,382 1,104,432 

Present value of all accumulated benefits $ 103,417,709 $ 95,773,822 

Actuarial value of assets $ 57,793,092 $ 60,050,741 

Market value of assets $ 50,999,106 $ 57,103,528 

Funded ratios (Actuarial value used for PPA)

Vested benefits 0.56 0.63 

All accumulated benefits 0.56 0.63 

Funded ratios (Market value)

Vested benefits 0.49 0.60 

All accumulated benefits 0.49 0.60 

Interest rate used to value benefits 7.50% 8.00%

The funded ratio can be 

used as an indication of 

ongoing funding 

progress

39.23
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page 12 

 

FUNDING STANDARD ACCOUNT

The Funding Standard Account is used to determine 

whether the plan meets the minimum funding 

requirements established by ERISA. Such a 

determination is done by subtracting the year’s 

charges from the credits. A positive result establishes 

a credit balance that represents the amount the plan is 

in excess of the minimum required contribution on a cumulative basis. A negative result 

represents a funding deficiency which could produce excise taxes (except under certain 

circumstances when the plan is following a funding a rehabilitation plan). The projected 

values use the assumptions summarized on page B-6 of the appendix. 

Funding Standard Account

Plan Year Ending June 30, 

2016

(Projected)

2015

(Final)

Charges

Prior year funding deficiency $ 6,028,373 $ 4,879,063 

Normal cost (including expenses) 357,760 393,849 

Amortization charges (see Appendix C) 9,605,099 8,702,177 

Interest on above 1,199,344 1,118,010 

Total charges 17,190,576 15,093,099 

Credits

Prior year credit balance - - 

Employer contributions 9,220,047 2,971,865 

Amortization credits (see Appendix C) 5,494,743 5,531,469 

Interest on above 757,858 561,392 

ERISA full funding credit - - 

Total credits 15,472,648 9,064,726 

Credit balance (credits less charges) $ (1,717,928) $ (6,028,373)

The minimum funding 

requirements have not 

been met for the most 

recent plan year

39.24
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page 13 

 

PROJECTION OF CREDIT BALANCE AND FUNDED RATIO

The following graphs provide more information 

about the two most important statistics used in 

the determination of the PPA Funded Status. 

The first graph shows the ERISA credit balance 

(a negative credit balance indicates a projected 

funding deficiency). The second graph shows the funded ratio. Both graphs illustrate 

projected results for the next 20 years using the assumptions summarized on page B-6 of 

the appendix. 

These graphs show 

projections of the two biggest 

drivers of PPA status

39.25
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page 14 

 

PPA FUNDING STATUS REPORT

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: “Endangered”, “Seriously 

Endangered”, “Critical”, “Critical and Declining” or none of these. As the plan’s actuary, 

we must complete the status certification within 90 days of the beginning of the plan year, 

and we must also certify whether or not the plan has made scheduled progress if its 

funding improvement or rehabilitation period has begun. The criteria for these 

determinations are outlined in Appendix D. Due to the timing requirement affecting PPA 

certifications, they are performed based on data different from that used in this report (see 

certification letter for additional details). The results are summarized below. The 

projection graph uses the assumptions summarized on page B-6 of the appendix. 

Description

Values Used for PPA Certification

2015 2014

Funded ratio 0.61 0.63 

Date of first projected funding deficiency 6/30/2016 6/30/2015

Years of benefit payments in assets 8+ 8+

Certified PPA status Critical and Declining Critical

Making progress under FIP/RP Yes Yes 

Projected PPA Status 

The plan is in Critical 

and Declining status for 

2015

39.26
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page 15 

 

ULTIMATE FUNDED STATUS

The ultimate funded status is a measure used to 

see how well funded the current population is. It 

compares the present value of benefits for both 

past and future service to the current market value 

of assets plus the present value of future 

contributions. The ultimate funded status for the two most recent plan years is shown in 

the graph below. The present values of benefits and contributions include only current 

participants and assume no future contribution rate increases. The percentage above the 

bars is the ratio of assets and future contributions to the value of total benefits. 

Ultimate funded status is a 

snapshot measure of 

contribution sufficiency

39.27

Page 17

PART II: SUPPLEMENTAL STATISTICS

39.29
Supplemental Statistics 

IAM Motor City Pension Fund

July 1, 2015 Actuarial Valuation 

Page 18 

 

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

July 1, 2014 219 329 649 1,197 

Change due to:

New hire 18 - - 18 

Rehire - - - - 

Termination (99) 66 - (33)

Disablement - - - - 

Retirement (5) (8) 13 - 

Death/cash out - (2) (25) (27)

New beneficiary - 1 7 8 

Certain pd. expired - - - - 

Data adjustment - 1 * - 1 

Net change (86) 58 (5) (33)

July 1, 2015 133 387 644 1,164 

* Includes one QDRO who is now a deferred beneficiary. 

39.30
Supplemental Statistics 

IAM Motor City Pension Fund

July 1, 2015 Actuarial Valuation 

Page 19 

 

WEEKS WORKED DURING PLAN YEAR

Plan Year Ending 

June 30, 2015 Number

Weeks

Worked

Average 

Weeks Worked

Actives

Vested 81 3,951 49 

Non-vested, continuing 34 1,568 46 

Non-vested, new entrant 18 443 25 

Total active 133 5,962 45 

Others 88 2,144 24 

Total for plan year 221 8,106 37 

History of Average Actual and Expected Weeks Worked per Participant 

39.31
Supplemental Statistics 

IAM Motor City Pension Fund

July 1, 2015 Actuarial Valuation 

Page 20 

 

CONTRIBUTIONS MADE DURING PLAN YEAR

Employer Credited Contributions Reported in Employee Data 

Plan Year Ending 

June 30, 2015 Number

Credited 

Contributions 

Reported

Actives

Vested 81 $ 498,562 

Non-vested, continuing 34 187,578 

Non-vested, new entrant 18 55,426 

Total valued as active 133 741,566 

Others 88 165,953 

Total for plan year 221 $ 907,519 

Average credited weekly contribution rate $ 111.96

Comparison with Audited Employer Contributions 

Employer credited contributions reported in data 907,519

Adjusted total employer contributions reported 1,875,634 

Total audited employer contributions* $ 1,949,053

Percent reported 96%

* Excludes employer withdrawal liability payments.

History of Actual and Expected Total Contributions Received* 

* Excludes employer withdrawal liability payments. 

39.32

Supplemental Statistics 

IAM Motor City Pension Fund

July 1, 2015 Actuarial Valuation 

Page 22 

 

INACTIVE VESTED INFORMATION

Inactive Vested Participants by Age as of July 1, 2015 

Age Group Number

Estimated Deferred 

Vested Benefits*

< 30 - $ - 

30-34 13 4,010 

35-39 20 5,528 

40-44 48 23,706 

45-49 61 31,584 

50-54 87 51,121 

55-59 79 33,227 

60-64 66 29,986 

65-69 10 7,197 

70+ 3 1,573 

Totals 387 187,932 

Unrecorded birth date - - 

Total inactive vested lives 387 $ 187,932 

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

39.34
Supplemental Statistics 

IAM Motor City Pension Fund

July 1, 2015 Actuarial Valuation 

Page 23 

 

RETIREE INFORMATION

Benefits Being Paid by Form of Payment as of July 1, 2015 

Monthly Benefits Being Paid

Form of Payment Number Total Average Smallest Largest

Life only 172 $ 118,337 $ 688 $ 47 $ 3,530 

Certain & life 70 129,174 1,845 167 3,793 

Joint & survivor 226 260,029 1,151 55 3,892 

Disability 14 24,712 1,765 385 4,102 

Beneficiaries 162 73,854 456 23 2,292 

Totals 644 $ 606,106 $ 941 $ 23 $ 4,102 

Retirees by Age and Form of Payment as of July 1, 2015 

Form of Benefits Being Paid

Age

Group

Life

Only

Certain 

& Life

Joint & 

Survivor Disability Total

< 40 - - - - - 

40-44 - - - - - 

45-49 - - - 1 1 

50-54 2 1 3 1 7 

55-59 17 14 23 2 56 

60-64 25 17 37 5 84 

65-69 38 22 58 3 121 

70-74 27 10 34 2 73 

75-79 23 5 42 - 70 

80-84 18 1 20 - 39 

85-89 14 - 8 - 22 

90-94 5 - 1 - 6 

95+ 3 - - - 3 

Totals 172 70 226 14 482 

plus: Beneficiaries 162 

Total receiving benefits 644 

39.35
Supplemental Statistics 

IAM Motor City Pension Fund

July 1, 2015 Actuarial Valuation 

Page 24 

 

RETIREE INFORMATION (CONT.)

Age of Participants Retired During Last 5 Plan Years 

(excludes beneficiaries and disability retirements) 

Age at Plan Year Ending June 30,

Retirement 2015 2014 2013 2012 2011

< 51 - - - - - 

51 - - 1 - - 

52 1 1 - 1 1 

53 1 - 1 1 3 

54 - 2 - 1 1 

55 1 - 2 - 2 

56 - - 1 - - 

57 1 - - - 3 

58 - 1 1 1 - 

59 1 - 1 1 - 

60 1 - - 2 2 

61 - 1 3 2 1 

62 2 2 4 4 4 

63 1 2 1 1 1 

64 - 1 - - 1 

65 2 2 - 5 1 

66+ 2 - 2 1 - 

Totals 13 12 17 20 20 

History of Average Retirement Ages 

(excludes beneficiaries and disability retirements) 

Retirement During Plan Year 

Ending In: Number

Average 

Retirement Age

2015 13 60.8

2014 12 60.7

2013 17 60.0

2012 20 61.4

2011 20 58.8

39.36
Page 25

PART III: ASSET INFORMATION

39.37
Asset Information 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page 26 

 

MARKET AND ACTUARIAL FUND VALUES

Asset information extracted from the fund’s financial statements audited by Wrubel, 

Wesley & Company. 

Market/Actuarial Value of 

Fund Investments

as of June 30, 2015 2014 2013

Invested assets

Common stocks and REITS $ 22,857,869 $ 29,558,719 $ 27,514,062 

Common/collective trusts 9,173,105 8,539,385 6,857,710 

Mutual funds 14,781,590 11,604,043 9,240,158 

Corporate debt - 3,072,233 3,125,045 

U.S. gov't securities 20 884,512 3,096,037 

Cash 4,595,054 3,190,010 2,059,612 

Prepaid insurance 7,246 71,777 7,473 

51,414,884 56,920,679 51,900,097 

Net receivables* (415,778) 182,849 2,350,391 

Market value $ 50,999,106 $ 57,103,528 $ 54,250,488 

Fund assets - Actuarial value 

Market value $ 50,999,106 $ 57,103,528 $ 54,250,488 

less: Deferred investment

gains and (losses) (6,793,986) (2,947,213) (6,936,890)

Actuarial value $ 57,793,092 $ 60,050,741 $ 61,187,378 

Actuarial value as a 

percentage of market value 113.32% 105.16% 112.79%

* Equals receivables, less any liabilities

39.38
Asset Information 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page 27 

 

FLOW OF FUNDS

Asset information extracted from the fund’s financial statements audited by Wrubel, 

Wesley & Company. 

Plan Year Ending 

June 30, 2015 2014 2013

Market value at beginning of

plan year $ 57,103,528 $ 54,250,488 $ 54,121,727 

Additions

Employer contributions 2,971,865 2,897,977 2,276,215 

Net investment income* (210,398) 8,908,395 6,846,840 

Other income 23,432 3,710 10,863 

2,784,899 11,810,082 9,133,918 

Deductions

Benefits paid 8,661,661 8,777,479 8,825,264 

Net expenses* 227,660 179,563 179,893 

8,889,321 8,957,042 9,005,157 

Net increase (decrease) (6,104,422) 2,853,040 128,761 

Adjustment - - - 

Market value at end of

plan year $ 50,999,106 $ 57,103,528 $ 54,250,488 

Cashflow

Contr.-ben.-exp. (5,917,456) (6,059,065) (6,728,942)

Percent of assets -11.60% -10.61% -12.40%

Estimated net investment return

On market value -0.39% 17.39% 13.49%

On actuarial value 6.37% 8.46% 6.47%

* Investment expenses have been offset against gross investment income.

39.39
Asset Information 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page 28 

 

INVESTMENT GAIN AND LOSS

Investment Gain or Loss

Plan Year Ending June 30, 2015

Expected market value at end of plan year

Market value at beginning of plan year $ 57,103,528 

Employer contributions and non-investment income 2,995,297 

Benefits and expenses paid (8,889,321)

Expected investment income (at 8.00% rate of return) 4,332,521 

55,542,025 

Actual market value at end of plan year 50,999,106 

less: Expected market value 55,542,025 

Investment gain or (loss) $ (4,542,919)

History of Gains and (Losses) 

Plan Year Investment

Ending Gain

June 30, or (Loss)

2015 $ (4,542,919)

2014 4,810,570 

2013 2,785,825 

2012 (4,693,794)

2011 8,528,863 

2009 (20,738,548)

Total $ (13,850,003)

Deferred Investment Gains and (Losses)* 

Plan Year

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

June 30, 2015* 2016 2017 2018

2015 $ (3,634,335) $ (2,725,751) $ (1,817,168) $ (908,584)

2014 2,886,342 1,924,228 962,114 - 

2013 1,114,330 557,165 - - 

2012 (938,759) - - - 

2009 (6,221,564) (4,147,710) (2,073,855) - 

Totals $ (6,793,986) $ (4,392,068) $ (2,928,909) $ (908,584)

* 10-year smoothing was elected with respect to the loss incurred during plan year ending 2009.

39.40
Page 29

PART IV: ENROLLED ACTUARY’S REPORT

39.41
Enrolled Actuary’s Report 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page 30 

 

NORMAL COST/ACTUARIAL LIABILITY

Normal Cost as of July 1, 2015 2014

Active participants - service prior to valuation date $ - $ - 

Active participants - service after valuation date 126,435 163,080 

Anticipated administrative expenses (beg. of year) 231,325 230,769 

Total normal cost $ 357,760 $ 393,849 

Unfunded Actuarial Liability as of

July 1, 2015 2014

Actuarial liability

Participants currently receiving benefits $ 81,113,698 $ 75,230,024 

Inactive vested participants 16,730,680 12,673,238 

Active participants - service prior to val. date 5,573,331 7,870,560 

Active participants - service after val. date - - 

103,417,709 95,773,822 

less: Fund assets (actuarial value) 57,793,092 60,050,741 

Unfunded actuarial liability (not less than 0) $ 45,624,617 $ 35,723,081 

39.42
Enrolled Actuary’s Report 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page 31 

 

ACTUARIAL LIABILITY RECONCILIATION/PROJECTION

Reconciliation of Unfunded Actuarial Liability

Expected unfunded actuarial liability as of June 30, 2015

Unfunded actuarial liability as of July 1, 2014 $ 35,723,081 

Normal cost (including expenses) 393,849 

Actual contributions (2,971,865)

Interest to end of plan year 2,770,477 

35,915,542 

Increase (decrease) due to:

Experience (gain) or loss 1,196,840 

Plan amendment - 

Change in actuarial assumptions 8,512,235 

Change in actuarial method - 

Net increase (decrease) 9,709,075 

Unfunded actuarial liability as of July 1, 2015 $ 45,624,617 

Projection of Actuarial Liability to Year End

Actuarial liability as of July 1, 2015 $ 103,417,709 

Expected increase (decrease) due to:

Normal cost (excluding expenses) 126,435 

Benefits paid (9,383,683)

Interest on above (342,405)

Interest on actuarial liability 7,756,328 

Net expected increase (decrease) (1,843,325)

Expected actuarial liability as of June 30, 2016 $ 101,574,384 

39.43
Enrolled Actuary’s Report 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page 32 

 

FUNDING PERIOD

Funding Period Calculation 

Actuarial Study as of July 1, 2015 2014

Unfunded actuarial liability

Actuarial liability $ 103,778,717 $ 96,205,465 

less: Fund assets (actuarial value) 57,793,092 60,050,741 

45,985,625 36,154,724 

Funds available to amortize unfunded

Anticipated contributions (beg. of yr.) 1,546,067 2,066,810 

less: Normal cost (including expenses) 346,351 378,798 

$ 1,199,716 $ 1,688,012 

Funding period (years) * * 

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

39.44

Enrolled Actuary’s Report 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page 34 

 

FULL FUNDING LIMIT

Projection of Assets 

for Full Funding Limit

Market

Value

Actuarial

Value

Asset value as of July 1, 2015 $ 50,999,106 $ 57,793,092 

Expected increase (decrease) due to:

Investment income 3,464,045 3,973,594 

Benefits paid (9,383,683) (9,383,683)

Expenses (240,000) (240,000)

Net expected increase (decrease) (6,159,638) (5,650,089)

Expected value as of June 30, 2016* $ 44,839,468 $ 52,143,003 

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

Full Funding Limit 

as of June 30, 2016

For Minimum 

Required

For Maximum 

Deductible

ERISA full funding limit (not less than 0)

Actuarial liability $ 101,574,384 $ 101,574,384 

less: Assets (lesser of market or actuarial) 44,839,468 44,839,468 

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

56,734,916 56,734,916 

Full funding limit override 

(not less than 0)

90% of current liability 140,117,294 140,117,294 

less: Assets (actuarial value) 52,143,003 52,143,003 

87,974,291 87,974,291 

Full funding limit (greater of ERISA limit 

and full funding override) $ 87,974,291 $ 87,974,291 

39.46
Enrolled Actuary’s Report 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page 35 

 

MINIMUM REQUIRED CONTRIBUTION AND FULL FUNDING CREDIT

Minimum Required Contribution

Plan Year Beginning July 1, 2015

Minimum funding cost

Normal cost (including expenses) $ 357,760 

Net amortization of unfunded liabilities 4,110,356 

Interest to end of plan year 335,110 

4,803,226 

Full funding limit 87,974,291 

Net charge to funding std. acct. (lesser of above) 4,803,226 

less: Credit balance with interest to year end (6,480,501)

Minimum Required Contribution (not less than 0)* $ 11,283,727 

* 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 June 30, 2016

Full funding credit (not less than 0)

Minimum funding cost (n.c., amort., int.) $ 4,803,226 

less: full funding limit 87,974,291 

$ - 

39.47
Enrolled Actuary’s Report 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page 36 

 

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 July 1, 2015

Preliminary deductible limit

Normal cost (including expenses) $ 357,760 

10-year limit adjustment (using “fresh start” alternative) 6,183,130 

Interest to end of plan year 490,567 

7,031,457 

Full funding limit 87,974,291 

Maximum deductible contribution override

140% of vested current liability projected to June 30, 2016 217,407,150 

less: Actuarial value of assets projected to June 30, 2016 52,143,003 

165,264,147 

Maximum deductible contribution* $ 165,264,147 

Anticipated employer contributions $ 1,604,045 

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

maximum deductible contribution override.

39.48
Enrolled Actuary’s Report 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page 37 

 

HISTORY OF UNFUNDED VESTED BENEFITS

Rolling 5 Method 

June 30,

Vested 

Benefits

Interest Rate

Value of 

Vested 

Benefits Asset Value*

Unfunded 

Vested 

Benefits

Unamortized 

Portion of

VAB

2002 8.00% 80,873,218 93,269,833 (12,396,615) 

2003 8.00% 88,169,646 92,413,923 (4,244,277) 

2004 8.00% 91,983,102 92,018,520 (35,418) 

2005 8.00% 100,539,192 91,949,502 8,589,690 

2006 8.00% 104,000,933 83,833,612 20,167,321 

2007 8.00% 104,880,517 84,233,041 20,647,476 

2008 8.00% 101,057,014 83,197,623 17,859,391 

2009 8.00% 99,394,341 66,487,122 32,907,219 2,302,376 

2010 8.00% 98,001,346 72,317,856 25,683,490 2,217,581 

2011 8.00% 97,203,242 69,237,352 27,965,890 2,126,001 

2012 8.00% 96,320,994 63,985,663 32,335,331 2,027,096 

2013 8.00% 95,368,138 61,187,378 34,180,760 1,920,278 

2014 8.00% 94,669,390 57,103,528 37,565,862 1,804,915 

2015 7.50% 103,136,327 50,999,106 52,137,221 1,680,323 

* Actuarial value through 2013, market value thereafter

Example of Calculation of Employer Liability Upon Withdrawal 

 Ratio of Withdrawing Employer’s 

 Years Contributions to Total Employer Contributions

7-1-2010 to 6-30-2015 1.0% 

Employer withdraws during 7-1-2015 through 6-30-2016: 

Withdrawal Liability = ($ 52,137,221 + $1,680,323) X 1.0% = $538,175 

Withdrawal Liability after DeMinimis = $538,175 

Example assumes there are no reasonably collectible employer withdrawal liability 

contributions to deduct from the unfunded vested benefits.

39.49
Enrolled Actuary’s Report 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page 38 

 

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 July 1, 2015 2014

Present value of vested accumulated benefits

Participants currently receiving benefits $ 81,113,698 $ 75,230,024 

Other participants 22,022,629 19,439,366 

103,136,327 94,669,390 

Nonvested accumulated benefits 281,382 1,104,432 

Present value of all accumulated benefits $ 103,417,709 $ 95,773,822 

Market value of plan assets $ 50,999,106 $ 57,103,528 

Interest rate used to value benefits 7.50% 8.00%

Changes in Present Value of Accumulated Benefits

Present value of accumulated benefits as of July 1, 2014 $ 95,773,822 

Increase (decrease) due to:

Plan amendment - 

Change in actuarial assumptions 8,512,235 

Benefits accumulated and experience gain or loss 131,407 

Interest due to decrease in discount period 7,661,906 

Benefits paid (8,661,661)

Net increase (decrease) 7,643,887 

Present value of accumulated benefits as of July 1, 2015 $ 103,417,709 

39.50
APPENDICES

39.51
Appendix A - Plan Provisions 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page A-1 

PLAN HISTORY

Origins/Purpose 

The International Association of Machinists Motor City Pension Plan was established 

effective June 1, 1955. Its purpose is to provide retirement income to covered 

employees. Payments of retirement income under the Plan are made from the 

International Association of Machinists Motor City Trust Fund. The Pension Plan is 

administered in accordance with the Taft-Hartley Act by a Board of Trustees. 

Employer Contributions 

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

the Collective Bargaining Agreement. Following is a listing of weekly pension 

contribution rates by employer. 

Weekly 

Contribution Rate

Employer

Number Employer Credited

NonCreditedEffective 

Date

2700 Doan Construction $134.70 $114.74 06/04/2012

$134.70 $140.43 06/06/2013

3003 Faygo Trucking Co. $121.55 $ 58.27 11/01/2011

$121.55 $ 76.80 11/01/2012

1150 Johnson, George P. $ 21.60 $ 13.38 02/01/2012

$ 21.60 $ 16.98 02/01/2013

4600 Koenig Fuel & Supply Co. $134.70

$134.70

 $114.74

 $140.43

06/07/2012

06/07/2013

5700 Motor City Electric $302.70 $130.34 11/01/2011

$302.70 $174.94 11/01/2012

6050 Penske Truck Leasing Co. $106.60 $126.94 11/01/2014

$106.60 $150.99 01/01/2015

3900, 6900 YRC Trucking Inc.

(Roadway and USF Holland) 

$173.00

$173.00

 $144.27

 $176.95

05/01/2011

05/01/2012

7800 YRC Trucking Inc.

(Yellow Freight)

$164.70

$164.70

 $152.57

 $185.25

05/01/2011

05/01/2012

39.52
Appendix A - Plan Provisions 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page A-2 

SUMMARY OF PLAN PROVISIONS

Participation Satisfaction of requirements in the collective bargaining 

agreement

Credited service Beginning 7-1-1990, based on weeks of contributions in a 

plan year according to the following schedule:

Weeks of contribution

in a plan year

Credited

service

0-5 0

6-15 1⁄4

16-25 1⁄2

26-35 3⁄4

36 or more 1

Vesting service 1 year of vesting service for each plan year during which 

the employee earns at least 1⁄2 of a year of credited 

service.

Break in service Plan year in which participant earns less than 1⁄4 of a year 

of credited service.

Normal retirement benefit

Eligibility Age 65

Monthly amount 3.50% of employer contributions prior to July 1, 2004 plus 

2.00% of employer contributions made on or after 

July 1, 2004 to June 30, 2006, plus 0.50% of credited 

employer contributions made on or after July 1, 2006. 

Payable for life. Retirees prior to January 1, 2009 are 

guaranteed a minimum of 60 payments.*

Early retirement benefit

Eligibility Age 52 and 5 years of credited service

Monthly amount Retirements on or after January 1, 2009:

Normal reduced 5/9% for each full month which payments 

begin prior to age 65 for 72 months and 3/10% for each 

full month thereafter. Payable same as normal.

Retirements prior to January 1, 2009 and grandfathered 

retirements on or after January 1, 2009:

Normal reduced 5/9% for each full month which payments 

begin prior to age 62 for 24 months and 1/3% for each full 

month thereafter. Payable same as normal.

* If retiree dies before 60 payments are made, the surviving spouse or named beneficiary in the absence of 

a surviving spouse will receive payments for the balance of the 60 months. 

39.53
Appendix A - Plan Provisions 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page A-3 

SUMMARY OF PLAN PROVISIONS (CONT.) 

Disability benefit

Eligibility 5 years of credited service.

Monthly amount Normal. Payable until age 65, recovery or death. This 

benefit is eliminated effective January 1, 2009.

Vested benefit

Eligibility 5 years of service, termination of employment

Monthly amount Accrued benefit payable at normal retirement age or after 

age 52 with benefit reduced 5/9% for each of the first 96 

months and by 5/18% for each of the next 60 months by 

which payments begin prior to age 65. Payable same as 

normal. 

Optional forms of  50% joint and survivor with pop-up*

payment  75% joint and survivor with pop-up*

 Social security leveler

 Life and 5 years certain

*Subsidy removed January 1, 2009

Pre-retirement death 

benefit

Eligibility Death of vested participant with surviving spouse

Monthly amount 75% of participant’s qualified joint and 75% survivor 

annuity payable to spouse over spouse’s lifetime 

commencing at participant’s earliest retirement date, or 

deferred to normal if spouse elects. Spouse may also 

elect a reduced actuarial equivalent immediate benefit or 

an actuarial equivalent lump sum. Effective 

January 1, 2009, this benefit is only available if 

participants pay for coverage with a reduction in their 

accrued benefit.

Lump sum death benefit

Eligibility Death of participant with at least 5 years of credited 

service with contributions after July 1, 2000 and no 

spouse. This benefit is eliminated effective 

January 1, 2009.

Lump sum amount 100% of employer contributions. If eligible to commence 

benefits, the lump sum amount will be an actuarial 

equivalent of 60 months of retirement benefit 

commencing at date of death.

39.54
Appendix A - Plan Provisions 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page A-4 

SUMMARY OF PLAN PROVISIONS (CONT.) 

Post-retirement death 

benefit

Eligibility Death after retirement (except from vested benefit), and 

contributions after 1/1/1980. This benefit is eliminated 

effective January 1, 2009.

Lump sum amount Based on the following schedule

Credited service Lump sum amount

0 – 9 $ 0

10 – 19 $3,000

20 – 24 $4,500

25+ $6,000

39.55
Appendix A - Plan Provisions 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page A-5 

HISTORICAL PLAN MODIFICATIONS

Normal Retirement 

Benefit

Effective date July 1, 2004

Adoption date May 20, 2004

Provisions 3.50% of employer contributions prior to July 1, 2004 plus 

2.0% of employer contributions made on or after 

July 1, 2004.

Normal Retirement 

Benefit

Effective date July 1, 2006

Adoption date June 1, 2006

Provisions Accrual rate was lowered to .5% of employer 

contributions. Contribution rate increases made on or 

after January 1, 2006 are deemed non-credited.

Lump Sum PostRetirement Death Benefit

 Effective date January 1, 2009

 Adoption date October 23, 2008

 Provisions The Lump Sum Post-Retirement Death Benefit is 

eliminated effective January 1, 2009.

Early Retirement Benefit

 Effective date January 1, 2009

 Adoption date October 23, 2008

 Provisions Eliminated the 25 & out unreduced early retirement 

benefit for non-retired participants with less than 25 years 

of service as of January 1, 2009, and increased the early 

retirement reduction factor to 5/9 of 1% for the first 72 

months and 3/10 of 1% for the next 84 months for 

participants under age 65 as of January 1, 2009.

39.56
Appendix A - Plan Provisions 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page A-6 

HISTORICAL PLAN MODIFICATIONS (CONT.)

Normal Retirement 

Benefit

Effective date January 1, 2009

Adoption date October 23, 2008

Provisions Eliminated the 60 month guarantee for the normal form 

for retirements on or after January 1, 2009.

Pre-Retirement Death 

Benefits

Effective date March 1, 2009

Adoption date October 23, 2008

 Provisions Effective March 1, 2009, participants will pay for preretirement death benefits with a reduction in benefits upon 

retirement, unless waived.

Disability Benefit

Effective date January 1, 2009

Adoption date October 23, 2008

Provisions Eliminated the Disability benefit.

Pop-up Subsidy

Effective date January 1, 2009

Adoption date October 23, 2008

Provisions The pop-up subsidy was removed for participants retiring 

on and after January 1, 2009.

39.57
Appendix B - Actuarial Assumptions and Methods 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page B-1 

ACTUARIAL ASSUMPTIONS

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

herein. 

Valuation date July 1, 2015

Interest rates

ERISA rate of return used 

to value liabilities

7.50% per year after investment expenses

Current liability 3.34% (in accordance with Section 431(c)(6) of the 

Internal Revenue Code)

Operational expenses $240,000 per year excluding investment expenses

Pop-up load Liabilities for retirees and disabled participants with joint 

and survivor option who retired before January 1, 2009 

with contributions after May 1, 1998 are loaded 2.3%.

Mortality

Assumed plan mortality RP 2014 Generational Blue Collar Mortality Tables for 

employees and healthy annuitants projected using the 

MP-2014 projection scale, set forward 2 years for males 

and females. 

Post-disablement mortality RP 2014 Generational Blue Collar Mortality Tables for 

disabled annuitants projected using the MP-2014 

projection scale, set forward 2 years for males and 

females. 

Current liability Separate annuitant and non-annuitant rates based on 

the RP-2000 Mortality Tables Report developed for 

males and females as prescribed by Section 431(c)(6) 

of the Internal Revenue Code.

39.58
Appendix B - Actuarial Assumptions and Methods 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page B-2 

ACTUARIAL ASSUMPTIONS (CONT.)

Withdrawal T-3 Turnover Table from The Actuary’s Pension 

Handbook (less GAM 51 mortality) – specimen rates 

shown below:

Withdrawal

Age Rate

25 .0527

30 .0483

35 .0447

40 .0384

45 .0321

50 .0152

Select rates for the first 3 years of employment are shown 

below:

Select

Withdrawal

Year Rate

First .15

Second .15

Third .15

39.59
Appendix B - Actuarial Assumptions and Methods 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page B-3 

ACTUARIAL ASSUMPTIONS (CONT.)

Future retirement rates

Active lives According to the following schedule:

Age

Participants not

Grandfathered

Grandfathered with

25 years of

credited service

as of

June 30, 2009*

46-51 .00 .08

52-60 .01 .08

61 .15 .15

62 .40 .40

63-64 .25 .25

65 .85 .85

66 .42 .42

67 .71 .71

68 .80 .80

69 .90 .90

70 1.00 1.00

*First year eligible with 25 years of service assumes at 

least a 50% retirement rate.

Resulting in an average expected retirement age of 63.1

Inactive vested lives Age 60, or current age if older (earliest unreduced

retirement age if grandfathered)

Future annual weeks Same number of weeks as previous plan year.

Future weekly 

contribution rate

Average negotiated weekly rate for current plan year.

Age of participants with 

unrecorded birth dates

Based on average entry age of participants with recorded 

birth dates and same vesting status.

Marriage assumptions 80% assumed married with the male spouse 3 years 

older than his wife

39.60
Appendix B - Actuarial Assumptions and Methods 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page B-4 

ACTUARIAL ASSUMPTIONS (CONT.)

Inactive vested lives over 

age 70

Continuing inactive vested participants over age 70 are 

assumed deceased and are not valued.

QDRO benefits Benefits to alternate payee included with participant’s 

benefit until payment commences

Section 415 limit 

assumptions

Dollar limit $210,000 per year

Assumed form of 

payment for those limited 

by Section 415

Qualified joint and 75% survivor annuity

Benefits not valued None

39.61
Appendix B - Actuarial Assumptions and Methods 

IAM Motor City Pension Fund 

July 1, 2015 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 2015 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.

Mortality The RP 2014 Generational Blue Collar Mortality Tables 

for employees and healthy annuitants projected using the 

MP-2014 projection scale was chosen as the base table 

for this population. 

The blue collar table was chosen based on the industry of 

plan participants. 

Finally, a 2-year set forward was applied in order to more 

closely match projected deaths for the coming plan year 

to extrapolated deaths derived from a study of retiree 

deaths from July 1, 2010 through June 30, 2015.

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

plan from July 1, 2011 through June 30, 2014. The 

assumed future rates of retirement were selected based 

on the results of this study. 

Withdrawal Actual rates of withdrawal by age were last studied for 

this plan from July 1, 2010 through June 30, 2015. The 

study excluded experience from employers that have 

completely withdrawn. The assumed future rates of 

withdrawal were selected based on the results of this 

study. 

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

anticipated future changes in workforce.

39.62
Appendix B - Actuarial Assumptions and Methods 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page B-6 

ACTUARIAL ASSUMPTIONS USED FOR PROJECTIONS

The assumptions used for the credit balance and funding ratio projections are the same 

as used throughout the report with the following exceptions. 

Assumed return on fund 

assets

Current year projections 6.75% for the first 10 years (7/1/2015-6/30/2025)

7.50% thereafter

Prior year projections 8.00% annually

Future total weeks worked

Current year projections 5,962 weeks annually

Prior year projections 9,935 weeks annually

Contribution Rate 

Increases

Current year projections None

Prior year projections None

Plan Changes

Current year projections None

Prior year projections None

Contributions from 

Withdrawn Employers

Current year projections Any future reasonably collectible contributions are 

included. 

Prior year projections Any future reasonably collectible contributions are 

included.

39.63
Appendix B - Actuarial Assumptions and Methods 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page B-7 

ACTUARIAL METHODS

Funding method

ERISA funding Traditional Unit Credit method (effective July 1, 2007)

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 week worked during 

the preceding plan year.

Inactive vested Vested participants with no weeks reported 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 without phase-in effective July 1, 

2006. Gains and Losses are amortized over a period of 5 

years. 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 rolling-5 method, market value 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.

39.64
Date 

Established

Source of Change in 

Unfunded Liability

Original 

Amount

Original 

Period Years Months

Outstanding 

Balance

Amortization 

Payment

Remaining Period 7/1/2015 7/1/2015

Appendix C - Minimum Funding Amortization Bases

IAM Motor City Pension Fund

July 1, 2015 Actuarial Valuation

Charges

1/1/1989 Amendment 4,603,500 30 3 6 1,207,064 377,438

1/1/1990 Amendment 2,152,100 30 4 6 700,113 176,132

1/1/1990 Amendment 645,000 30 4 6 209,910 52,809

6/30/1991 Amendment 640,667 29 4 11 210,410 49,082

6/30/1992 Amendment 308,404 29 5 11 117,242 23,506

6/30/1993 Amendment 428,714 29 6 11 183,574 32,549

6/30/1994 Amendment 2,080,046 29 7 11 983,149 157,395

6/30/1995 Amendment 1,715,262 29 8 11 881,302 129,402

6/30/1996 Amendment 703,466 29 9 11 388,214 52,923

7/1/1996 Amendment 713,576 30 11 0 452,506 57,541

7/1/1997 Amendment 3,757,051 30 12 0 2,514,987 302,448

7/1/1998 Amendment 4,432,443 30 13 0 3,111,882 356,243

7/1/1999 Amendment 3,124,741 30 14 0 2,288,278 250,747

7/1/2000 Amendment 2,049,736 30 15 0 1,558,443 164,234

7/1/2001 Amendment 1,367,712 30 16 0 1,075,365 109,428

7/1/2001 Amendment 229,637 30 16 0 180,554 18,373

7/1/2001 Experience Loss 316,241 15 1 0 34,193 34,193

7/1/2002 Amendment 2,031,517 30 17 0 1,646,051 162,308

7/1/2002 Amendment 1,044,545 30 17 0 846,349 83,454

7/1/2002 Experience Loss 3,349,162 15 2 0 697,759 361,490

7/1/2003 Amendment 354,406 30 18 0 295,035 28,276

7/1/2003 Assumptions 551,321 30 18 0 458,953 43,986

7/1/2003 Experience Loss 4,633,054 15 3 0 1,394,920 498,976

7/1/2004 Amendment 72,126 30 19 0 61,523 5,747

7/1/2004 Experience Loss 3,012,006 15 4 0 1,165,512 323,706

7/1/2005 Assumptions 6,239,179 30 20 0 5,441,306 496,511

7/1/2005 Experience Loss 1,588,635 15 5 0 741,052 170,383

7/1/2006 Assumptions 696,852 30 21 0 620,043 55,388

7/1/2006 Experience Loss 3,023,311 15 6 0 1,632,859 323,602

7/1/2006 Method 7,467,360 10 1 0 1,030,421 1,030,421

7/1/2007 Method 584,386 10 2 0 155,303 80,458

7/1/2009 Experience Loss 17,168,384 15 9 0 12,529,845 1,827,226

7/1/2011 Assumptions 139,773 15 11 0 116,575 14,824

7/1/2011 Experience Loss 1,366,458 15 11 0 1,139,688 144,923

7/1/2012 Assumptions 84,203 15 12 0 74,133 8,915

Page C-1

39.65
Date 

Established

Source of Change in 

Unfunded Liability

Original 

Amount

Original 

Period Years Months

Outstanding 

Balance

Amortization 

Payment

Remaining Period 7/1/2015 7/1/2015

Appendix C - Minimum Funding Amortization Bases

IAM Motor City Pension Fund

July 1, 2015 Actuarial Valuation

7/1/2012 Experience Loss 3,544,308 15 12 0 3,120,539 375,271

7/1/2013 Experience Loss 970,596 15 13 0 896,242 102,600

7/1/2014 Assumptions 938,147 15 14 0 903,595 99,015

7/1/2015 Assumptions 8,512,235 15 15 0 8,512,235 897,049

7/1/2015 Experience Loss 1,196,840 15 15 0 1,196,840 126,127

Total Charges: 60,773,964 9,605,099

Credits

7/1/2008 Combined Credits 25,183,056 10 3 0 9,671,891 3,459,727

1/1/2009 Amendment 8,798,427 15 8 6 6,194,379 941,831

7/1/2009 Method (Relief) 5,540,594 10 4 0 2,734,861 759,573

7/1/2010 Assumptions 405,265 15 10 0 317,702 43,056

7/1/2010 Experience Gain 2,115,767 15 10 0 1,658,626 224,780

7/1/2014 Experience Gain 623,213 15 14 0 600,261 65,776

Total Credits: 21,177,720 5,494,743

Net Charges: 39,596,244 4,110,356

Less Credit Balance:

Less Reconciliation Balance:

Unfunded Actuarial Liability:

-6,028,373

0

45,624,617

Page C-2

39.66
Appendix D – Summary of Endangered and Critical Status Rules 

IAM Motor City Pension Fund 

July 1, 2015 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 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 nonactives 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 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

39.67
Appendix D – Summary of Endangered and Critical Status Rules 

IAM Motor City Pension Fund 

July 1, 2015 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

39.68
Appendix D – Summary of Endangered and Critical Status Rules 

IAM Motor City Pension Fund 

July 1, 2015 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. 

 PBGC premium doubled and indexed 

 PBGC ability to facilitate mergers and partitions expanded

39.69
Appendix E – Glossary of Common Pension Terms 

IAM Motor City Pension Fund 

July 1, 2015 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: The market value of all assets in the fund including on an 

accrued, not cash basis (matching 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. 

39.70
Appendix E – Glossary of Common Pension Terms 

IAM Motor City Pension Fund 

July 1, 2015 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. 

39.71
Appendix E – Glossary of Common Pension Terms 

IAM Motor City Pension Fund 

July 1, 2015 Actuarial Valuation 

Page E-3 

GLOSSARY OF COMMON PENSION TERMS (CONT.)

Funding 

Funded Ratio (Funded Percentage): Present Value of Accrued Benefits divided by 

the Actuarial Value of Assets. 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. 

Accumulated Funding Deficiency: A negative credit balance, indicating an excess 

of total charges to the funding standard account over the total credits to such 

account. 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 two main criteria used in determining the 

annual PPA status. It can eventually trigger an excise tax levied on contributing 

employers. 

Funding Period: The estimated number of years it would take to pay off the Plan’s 

unfunded liabilities (and be 100% funded). This calculation is based on the entry age 

normal liability basis. This is determined by taking the excess of expected 

contributions over expected normal cost and comparing it to the unfunded entry age 

accrued liability. This is a good single measure of plan health that looks at both 

current levels of funding and future expectations. It is also a good indicator of the 

level of risk the plan is taking in funding its future benefits. 

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 with 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 contributing employers. Employer Withdrawal Liability has both 

advantages and disadvantages to the plan. The main upside of Employer 

Withdrawal Liability is that its presence may encourage contributing employers to 

remain in the plan, helping other contributing employers. The disadvantage is 

that EWL may make it more difficult for a contributing employer to sell the 

company, and possibly may make it more challenging to secure loans and other 

lines of credit. 

39.72
International Association of Machinists Motor City Pension Fund

EIN/Plan #: 38-6237143/001

Checklist Item #39 – 7.09 Copy of Rehabilitation Plan and 2 Most Recent Actuarial Valuations

Document 39.2(2)

The July 1, 2016 Actuarial

Valuation Report

Please refer to the following pages.

39.73
INTERNATIONAL ASSOCIATION OF MACHINISTS

MOTOR CITY PENSION FUND

Actuarial Valuation Report 

For Plan Year Commencing 

July 1, 2016 

39.74


TABLE OF CONTENTS

PART I: SUMMARY OF RESULTS 1

5 - Year Summary of Valuation Results 2

5 - Year Summary of Demographics 3

Changes From Prior Study 4

History of Major Assumptions 5

Experience vs. Assumptions 6

Rate of Return on Fund Assets 7

Unfunded Vested Benefits/Employer Withdrawal Liability 8

Termination by Mass Withdrawal 9

Contribution Allocation 10

Funded Ratios 11

Funding Standard Account 12

Projection of Credit Balance and Funded Ratio 13

PPA Funding Status Report 14

Ultimate Funded Status 15

Sensitivity Analysis 16

PART II: SUPPLEMENTAL STATISTICS 17

Participant Data Reconciliation 18

Weeks Worked During Plan Year 19

Contributions Made During Plan Year 20

Active Information 21

Inactive Vested Information 22

Retiree Information 23

PART III: ASSET INFORMATION 25

Market and Actuarial Fund Values 26

Flow of Funds 27

Investment Gain and Loss 28

PART IV: ENROLLED ACTUARY’S REPORT 29

Normal Cost/Actuarial Liability 30

Actuarial Liability Reconciliation/Projection 31

Funding Period 32

Current Liability 33

Full Funding Limit 34

Minimum Required Contribution and Full Funding Credit 35

Maximum Deductible Contribution 36

History of Unfunded Vested Benefits 37

ASC 960 Information 38

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

39.77
Page 1 

PART I: SUMMARY OF RESULTS

39.78
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 2 

 

5 - YEAR SUMMARY OF VALUATION RESULTS

Actuarial Study 

as of July 1, 2015 2014 2013 2012 2011

 

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

Progress under FIP/RP Yes Yes Yes No No

Funded ratio

PPA certification 57.9% 61.2% 63.2% 63.5% 65.9%

Valuation report 58.6% 55.9% 62.7% 63.5% 65.7%

Date of first projected funding deficiency

PPA certification 6/30/17 6/30/16 6/30/15 6/30/14 6/30/12 

Valuation report 6/30/17* 6/30/16 6/30/15 6/30/14 6/30/13 

Asset values ($ 000)

Market 51,182 50,999 57,104 54,250 54,122 

Actuarial 59,207 57,793 60,051 61,187 63,986 

Accumulated ben. ($ 000) 100,968 103,418 95,774 96,373 97,452 

* Based on assumptions used for the credit balance projection graph as shown on page B-6

39.79
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 3 

 

5 - YEAR SUMMARY OF DEMOGRAPHICS

Actuarial Study 

as of July 1, 2016 2015 2014 2013 2012

Active 141 133 219 208 188 

Inactive vested 377 387 329 332 339 

Receiving benefits 638 644 649 657 655 

Total 1,156 1,164 1,197 1,197 1,182 

Active/retiree ratio 0.22 0.21 0.34 0.32 0.29 

Active/inactive ratio 0.14 0.13 0.22 0.21 0.19 

Unrecorded dates of birth - - 3 15 - 

Average entry age 30.6 30.9 30.2 30.8 31.0 

Average attained age 42.4 44.1 44.1 45.3 47.2 

History of Weeks 

39.80
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 4 

 

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 mortality rates were changed from the RP-2014 Blue Collar 

Generational Mortality Table for employees and healthy annuitants with a 2-year set 

forward projected using the MP-2014 projection scale to 110% of the RP-2014 Blue 

Collar Mortality Table for employees and healthy annuitants adjusted backward to 

2006 with the MP-2014 projection scale and projected forward using the MP-2016 

projection scale. This change was made in order to better reflect anticipated 

improvements in mortality rates for each future year due to medical advances and 

lifestyle changes. 

 The assumed withdrawal rates were changed from 3-year select rates of 15%, to 4-

year select rates of 20%, 20%, 20% and 10%. Also withdrawal rates by age after the 

select period were also increased according to the table in Appendix B. This change 

reflects our best estimate of future withdrawal patterns based on recent plan 

experience. 

 The assumed retirement rates were changed according to the schedule in Appendix B 

to represent our best estimate of future retirement patterns based on recent plan 

experience. 

 The pop-up load for non-disabled retirees was removed. The actual value of the popup is now measured for each individual retiree. 

 The pop-up load was decreased for disabled retirees receiving a joint and survivor 

form of benefit who retired after January 1, 2009 from 1.2% to 0.7%. This load 

remains because our software still cannot directly value a disabled benefit pop-up.

 We changed the optional form assumption from 100% of married participants electing 

a life only form of benefit at retirement to 25% of married participants assumed to elect 

a joint and 50% form of benefit, 30% of married participants assumed to elect a joint 

and 75% form of benefit and 45% of married participants assumed to elect a life only 

form of benefit. This change is based on recent benefit election experience and 

reflects our best estimate. 

 The percentage of participants assumed married was changed from 80% to 75%. 

This is based on recent experience at retirement and represents our best estimate. 

 The current liability interest rate was changed from 3.34% to 3.18%. The new rate is 

within established statutory guidelines. 

39.81
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 5 

 

HISTORY OF MAJOR ASSUMPTIONS

Actuarial Study as of July 1,

Assumption 2016 2015 2014 2013 2012

Future rate of net 

investment return

7.50% 7.50% 8.00% 8.00% 8.00%

Mortality table RP 2014 RP-2014 RP-2000 RP-2000 RP-2000 

Adjustment 110% 2 yr. sf. 2 yr. sf. 2 yr. sf. 2 yr. sf.

Projection Scale MP-2016 MP-2014 AA AA AA

Future expenses $ 240,000 $ 240,000 $ 240,000 $ 240,000 $ 240,000 

Average future weekly

contribution rate*

Credited $122.34 $124.34 $105.85 $107.82 $109.36

Non-credited 143.56 144.70 110.50 104.11 93.33

Total $265.90 $269.04 $216.35 $211.93 $202.69

Average future 

annual weeks*

42 45 45 43 49

Average expected retirement age**

Actives 62.3 63.1 62.9 60.1 60.1

Inactive vested 60.6 60.5 60.3 64.7 64.7

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

** Resulting from the application of the retirement probabilities shown in Appendix B to active 

participants.

39.82
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 6 

 

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 

June 30, 2016 Expected Actual

Decrements

Terminations 22 

less: Rehires 2 

Terminations (net of rehires) 6.9 20 

Retirements 2.5 4 

Disabilities - - 

Deaths - pre-retirement 2.8 2 

Deaths - post-retirement 25.3 30 

Asset assumptions

Rate of net investment return on actuarial value 7.50% 0.94%

Net expenses $ 240,000 $ 250,224 

Other demographic assumptions

Average retirement age from active (new retirees) 60.4 60.4

Average retirement age from inactive (new retirees)* 60.5 59.6

Average entry age (new entrants) 30.9 30.3

Weeks worked per active 45 42

Total weeks worked (valuation assumption) 5,962 5,993 

Total weeks worked (PPA certification assumption) 5,962 5,993 

Unfunded liability (gain)/loss

(Gain)/loss due to asset experience $ 3,819,676 

(Gain)/loss due to liability experience (188,836)

Total (gain)/loss $ 3,630,840 

* 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 

39.83
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 7 

 

RATE OF RETURN ON FUND ASSETS

Historical Rates of Net Investment Return 

Average Rates of Net Investment Return (dollar weighted) 

Return on Market Value Return on Actuarial Value

Period Ending June 30, Period Ending June 30,

Period 2016 2015 2016 2015

One year -1.33% -0.39% 0.94% 6.37%

5 years 5.72% 11.26% 4.94% 5.81%

10 years 4.43% 4.90% 5.11% 4.18%

15 years 3.97% 3.52% 4.35% n/a

20 years 5.74% 6.64% n/a n/a

39.84
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 8 

 

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 rolling 5 method. 

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. 

Rolling 5 Method ($ 000) 

June 30, 2016 2015 2014 2013 2012

Vested benefits interest 7.50% 7.50% 8.00% 8.00% 8.00%

Vested benefits 100,620 103,136 94,669 95,368 96,321 

less: Asset value* 51,182 50,999 57,104 61,187 63,986 

UVB 49,438 52,137 37,565 34,181 32,335 

Unamortized VAB 1,546 1,680 1,805 1,920 2,027 

* Actuarial value through 2013, market value thereafter

An employer withdrawing 

during the coming year may

have withdrawal liability

39.85
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 9 

 

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 2.77% for the first 20 years and 2.86% for each year thereafter and the GAM 94 Basic 

Table projected to 2026 mortality table were used. 

Illustrative Section 4281 Valuation

as of June 30, 2016

Value of nonforfeitable benefits

Participants currently receiving benefits $ 123,562,171 

Inactive vested participants 34,761,341 

Active participants 10,906,899 

Expenses (per Section 4281 of ERISA) 1,119,190 

170,349,601 

less: Fund assets (market value) 51,181,760 

Value of nonforfeitable benefits in excess of (less than) fund assets $ 119,167,841 

Under mass withdrawal 

assumptions, plan assets do 

not exceed plan liabilities

39.86
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 10 

 

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 July 1, 2016 

Total Expected Contribution Rate $265.90 

Contribution Allocation as of July 1, 2015 

Total Expected Contribution Rate $269.04 

These graphs show how 

the contributions are

being spent

39.87
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 11 

 

FUNDED RATIOS

The present value of vested accumulated benefits is the 

amount that would have to be invested as of the 

valuation date in order to pay, when due, the benefits 

accrued and vested as of the valuation date. This 

calculation assumes fund assets will earn interest at the 

assumed rate and all other aspects of the fund’s 

experience will follow the actuarial assumptions. Similarly, the present value of all 

accumulated benefits is the amount necessary to fund all benefits accrued as of the 

valuation date. 

The extent to which the value of vested, accumulated benefits and total accumulated 

benefits are funded provides a “snapshot” measure of the plan’s funded status as of the 

valuation date. 

Present Value of Accumulated Benefits/

Funded Ratios

Actuarial Study as of July 1, 2016 2015

Present value of vested accumulated benefits

Participants currently receiving benefits $ 79,245,612 $ 81,113,698 

Inactive vested participants 16,577,026 16,492,151 

Active participants 4,797,630 5,530,478 

Total 100,620,268 103,136,327 

Nonvested accumulated benefits 347,617 281,382 

Present value of all accumulated benefits $ 100,967,885 $ 103,417,709 

Actuarial value of assets $ 59,206,665 $ 57,793,092 

Market value of assets $ 51,181,760 $ 50,999,106 

Funded ratios (Actuarial value used for PPA)

Vested benefits 58.8% 56.0%

All accumulated benefits 58.6% 55.9%

Funded ratios (Market value)

Vested benefits 50.9% 49.4%

All accumulated benefits 50.7% 49.3%

Interest rate used to value benefits 7.50% 7.50%

The funded ratio can be 

used as an indication of 

ongoing funding 

progress

39.88
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 12 

 

FUNDING STANDARD ACCOUNT

The Funding Standard Account is used to determine 

whether the plan meets the minimum funding 

requirements established by ERISA. Such a 

determination is done by subtracting the year’s 

charges from the credits. A positive result establishes 

a credit balance that represents the amount the plan is 

in excess of the minimum required contribution on a cumulative basis. A negative result 

represents a funding deficiency which could produce excise taxes (except under certain 

circumstances when the plan is following a funding improvement plan or a rehabilitation 

plan). The projected values use the assumptions summarized on page B-6 of the 

appendix. 

Funding Standard Account

Plan Year Ending June 30, 

2017

(Projected)

2016

(Final)

Charges

Prior year funding deficiency $ 1,120,642 $ 6,028,373 

Normal cost (including expenses) 442,751 357,760 

Amortization charges (see Appendix C) 8,923,116 9,605,099 

Interest on above 786,489 1,199,344 

Total charges 11,272,998 17,190,576 

Credits

Prior year credit balance - - 

Employer contributions 2,192,835 9,795,745 

Amortization credits (see Appendix C) 5,614,626 5,494,743 

Interest on above 503,328 779,446 

ERISA full funding credit - - 

Total credits 8,310,789 16,069,934 

Credit balance (credits less charges) $ (2,962,209) $ (1,120,642)

The minimum funding 

requirements have not 

been met for the most 

recent plan year

39.89
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 13 

 

PROJECTION OF CREDIT BALANCE AND FUNDED RATIO

The following graphs provide more information 

about the two most important statistics used in 

the determination of the PPA Funded Status. 

The first graph shows the ERISA credit balance 

(a negative credit balance indicates a projected 

funding deficiency). The second graph shows the funded ratio. Both graphs illustrate 

projected results for the next 20 years using the assumptions summarized on page B-6 of 

the appendix. 

These graphs show 

projections of the two biggest 

drivers of PPA status

39.90
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 14 

 

PPA FUNDING STATUS REPORT

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: “Endangered”, “Seriously 

Endangered”, “Critical”, “Critical and Declining” or none of these. As the plan’s actuary, 

we must complete the status certification within 90 days of the beginning of the plan year, 

and we must also certify whether or not the plan has made scheduled progress if its 

funding improvement or rehabilitation period has begun. The criteria for these 

determinations are outlined in Appendix D. Due to the timing requirement affecting PPA 

certifications, they are performed based on data different from that used in this report (see 

certification letter for additional details). The results are summarized below. The 

projection graph uses the assumptions summarized on page B-6 of the appendix. 

Description

Values Used for PPA Certification

2016 2015

Funded ratio 57.9% 61.2%

Date of first projected funding deficiency 6/30/2017 6/30/2016

Years of benefit payments in assets 8+ 8+

Year of projected insolvency 2025-26 plan year 2027-28 plan year

Ratio of inactive to active participants 7.75 4.47

Certified PPA status Critical & Declining Critical & Declining

Making progress under FIP/RP Yes Yes

Projected PPA Status 

The plan is in Critical 

and Declining status for 

2016

39.91
Summary of Results 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 15 

 

ULTIMATE FUNDED STATUS

The ultimate funded status is a measure used to 

see how well funded the current population is. It 

compares the present value of benefits for both 

past and future service to the current market value 

of assets plus the present value of future 

contributions. The ultimate funded status for the two most recent plan years is shown in 

the graph below. The present values of benefits and contributions include only current 

participants and assume no future contribution rate increases. The percentage above the 

bars is the ratio of assets and future contributions to the value of total benefits. 

Ultimate funded status is a 

snapshot measure of 

contribution sufficiency

39.92

Page 17

PART II: SUPPLEMENTAL STATISTICS

39.94
Supplemental Statistics 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 18 

 

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

July 1, 2015 133 387 644 1,164 

Change due to:

New hire 32 - - 32 

Rehire 2 (2) - - 

Termination (22) 7 - (15)

Disablement - - - - 

Retirement (4) (12) 16 - 

Death - (2) (30) (32)

Cash out - - - - 

New beneficiary - 1 8 10 

Certain pd. expired - - - - 

Data adjustment - (2)* - (3)

Net change 8 (10) (6) (8)

July 1, 2016 141 377 638 1,156 

* Includes 2 participants who are over age 70 and now assumed to be dead.

39.95
Supplemental Statistics 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 19 

 

WEEKS WORKED DURING PLAN YEAR

Plan Year Ending 

June 30, 2016 Number

Weeks

Worked

Average 

Weeks Worked

Actives

Vested 77 3,731 48 

Non-vested, continuing 32 1,427 45 

Non-vested, new entrant 32 734 23 

Total active 141 5,892 42 

Others 8 101 13 

Total for plan year 149 5,993 40 

History of Average Actual and Expected Weeks Worked per Participant 

39.96
Supplemental Statistics 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 20 

 

CONTRIBUTIONS MADE DURING PLAN YEAR

Employer Credited Contributions Reported in Employee Data 

Plan Year Ending 

June 30, 2016 Number

Credited 

Contributions 

Reported

Actives

Vested 77 $ 455,628 

Non-vested, continuing 32 180,193 

Non-vested, new entrant 32 88,953 

Total valued as active 141 724,774 

Others 8 16,862 

Total for plan year 149 $ 741,636 

Average credited weekly contribution rate $ 123.75

Comparison with Audited Employer Contributions 

Employer credited contributions reported in data $ 741,636 

Adjusted total employer contributions reported $ 1,605,626 

Total audited employer contributions* $ 1,635,146

Percent reported 98%

* Excludes employer withdrawal liability payments.

History of Actual and Expected Total Contributions Received* 

* Excludes employer withdrawal liability payments.

39.97

Supplemental Statistics 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 22 

 

INACTIVE VESTED INFORMATION

Inactive Vested Participants by Age as of July 1, 2016 

Age Group Number

Estimated Deferred 

Vested Benefits*

< 30 - $ - 

30-34 9 2,442 

35-39 20 6,418 

40-44 38 19,762 

45-49 60 39,488 

50-54 77 56,771 

55-59 86 46,679 

60-64 69 37,101 

65-69 17 8,907 

70+ 1 226 

Totals 377 217,794 

Unrecorded birth date - - 

Total inactive vested lives 377 $ 217,794 

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

39.99
Supplemental Statistics 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 23 

 

RETIREE INFORMATION

Benefits Being Paid by Form of Payment as of July 1, 2016 

Monthly Benefits Being Paid

Form of Payment Number Total Average Smallest Largest

Life only 173 $ 136,052 $ 786 $ 47 $ 4,699 

Certain & life 70 170,635 2,438 184 5,091 

Joint & survivor 223 314,651 1,411 55 4,626 

Disability 14 24,712 1,765 385 4,102 

Beneficiaries 158 79,945 506 23 3,057 

Totals 638 $ 725,995 $ 1,138 $ 23 $ 5,091 

Retirees by Age and Form of Payment as of July 1, 2016 

Form of Benefits Being Paid

Age

Group

Life

Only

Certain 

& Life

Joint & 

Survivor Disability Total

< 45 - - - - - 

45-49 1 - - - 1 

50-54 2 - 4 1 7 

55-59 15 11 17 1 44 

60-64 25 18 31 6 80 

65-69 45 22 62 3 132 

70-74 26 11 37 3 77 

75-79 22 7 36 - 65 

80-84 16 - 24 - 40 

85-89 13 1 12 - 26 

90-94 5 - - - 5 

95+ 3 - - - 3 

Totals 173 70 223 14 480 

plus: Beneficiaries 158 

Total receiving benefits 638 

39.100
Supplemental Statistics 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 24 

 

RETIREE INFORMATION (CONT.)

Age of Participants Retired During Last 5 Plan Years 

(excludes beneficiaries and disability retirements) 

Age at Plan Year Ending June 30,

Retirement 2016 2015 2014 2013 2012

< 49 - - - - - 

49 1 - - - - 

50 - - - - - 

51 - - - 1 - 

52 2 1 1 - 1 

53 - 1 - 1 1 

54 - - 2 - 1 

55 - 1 - 2 - 

56 - - - 1 - 

57 - 1 - - - 

58 2 - 1 1 1 

59 - 1 - 1 1 

60 1 1 - - 2 

61 1 - 1 3 2 

62 5 2 2 4 4 

63 1 1 2 1 1 

64 1 - 1 - - 

65 1 2 2 - 5 

66+ - 2 - 2 1 

Totals 15 13 12 17 20 

History of Average Retirement Ages 

(excludes beneficiaries and disability retirements) 

Retirement During Plan Year 

Ending In: Number

Average 

Retirement Age

2016 15 59.8

2015 13 60.8

2014 12 60.7

2013 17 60.0

2012 20 61.4

39.101
Page 25

PART III: ASSET INFORMATION

39.102
Asset Information 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 26 

 

MARKET AND ACTUARIAL FUND VALUES

Asset information extracted from the fund’s financial statements audited by Wrubel, 

Wesley & Company. 

Market/Actuarial Value of 

Fund Investments

as of June 30, 2016 2015 2014

Invested assets

Common stocks and REITS $ 20,979,668 $ 22,857,869 $ 29,558,719 

Common/collective trusts 9,529,411 9,173,105 8,539,385 

Mutual funds 15,038,088 14,781,590 11,604,043 

Corporate debt - - 3,072,233 

U.S. gov't securities 8 20 884,512 

Cash 5,484,248 4,595,054 3,190,010 

Prepaid insurance 8,414 7,246 71,777 

51,039,837 51,414,884 56,920,679 

Net receivables* 141,923 (415,778) 182,849 

Market value $ 51,181,760 $ 50,999,106 $ 57,103,528 

Fund assets - Actuarial value 

Market value $ 51,181,760 $ 50,999,106 $ 57,103,528 

less: Deferred investment

gains and (losses) (8,024,905) (6,793,986) (2,947,213)

Actuarial value $ 59,206,665 $ 57,793,092 $ 60,050,741 

Actuarial value as a 

percentage of market value 115.68% 113.32% 105.16%

* Equals receivables, less any liabilities

39.103
Asset Information 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 27 

 

FLOW OF FUNDS

Asset information extracted from the fund’s financial statements audited by Wrubel, 

Wesley & Company. 

Plan Year Ending 

June 30, 2016 2015 2014

Market value at beginning of

plan year $ 50,999,106 $ 57,103,528 $ 54,250,488 

Additions

Employer contributions 9,795,745 2,971,865 2,897,977 

Net investment income* (683,628) (210,398) 8,908,395 

Other income 6,428 23,432 3,710 

9,118,545 2,784,899 11,810,082 

Deductions

Benefits paid 8,685,665 8,661,661 8,777,479 

Net expenses* 250,224 227,660 179,563 

8,935,889 8,889,321 8,957,042 

Net increase (decrease) 182,656 (6,104,422) 2,853,040 

Adjustment (2) - - 

Market value at end of

plan year $ 51,181,760 $ 50,999,106 $ 57,103,528 

Cashflow**

Contr.-ben.-exp. 859,856 (5,917,456) (6,059,065)

Percent of assets 1.68% -11.60% -10.61%

Estimated net investment return

On market value -1.33% -0.39% 17.39%

On actuarial value 0.94% 6.37% 8.46%

* Investment expenses have been offset against gross investment income.

** Cash flow for 2016 was skewed due to a large EWL payoff made during the plan year

39.104
Asset Information 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 28 

 

INVESTMENT GAIN AND LOSS

Investment Gain or Loss

Plan Year Ending June 30, 2016

Expected market value at end of plan year

Market value at beginning of plan year $ 50,999,106 

Employer contributions and non-investment income 9,802,171 

Benefits and expenses paid (8,935,889)

Expected investment income (at 7.50% rate of return) 3,857,418 

55,722,806 

Actual market value at end of plan year 51,181,760 

less: Expected market value 55,722,806 

Investment gain or (loss) $ (4,541,046)

History of Gains and (Losses) 

Plan Year Investment

Ending Gain

June 30, or (Loss)

2016 $ (4,541,046)

2015 (4,542,919)

2014 4,810,570 

2013 2,785,825 

2009 (20,738,548)

Deferred Investment Gains and (Losses)* 

Plan Year

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

June 30, 2016 2017 2018 2019

2016 $ (3,632,837) $ (2,724,628) $ (1,816,418) $ (908,209)

2015 (2,725,751) (1,817,168) (908,584) - 

2014 1,924,228 962,114 - - 

2013 557,165 - - - 

2009 (4,147,710) (2,073,855) - -

Totals $ (8,024,905) $ (5,653,537) $ (2,725,002) $ (908,209)

* 10-year smoothing was elected with respect to the loss incurred during plan year ending 2009. Gains 

and losses for the 2010, 2011, and 2012 plan year have been fully recognized.

39.105
Page 29

PART IV: ENROLLED ACTUARY’S REPORT

39.106
Enrolled Actuary’s Report 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 30 

 

NORMAL COST/ACTUARIAL LIABILITY

Normal Cost as of July 1, 2016 2015

Active participants - service prior to valuation date $ - $ - 

Active participants - service after valuation date 115,040 126,435 

Anticipated administrative expenses (beg. of year) 231,325 231,325 

Total normal cost $ 346,365 $ 357,760 

Unfunded Actuarial Liability as of July 1, 2016 2015

Actuarial liability

Participants currently receiving benefits $ 79,245,612 $ 81,113,698 

Inactive vested participants 16,788,255 16,730,680 

Active participants - service prior to val. date 4,934,018 5,573,331 

Active participants - service after val. date - - 

100,967,885 103,417,709 

less: Fund assets (actuarial value) 59,206,665 57,793,092 

Unfunded actuarial liability (not less than 0) $ 41,761,220 $ 45,624,617 

39.107
Enrolled Actuary’s Report 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 31 

 

ACTUARIAL LIABILITY RECONCILIATION/PROJECTION

Reconciliation of Unfunded Actuarial Liability

Expected unfunded actuarial liability as of June 30, 2016

Unfunded actuarial liability as of July 1, 2015 $ 45,624,617 

Normal cost (including expenses) 357,760 

Actual contributions (9,795,745)

Interest to end of plan year 3,081,336 

39,267,968 

Increase (decrease) due to:

Experience (gain) or loss 3,630,840 

Plan amendment - 

Change in actuarial assumptions (1,137,588)

Change in actuarial method - 

Net increase (decrease) 2,493,252 

Unfunded actuarial liability as of July 1, 2016 $ 41,761,220 

Projection of Actuarial Liability to Year End

Actuarial liability as of July 1, 2016 $ 100,967,885 

Expected increase (decrease) due to:

Normal cost (excluding expenses) 115,040 

Benefits paid (9,365,111)

Interest on above (342,564)

Interest on actuarial liability 7,572,591 

Net expected increase (decrease) (2,020,044)

Expected actuarial liability as of June 30, 2017 $ 98,947,841 

39.108
Enrolled Actuary’s Report 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 32 

 

FUNDING PERIOD

Funding Period Calculation 

Actuarial Study as of July 1, 2016 2015

Unfunded actuarial liability

Actuarial liability $ 101,329,774 $ 103,778,717 

less: Fund assets (actuarial value) 59,206,665 57,793,092 

42,123,109 45,985,625 

Funds available to amortize unfunded

Anticipated contributions (beg. of yr.) 1,510,046 1,546,067 

less: Normal cost (including expenses) 318,600 346,351 

$ 1,191,446 $ 1,199,716 

Funding period (years) * * 

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

39.109

Enrolled Actuary’s Report 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 34 

 

FULL FUNDING LIMIT

Projection of Assets 

for Full Funding Limit

Market

Value

Actuarial

Value

Asset value as of July 1, 2016 $ 51,181,760 $ 59,206,665 

Expected increase (decrease) due to:

Investment income 3,478,440 4,080,308 

Benefits paid (9,365,111) (9,365,111)

Expenses (240,000) (240,000)

Net expected increase (decrease) (6,126,671) (5,524,803)

Expected value as of June 30, 2017* $ 45,055,089 $ 53,681,862 

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

Full Funding Limit 

as of June 30, 2017

For Minimum 

Required

For Maximum 

Deductible

ERISA full funding limit (not less than 0)

Actuarial liability $ 98,947,841 $ 98,947,841 

less: Assets (lesser of market or actuarial) 45,055,089 45,055,089 

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

53,892,752 53,892,752 

Full funding limit override 

(not less than 0)

90% of current liability 139,097,210 139,097,210 

less: Assets (actuarial value) 53,681,862 53,681,862 

85,415,348 85,415,348 

Full funding limit (greater of ERISA limit 

and full funding override) $ 85,415,348 $ 85,415,348 

39.111
Enrolled Actuary’s Report 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 35 

 

MINIMUM REQUIRED CONTRIBUTION AND FULL FUNDING CREDIT

Minimum Required Contribution

Plan Year Beginning July 1, 2016

Minimum funding cost

Normal cost (including expenses) $ 346,365 

Net amortization of unfunded liabilities 3,308,490 

Interest to end of plan year 274,115 

3,928,970 

Full funding limit 85,415,348 

Net charge to funding std. acct. (lesser of above) 3,928,970 

less: Credit balance with interest to year end (1,204,690)

Minimum Required Contribution (not less than 0)* $ 5,133,660 

* 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 June 30, 2017

Full funding credit (not less than 0)

Minimum funding cost (n.c., amort., int.) $ 3,928,970 

less: full funding limit 85,415,348 

$ - 

39.112
Enrolled Actuary’s Report 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 36 

 

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 July 1, 2016

Preliminary deductible limit

Normal cost (including expenses) $ 346,365 

10-year limit adjustment (using “fresh start” alternative) 5,659,555 

Interest to end of plan year 450,444 

6,456,364 

Full funding limit 85,415,348 

Maximum deductible contribution override

140% of vested current liability projected to June 30, 2017 215,866,452 

less: Actuarial value of assets projected to June 30, 2017 53,681,862 

162,184,590 

Maximum deductible contribution* $ 162,184,590 

Anticipated employer contributions $ 1,566,673 

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

maximum deductible contribution override.

39.113
Enrolled Actuary’s Report 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 37 

 

HISTORY OF UNFUNDED VESTED BENEFITS

Rolling 5 Method 

June 30,

Vested 

Benefits

Interest Rate

Value of 

Vested 

Benefits Asset Value*

Unfunded 

Vested 

Benefits

Unamortized 

Portion of

VAB

2002 8.00% 80,873,218 93,269,833 (12,396,615)

2003 8.00% 88,169,646 92,413,923 (4,244,277)

2004 8.00% 91,983,102 92,018,520 (35,418)

2005 8.00% 100,539,192 91,949,502 8,589,690 

2006 8.00% 104,000,933 83,833,612 20,167,321 

2007 8.00% 104,880,517 84,233,041 20,647,476 

2008 8.00% 101,057,014 83,197,623 17,859,391 

2009 8.00% 99,394,341 66,487,122 32,907,219 2,302,376 

2010 8.00% 98,001,346 72,317,856 25,683,490 2,217,581 

2011 8.00% 97,203,242 69,237,352 27,965,890 2,126,001 

2012 8.00% 96,320,994 63,985,663 32,335,331 2,027,096 

2013 8.00% 95,368,138 61,187,378 34,180,760 1,920,278 

2014 8.00% 94,669,390 57,103,528 37,565,862 1,804,915 

2015 7.50% 103,136,327 50,999,106 52,137,221 1,680,323 

2016 7.50% 100,620,268 51,181,760 49,438,508 1,545,763 

* Actuarial value through 2013, market value thereafter

Example of Calculation of Employer Liability Upon Withdrawal 

 Ratio of Withdrawing Employer’s 

 Years Contributions to Total Employer Contributions 

7-1-2011 to 6-30-2016 1.0% 

Employer withdraws during 7-1-2016 through 6-30-2017: 

Withdrawal Liability = ($ 49,438,508 + $1,545,763) x 1.0% = $509,843 

Withdrawal Liability after De Minimis = $509,843 

Example assumes there are no reasonably collectible employer withdrawal liability 

contributions to deduct from the unfunded vested benefits.

39.114
Enrolled Actuary’s Report 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page 38 

 

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 July 1, 2016 2015

Present value of vested accumulated benefits

Participants currently receiving benefits $ 79,245,612 $ 81,113,698 

Other participants 21,374,656 22,022,629 

100,620,268 103,136,327 

Nonvested accumulated benefits 347,617 281,382 

Present value of all accumulated benefits $ 100,967,885 $ 103,417,709 

Market value of plan assets $ 51,181,760 $ 50,999,106 

Interest rate used to value benefits 7.50% 7.50%

Changes in Present Value of Accumulated Benefits

Present value of accumulated benefits as of July 1, 2015 $ 103,417,709 

Increase (decrease) due to:

Plan amendment - 

Change in actuarial assumptions (1,137,588)

Benefits accumulated and experience gain or loss (382,899)

Interest due to decrease in discount period 7,756,328 

Benefits paid (8,685,665)

Net increase (decrease) (2,449,824)

Present value of accumulated benefits as of July 1, 2016 $ 100,967,885 

39.115
APPENDICES

39.116
Appendix A - Plan Provisions 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page A-1 

PLAN HISTORY

Origins/Purpose 

The International Association of Machinists Motor City Pension Plan was established 

effective June 1, 1955. Its purpose is to provide retirement income to covered 

employees. Payments of retirement income under the Plan are made from the 

International Association of Machinists Motor City Trust Fund. The Pension Plan is 

administered in accordance with the Taft-Hartley Act by a Board of Trustees. 

Employer Contributions 

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

the Collective Bargaining Agreement. Following is a listing of weekly pension 

contribution rates by employer. 

Weekly 

Contribution Rate

Employer

Number Employer Credited

NonCreditedEffective 

Date

2700 Doan Construction $134.70 $114.74 06/04/2012

$134.70 $140.43 06/06/2013

3003 Faygo Trucking Co. $121.55 $ 58.27 11/01/2011

$121.55 $ 76.80 11/01/2012

1150 Johnson, George P. $ 21.60 $ 13.38 02/01/2012

$ 21.60 $ 16.98 02/01/2013

5700 Motor City Electric $302.70 $130.34 11/01/2011

$302.70 $174.94 11/01/2012

6050 Penske Truck Leasing Co. $106.60 $126.94 11/01/2014

$106.60 $150.99 01/01/2015

3900, 6900 YRC Trucking Inc.

(Roadway and USF Holland) 

$173.00

$173.00

 $144.27

 $176.95

05/01/2011

05/01/2012

7800 YRC Trucking Inc.

(Yellow Freight)

$164.70

$164.70

 $152.57

 $185.25

05/01/2011

05/01/2012

39.117
Appendix A - Plan Provisions 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page A-2 

SUMMARY OF PLAN PROVISIONS

Participation Satisfaction of requirements in the collective bargaining 

agreement

Credited service Beginning 7-1-1990, based on weeks of contributions in a 

plan year according to the following schedule:

Weeks of contribution

in a plan year

Credited

service

0-5 0

6-15 1⁄4

16-25 1⁄2

26-35 3⁄4

36 or more 1

Vesting service 1 year of vesting service for each plan year during which 

the employee earns at least 1⁄2 of a year of credited 

service.

Break in service Plan year in which participant earns less than 1⁄4 of a year 

of credited service.

Normal retirement benefit

Eligibility Age 65

Monthly amount 3.50% of employer contributions prior to July 1, 2004 plus 

2.00% of employer contributions made on or after 

July 1, 2004 to June 30, 2006, plus 0.50% of credited 

employer contributions made on or after July 1, 2006. 

Payable for life. Retirees prior to January 1, 2009 are 

guaranteed a minimum of 60 payments.*

Early retirement benefit

Eligibility Age 52 and 5 years of credited service

Monthly amount Retirements on or after January 1, 2009:

Normal reduced 5/9% for each full month which payments 

begin prior to age 65 for 72 months and 3/10% for each 

full month thereafter. Payable same as normal.

Retirements prior to January 1, 2009 and grandfathered 

retirements on or after January 1, 2009:

Normal reduced 5/9% for each full month which payments 

begin prior to age 62 for 24 months and 1/3% for each full 

month thereafter. Payable same as normal.

* If retiree dies before 60 payments are made, the surviving spouse or named beneficiary in the absence of 

a surviving spouse will receive payments for the balance of the 60 months. 

39.118
Appendix A - Plan Provisions 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page A-3 

SUMMARY OF PLAN PROVISIONS (CONT.)

Disability benefit

Eligibility 5 years of credited service.

Monthly amount Normal. Payable until age 65, recovery or death. This 

benefit is eliminated effective January 1, 2009.

Vested benefit

Eligibility 5 years of service, termination of employment

Monthly amount Accrued benefit payable at normal retirement age or after 

age 52 with benefit reduced 5/9% for each of the first 96 

months and by 5/18% for each of the next 60 months by 

which payments begin prior to age 65. Payable same as 

normal. 

Optional forms of  50% joint and survivor with pop-up*

payment  75% joint and survivor with pop-up*

 Social security leveler

 Life and 5 years certain

*Subsidy removed January 1, 2009

Pre-retirement death 

benefit

Eligibility Death of vested participant with surviving spouse

Monthly amount 75% of participant’s qualified joint and 75% survivor 

annuity payable to spouse over spouse’s lifetime 

commencing at participant’s earliest retirement date, or 

deferred to normal if spouse elects. Spouse may also 

elect a reduced actuarial equivalent immediate benefit or 

an actuarial equivalent lump sum. Effective 

January 1, 2009, this benefit is only available if 

participants pay for coverage with a reduction in their 

accrued benefit.

Lump sum death benefit

Eligibility Death of participant with at least 5 years of credited 

service with contributions after July 1, 2000 and no 

spouse. This benefit is eliminated effective 

January 1, 2009.

Lump sum amount 100% of employer contributions. If eligible to commence 

benefits, the lump sum amount will be an actuarial 

equivalent of 60 months of retirement benefit 

commencing at date of death.

39.119
Appendix A - Plan Provisions 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page A-4 

SUMMARY OF PLAN PROVISIONS (CONT.)

Post-retirement death 

benefit

Eligibility Death after retirement (except from vested benefit), and 

contributions after 1/1/1980. This benefit is eliminated 

effective January 1, 2009.

Lump sum amount Based on the following schedule

Credited service Lump sum amount

0 – 9 $ 0

10 – 19 $3,000

20 – 24 $4,500

25+ $6,000

39.120
Appendix A - Plan Provisions 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page A-5 

HISTORICAL PLAN MODIFICATIONS

Normal Retirement 

Benefit

Effective date July 1, 2004

Adoption date May 20, 2004

Provisions 3.50% of employer contributions prior to July 1, 2004 plus 

2.0% of employer contributions made on or after 

July 1, 2004.

Normal Retirement 

Benefit

Effective date July 1, 2006

Adoption date June 1, 2006

Provisions Accrual rate was lowered to .5% of employer 

contributions. Contribution rate increases made on or 

after January 1, 2006 are deemed non-credited.

Lump Sum PostRetirement Death Benefit

 Effective date January 1, 2009

 Adoption date October 23, 2008

 Provisions The Lump Sum Post-Retirement Death Benefit is 

eliminated effective January 1, 2009.

Early Retirement Benefit

 Effective date January 1, 2009

 Adoption date October 23, 2008

 Provisions Eliminated the 25 & out unreduced early retirement 

benefit for non-retired participants with less than 25 years 

of service as of January 1, 2009, and increased the early 

retirement reduction factor to 5/9 of 1% for the first 72 

months and 3/10 of 1% for the next 84 months for 

participants under age 65 as of January 1, 2009.

39.121
Appendix A - Plan Provisions 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page A-6 

HISTORICAL PLAN MODIFICATIONS (CONT.)

Normal Retirement 

Benefit

Effective date January 1, 2009

Adoption date October 23, 2008

Provisions Eliminated the 60 month guarantee for the normal form 

for retirements on or after January 1, 2009.

Pre-Retirement Death 

Benefits

Effective date March 1, 2009

Adoption date October 23, 2008

 Provisions Effective March 1, 2009, participants will pay for preretirement death benefits with a reduction in benefits upon 

retirement, unless waived.

Disability Benefit

Effective date January 1, 2009

Adoption date October 23, 2008

Provisions Eliminated the Disability benefit.

Pop-up Subsidy

Effective date January 1, 2009

Adoption date October 23, 2008

Provisions The pop-up subsidy was removed for participants retiring 

on and after January 1, 2009.

39.122
Appendix B - Actuarial Assumptions and Methods 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page B-1 

ACTUARIAL ASSUMPTIONS

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

herein. 

Valuation date July 1, 2016

Interest rates

ERISA rate of return used 

to value liabilities

7.50% per year after investment expenses

Current liability 3.18% (in accordance with Section 431(c)(6) of the 

Internal Revenue Code)

Operational expenses $240,000 per year excluding investment expenses

Pop-up load Liabilities for disabled participants with a joint and 

survivor option with contributions after May 1, 1998 are 

loaded 0.7%.

Mortality

Assumed plan mortality 110% of the RP 2014 Generational Blue Collar Mortality 

Tables for employees and healthy annuitants adjusted 

backward to 2006 with the MP-2014 projection scale 

and projected forward using the MP-2016 projection 

scale. 

Post-disablement mortality 110% of the RP 2014 Generational Blue Collar Mortality 

Tables for disabled annuitants adjusted backward to 

2006 with the MP-2014 projection scale and projected 

forward using the MP-2016 projection scale. 

Current liability Separate annuitant and non-annuitant rates based on 

the RP-2000 Mortality Tables Report developed for 

males and females as prescribed by Section 431(c)(6) 

of the Internal Revenue Code.

39.123
Appendix B - Actuarial Assumptions and Methods 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page B-2 

ACTUARIAL ASSUMPTIONS (CONT.)

Withdrawal T-6 Turnover Table from The Actuary’s Pension 

Handbook (less GAM 51 mortality) – specimen rates 

shown below:

Withdrawal

Age Rate

25 .0772

30 .0740

35 .0686

40 .0611

45 .0516

50 .0362

Select rates for the first 4 years of employment are shown 

below:

Select

Withdrawal

Year Rate

First .20

Second .20

Third .20

Fourth .10

Future retirement rates

Active lives According to the following schedule:

Age

Participants not

Grandfathered

Grandfathered with

25 years of

credited service

as of

June 30, 2009*

46-51 .00 .10

52-59 .01 .10

60-61 .20 .10

62 .40 .50

63-66 .50 .50

67 1.00 1.00

*First year eligible with 25 years of service assumes at 

least a 50% retirement rate.

Resulting in an average expected retirement age of 62.3

Inactive vested lives Age 60, or current age if older (earliest unreduced 

retirement age if grandfathered)

39.124
Appendix B - Actuarial Assumptions and Methods 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page B-3 

ACTUARIAL ASSUMPTIONS (CONT.)

Future annual weeks Same number of weeks as previous plan year.

Future weekly 

contribution rate

Average negotiated weekly rate for current plan year.

Age of participants with 

unrecorded birth dates

Based on average entry age of participants with recorded 

birth dates and same vesting status.

Marriage assumptions 75% assumed married with the male spouse 3 years 

older than his wife

Optional form assumption For the portion of non-retired participants assumed to be 

married, the following table shows the percent assumed 

to elect an optional form at retirement.

Form of Benefit Percent Electing

Life Only 45%

Joint and 50% 25%

Joint and 75% 30%

The portion of non-retired participants assumed to be 

unmarried are assumed to elect the single life annuity.

Inactive vested lives over 

age 70

Continuing inactive vested participants over age 70 are 

assumed deceased and are not valued.

QDRO benefits Benefits to alternate payee included with participant’s 

benefit until payment commences

Section 415 limit 

assumptions

Dollar limit $210,000 per year

Assumed form of 

payment for those limited 

by Section 415

Qualified joint and 75% survivor annuity

Benefits not valued None

39.125
Appendix B - Actuarial Assumptions and Methods 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page B-4 

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 2016 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.

Mortality The RP-2014 Blue Collar Mortality Tables for employees 

and healthy annuitants adjusted backward to 2006 with 

the MP-2014 projection scale and projected forward using 

the MP-2016 projection scale was chosen as the base 

table for this population.

The blue collar table was chosen based on the industry of 

plan participants.

Finally, a 110% multiplier was applied in order to more 

closely match projected deaths to actual post-retirement 

death experience. The period of actual data studied to 

develop this multiplier was from July 1, 2011 to June 30, 

2016 for this plan, blended with a study of deaths for 

larger plans in similar industries.

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

plan from July 1, 2011 through June 30, 2016. The 

assumed future rates of retirement were selected based 

on the results of this study. 

Withdrawal Actual rates of withdrawal by age were last studied for 

this plan from July 1, 2011 through June 30, 2016. The 

study excluded experience from employers that have 

completely withdrawn. The assumed future rates of 

withdrawal were selected based on the results of this

study. 

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

anticipated future changes in workforce.

39.126
Appendix B - Actuarial Assumptions and Methods 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page B-5 

ACTUARIAL ASSUMPTIONS USED FOR PROJECTIONS

The assumptions used for the credit balance and funding ratio projections are the same 

as used throughout the report with the following exceptions. 

Assumed return on fund 

assets

Current year projections 6.75% for the first 10 years (7/1/2016-6/30/2026)

7.50% thereafter

Prior year projections 6.75% for the first 10 years (7/1/2015-6/30/2025)

7.50% thereafter

Expenses

Current year projections $240,000 in the 2016-17 plan year increasing by 2% per 

year annually plus an additional $100,000 in the 2016-17 

and 2017-18 plan year

Prior year projections $240,000 per year

Future total weeks worked

Current year projections 5,892 weeks annually

Prior year projections 5,962 weeks annually

Contribution Rate 

Increases

Current year projections None

Prior year projections None

Plan Changes

Current year projections None

Prior year projections None

Contributions from 

Withdrawn Employers

Current year projections Any future reasonably collectible contributions are 

included. 

Prior year projections Any future reasonably collectible contributions are 

included.

39.127
Appendix B - Actuarial Assumptions and Methods 

IAM Motor City Pension Fund 

July 1, 2016 Actuarial Valuation 

Page B-6 

ACTUARIAL METHODS

Funding method

ERISA funding Traditional Unit Credit method (effective July 1, 2007)

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 week worked during 

the preceding plan year.

Inactive vested Vested participants with no weeks reported 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 without phase-in effective July 1, 

2006. Gains and Losses are amortized over a period of 5 

years. 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 rolling-5 method, market value 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.

39.128
Date 

Established

Source of Change in 

Unfunded Liability

Original 

Amount

Original 

Period Years Months

Outstanding 

Balance

Amortization 

Payment

Remaining Period 7/1/2016 7/1/2016

Appendix C - Minimum Funding Amortization Bases

IAM Motor City Pension Fund

July 1, 2016 Actuarial Valuation

Charges

1/1/1989 Amendment 4,603,500 30 2 6 891,848 377,438

1/1/1990 Amendment 2,152,100 30 3 6 563,279 176,132

1/1/1990 Amendment 645,000 30 3 6 168,883 52,809

6/30/1991 Amendment 640,667 29 3 11 173,428 49,082

6/30/1992 Amendment 308,404 29 4 11 100,766 23,506

6/30/1993 Amendment 428,714 29 5 11 162,352 32,549

6/30/1994 Amendment 2,080,046 29 6 11 887,685 157,395

6/30/1995 Amendment 1,715,262 29 7 11 808,293 129,402

6/30/1996 Amendment 703,466 29 8 11 360,438 52,923

7/1/1996 Amendment 713,576 30 10 0 424,587 57,541

7/1/1997 Amendment 3,757,051 30 11 0 2,378,479 302,448

7/1/1998 Amendment 4,432,443 30 12 0 2,962,312 356,243

7/1/1999 Amendment 3,124,741 30 13 0 2,190,346 250,747

7/1/2000 Amendment 2,049,736 30 14 0 1,498,774 164,234

7/1/2001 Amendment 229,637 30 15 0 174,345 18,373

7/1/2001 Amendment 1,367,712 30 15 0 1,038,382 109,428

7/1/2002 Amendment 2,031,517 30 16 0 1,595,024 162,308

7/1/2002 Amendment 1,044,545 30 16 0 820,112 83,454

7/1/2002 Experience Loss 3,349,162 15 1 0 361,489 361,489

7/1/2003 Amendment 354,406 30 17 0 286,766 28,276

7/1/2003 Assumptions 551,321 30 17 0 446,089 43,986

7/1/2003 Experience Loss 4,633,054 15 2 0 963,140 498,976

7/1/2004 Amendment 72,126 30 18 0 59,959 5,747

7/1/2004 Experience Loss 3,012,006 15 3 0 904,941 323,706

7/1/2005 Assumptions 6,239,179 30 19 0 5,315,655 496,511

7/1/2005 Experience Loss 1,588,635 15 4 0 613,469 170,383

7/1/2006 Assumptions 696,852 30 20 0 607,004 55,388

7/1/2006 Experience Loss 3,023,311 15 5 0 1,407,451 323,602

7/1/2007 Method 584,386 10 1 0 80,459 80,459

7/1/2009 Experience Loss 17,168,384 15 8 0 11,505,315 1,827,226

7/1/2011 Assumptions 139,773 15 10 0 109,382 14,824

7/1/2011 Experience Loss 1,366,458 15 10 0 1,069,373 144,923

7/1/2012 Assumptions 84,203 15 11 0 70,109 8,915

7/1/2012 Experience Loss 3,544,308 15 11 0 2,951,163 375,271

7/1/2013 Experience Loss 970,596 15 12 0 853,165 102,600

Page C-1

39.129
Date 

Established

Source of Change in 

Unfunded Liability

Original 

Amount

Original 

Period Years Months

Outstanding 

Balance

Amortization 

Payment

Remaining Period 7/1/2016 7/1/2016

Appendix C - Minimum Funding Amortization Bases

IAM Motor City Pension Fund

July 1, 2016 Actuarial Valuation

7/1/2014 Assumptions 938,147 15 13 0 864,924 99,015

7/1/2015 Assumptions 8,512,235 15 14 0 8,186,325 897,049

7/1/2015 Experience Loss 1,196,840 15 14 0 1,151,016 126,127

7/1/2016 Experience Loss 3,630,840 15 15 0 3,630,840 382,631

Total Charges: 58,637,367 8,923,116

Credits

7/1/2008 Combined Credits 25,183,056 10 2 0 6,678,076 3,459,727

1/1/2009 Amendment 8,798,427 15 7 6 5,646,489 941,831

7/1/2009 Method (Relief) 5,540,594 10 3 0 2,123,435 759,573

7/1/2010 Assumptions 405,265 15 9 0 295,245 43,056

7/1/2010 Experience Gain 2,115,767 15 9 0 1,541,384 224,780

7/1/2014 Experience Gain 623,213 15 13 0 574,572 65,776

7/1/2016 Assumptions 1,137,588 15 15 0 1,137,588 119,883

Total Credits: 17,996,789 5,614,626

Net Charges: 40,640,578 3,308,490

Less Credit Balance:

Less Reconciliation Balance:

Unfunded Actuarial Liability:

-1,120,642

0

41,761,220

Page C-2

39.130
Appendix D – Summary of Endangered and Critical Status Rules 

IAM Motor City Pension Fund 

July 1, 2016 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 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 nonactives 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 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

39.131
Appendix D – Summary of Endangered and Critical Status Rules 

IAM Motor City Pension Fund 

July 1, 2016 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

39.132
Appendix D – Summary of Endangered and Critical Status Rules 

IAM Motor City Pension Fund 

July 1, 2016 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. 

 PBGC premium doubled and indexed 

 PBGC ability to facilitate mergers and partitions expanded

39.133
Appendix E – Glossary of Common Pension Terms 

IAM Motor City Pension Fund 

July 1, 2016 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. 

Assets 

Market Value of Assets: The market value of all assets in the fund including on an 

accrued, not cash basis (matching 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. 

39.134
Appendix E – Glossary of Common Pension Terms 

IAM Motor City Pension Fund 

July 1, 2016 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. 

39.135
Appendix E – Glossary of Common Pension Terms 

IAM Motor City Pension Fund 

July 1, 2016 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. 

Accumulated Funding Deficiency: A negative credit balance, indicating an excess 

of total charges to the funding standard account over the total credits to such 

account. 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 two main criteria used in determining the 

annual PPA status. It can eventually trigger an excise tax levied on contributing 

employers. 

Funding Period: The estimated number of years it would take to pay off the Plan’s 

unfunded liabilities (and be 100% funded). This calculation is based on the entry age 

normal liability basis. This is determined by taking the excess of expected 

contributions over expected normal cost and comparing it to the unfunded entry age 

accrued liability. This is a good single measure of plan health that looks at both 

current levels of funding and future expectations. It is also a good indicator of the 

level of risk the plan is taking in funding its future benefits. 

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 assessed. Small amounts (under $150,000) are generally reduced or 

eliminated pursuant to the “de minimis rule.”

 

39.136