International Secretary-Treasurer Kenneth Cooper delivered an update on the Pension Benefit Fund, considered one of the safest and best funded pension plans in the country, on May 10.
“It’s pound-for-pound one of the best pension plans out there,” Cooper said. “Any time I talk about a pension plan, I say it’s one of best things we have.”
Cooper began his remarks with a look back to 2016, at the 39th International Convention.
“If we didn’t have the courage to [increase the PBF contribution] and stayed where we were, what would have happened to our pension benefit plan? However, at the time, the delegates of the convention had enough wisdom and courage to increase the contribution rate,” he said.
In 2016, IBEW leaders implemented a modest increase to “A” member contributions, starting with $2 per month additional in 2017 and another $1 in 2019.
Today, the PBF is 96% funded, Cooper said, adding that in 2021 it had a return of 26.64% on its investments, the highest since 1986.
“It was a good thing, it was a great thing,” he said. “But we know we cannot sustain those kinds of returns. In fact, this year has been an up and down road.”
If we do nothing, Cooper went on, we could be fully funded by 2025 if things continue to go the way they are.
“However, the IBEW is never happy just watching things stand still,” he said. “We are charged with leaving it better than we found it. We owe it to the next generation. Someone gave it to us that way.”
So, leaders sat down and took a deep dive to see what to do. The recommendation by the Law Committee, which combined elements of different proposals, was ultimately to change the benefit accrual rate from $4.50 to $5.50 beginning with years of service earned after January 1, 2023, and moving forward. They also made a recommendation for increasing contribution rates from $19 to $21 beginning January 1, 2023 and to $23 on January 1, 2025.
Cooper said that in just four years and three months following retirement, a member would receive 100% of the money they put into the PBF. The average member draws from it for 20 years.
“That’s quite the accomplishment,” he said. “If we can find more investments out there like that we all should go to them because it truly is a great investment.”
The amendment was adopted by the convention as recommended.