A Message about our Pension Trust from the
Operating Engineers Local 302
The current financial market crisis has caused anxiety for savers and investors, and retirement plan participants. We want you to know that your Board of Trustees have been discussing these issues with our financial experts and we want to share with you why we feel your pension program is safe and secure. The broad stock market lost nearly 40% over the last year. This followed five years of a very strong market compounding at 13% per year. Market declines of this magnitude are traumatic but not unique. They happened most recently in 2001-02 and before that in 1973-74. This decline has been driven by a meltdown of the Sub Prime Mortgage Market. It has brought down large financial institutions including Bear Stearns, Lehman, Washington Mutual and Wachovia, and restructured many others: Fannie Mae, Freddie Mac, AIG, and Merrill Lynch. Congress has passed dramatic legislation and the Federal Reserve has acted to support a recovery of the banking and financial industry. Most believe the recovery will happen but that the volatility is not over yet. Previous recoveries in 2003 and 1975 resulted in dramatic rebounds of the markets.
The Trustees of the Operating Engineers Pension Plan maintain a broadly diversified investment portfolio. It is constructed in a manner that is consistent with the long-term actuarial assumptions that underlie the Plan’s benefit structure. Due to the investment program’s design and professional oversight and monitoring, it has been successful throughout the years and in all types of market conditions. For the past 5 years it earned 12.9% per year ranking in the top 5% of other plans.
The Trustees employ an asset valuation method that provides for the “smoothing out” of fluctuations in the value of invested assets due to market volatility over time. Participants should also take comfort in the fact that the Pension Plan continues to operate from a very strong funded position and is well-poised to contend with the current volatility. Your Plan was recently certified as a well-funded “Green Zone” plan under the Pension Protection Act and has amassed a substantial credit balance over time against the Federal government’s minimum funding requirements.
In summary, the Pension Plan is well-positioned to meet its future obligations and weather market volatility along the way. The long-term nature of this defined benefit pension program and the prudent measures and policies employed by the Trustees allow for uninterrupted operation in turbulent times and retirement security for its participants and beneficiaries.
We will be having a Trust meeting on the 30th of October and will update you if there are any changes to the Trustees’ opinion on this matter.
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