Issue 6, 2009

2008 Annual Report
IPF/IHF Committed to Members during Challenging Times

The 2008 Annual Report provides a status report on IU benefit plans and programs. As outlined in the Report, 2008 proved to be another challenging year for the U.S. and Canadian economies, the construction industry, and pension and health and welfare funds. The collapse of financial institutions, a drastic drop in residential construction, the tightening of lending standards, and rising unemployment created conditions not experienced in most of participants’ lifetimes.

Pension Challenges

These conditions alone would have been challenging for U.S. pension funds, but the imposition of stringent short-term funding requirements imposed under the Pension Protection Act of 2006 added an extra burden. Lobbying efforts by labor helped pass the Worker, Retiree and Employer Recovery Act, which provided temporary relief from some of the PPA burdens for IPF and other pension plans. Although the relief helped, the IPF U.S. Board of Trustees was still forced to make the difficult, but necessary, decision to reduce IPF pension benefit accruals for work performed after April 1, 2009 (please note: this does not affect benefit accruals for prior years of employment or current retirees’ benefits).

Even with these difficulties, a study by the National Institute on Retirement Security (NIRS) found that individuals are much better off with a defined pension benefit, such as that offered by IPF, than with a less secure defined contribution plan or no formal plan. The study found recipients of defined pension plans were less likely to live in poverty, or experience problems affording food, shelter and health care.

IPF actively works to protect participants’ pension investments through the Proxy Voting Service, which ensures that companies in which members’ pension contributions are invested work in their interest. IPF also invests a portion of its assets in secure investment vehicles that produce union-built construction projects. These investments include the AFL-CIO Housing Investment Trust, which outperformed many other real estate investment options in 2008 and provided a competitive return to IPF.

Heading in to 2010, IPF’s Trustees remain committed to working with the government, fund professionals and investment advisors to secure members’ retirement income, and as market and industry conditions improve enhance benefit accruals. In addition, BAC will continue to work with others in the labor and benefits community to pursue another legislative fix to allow funds adequate time to make up for market losses in 2008 and 2009, which were completely out of their control.

BAC SAVE Offers Safety Valve

While pension security is important, many members have been facing more immediate issues in this recession. The BAC SAVE program’s provision, which allows limited withdrawals for “hardship” has helped participants facing serious problems, such as the loss of a home. To take advantage of this provision, participants of Local Unions in the Retirement Savings Plan or the 401(k) plan must submit an application to withdraw funds for a “hardship.”

To learn more contact the Fund Office or visit www.ipfweb.org.

Health Care Positioning for the Future

Rising health care costs continued to be an issue for health and welfare funds. In response, the International Health Fund pursued innovative coalitions to use members’ collective purchasing power to control costs without sacrificing coverage. The BAC Prescription Drug Coalition once again produced savings for participating funds and members, and the new Health Care Purchasing Coalition registered first year savings for all participating funds. For retirees, a coalition established in alliance with the AARP offered retirees another option when filling the “gap” in Medicare coverage.

Stay Informed

Participants that have not already done so are encouraged to take time to read the report and familiarize themselves with the services and benefits available.

If you have questions about IPF or the BAC SAVE program contact:

David F. Stupar
Executive Director
International Pension Fund
dstupar@ipfweb.org
1-888-880-8222

For questions about programs available through the International Health Fund contact:

Anne Codd
Executive Director
International Health Programs
acodd@bacweb.org
202-383-3976