Notice of Plan Amendment:
New Defined Contribution Provision within Plan for Working Retirees
For: United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, Local 740 Pension Plan (the “Plan”)
NL Registration Number 075302
To: Active and Former Plan Members entitled to benefits under the Plan
And to: UA Local 740 (the “Union”)
From: Trustees of the Plan (“Trustees”)
Date: July 19, 2023
This notice is for information purposes only and is being provided to you as required by applicable legislation. No action is required by you.
The Trustees of the Plan are pleased to inform you that the Plan has been amended, effective October 1, 2022, to add a defined contribution (“DC”) provision for eligible retirees who have returned to work.
Effective October 1, 2022, a retiree who is receiving a monthly lifetime pension from this Plan and who returns to work under our Collective Agreement will have the contributions made on their behalf directed into a Member Account in the new DC provision of the Plan.
A working retiree will be eligible to participate in the DC provision until the end of the year that they turn 71. Contributions made to the DC provision will be credited with interest at the rate earned on the pension fund (whether a gain or a loss), net of expenses. Annual statements from the DC provision will be mailed to retirees who returned to work reflecting their accumulated contributions and interest earnings.
DC benefits will be accessible after 6 consecutive months have passed since the last contribution was received (or December 31 of the year a working retiree turns 71, if earlier).
Please note that contributions on behalf of other active members not in receipt of a pension from this Plan will continue to be made into the DB provision of the Plan, as usual, and active members of the Plan are not eligible to participate in the DC provision.
We have provided frequently asked questions and answers (Q&A) on the next page. If you have any further questions about this notice, please contact the Plan administrator:
Ms. Leslie Wells
Administrator
UA Local 740 Benefits Office
709-747-2249, ext 308
Q&A – UA Local 740 DC Provision
1. What is the DC provision?
The DC provision is a separate provision of the Plan established for eligible working retired members. In the DC provision, contributions received on behalf of a working retiree are tracked separately and accumulated with interest in a member account. When eligible, the retiree may apply for the DC benefits, at which point the entitlement will be the accumulated value of the contributions with interest in the member account. Interest will be credited based on the rate earned by the overall pension fund, net of expenses, for the complete months that the contributions were held in the member account.
The DC provision is different from the defined benefit (“DB”) provision of the Plan, which is applicable to most of our members. The contributions to the DB provision are pooled in the pension fund, and the pension fund then pays the member a lifetime pension after their retirement. The amount of lifetime pension payable from the DB provision is calculated according to the DB formula in the Plan documents.
2. What is my benefit from the DC provision? When can I receive it?
The benefit payable from the DC provision on your death, termination or retirement will be equal to the accumulated value of the contributions with interest in your member account.
The DC provision is intended to remain invested while you return to work so that it can grow and support your retirement. You may apply for your benefits from the DC provision after 6 consecutive months have passed since your last contribution, or if you reach the end of the year that you turned 71 and can no longer participate in the DC provision.
Should you resume employment and contributions into the DC provision prior to completing 6 consecutive months with no contributions, you would not be eligible to withdraw the DC benefit until you again stop work, and 6 more consecutive months have passed.
3. Who is eligible for participation in the DC provision?
Effective October 1, 2022, only retirees who are receiving a monthly lifetime pension from this Plan, and who return to work under our Collective Agreement(s) will be eligible to participate in the DC provision of the Plan. Retirees working on travel card will also accumulate reciprocal pension contributions in the DC provision. Members must terminate from the DC provision by the end of the year they turn 71.
Working retirees who have reached the end of the year that they turned 71 will receive pension contributions paid out as wages.
All other working active members of the Plan, who are not in receipt of a pension from this Plan, will continue to have their contributions made and benefits earned in the DB provision.
4. Can I participate in the DC provision instead of the DB provision?
You may only participate in the DC provision if you are working and in receipt of a monthly lifetime pension from this Plan. If you are not a working retiree, you are not eligible to participate in the DC provision.
5. Why did the Trustees add the DC provision?
Effective with our latest Collective Agreement on October 1, 2022, the law (Income Tax Act) prohibits contributions to be made to a DB pension plan in respect of work done by a member who is collecting a pension from that same plan. The DC provision was established to remain compliant with the Income Tax Act in respect of contributions for working retirees.