2020 Member Call Highlights
On Thursday, April 30, 2020, more than 400 members and spouses joined us for our annual member call. Call topics included our current operations, market performance, the 2020 Special Apportionment, and regulatory changes resulting from the CARES Act. In an effort to keep the lines of communication open with our members, particularly if you were unable to join us, here are some of the highlights.
On March 11, we decentralized our staff as a test of our Disaster Recovery/Business Continuity Plan and remain decentralized. Operationally, our systems have performed as designed. Our team has stepped up – serving our members from home as we’ve increased our internal communications platforms and use of existing technology. We are discovering and adopting innovative practices that we will continue to use long after our return to the office. Currently, our plan is to begin a rolling return to the office mid-July.
We continue to follow our proven and time-tested investment strategy. We maintain a diverse investment portfolio and, per policy, rebalance when our investment levels indicate that we should rebalance. In November, the Pension Fund Board of Directors, in consultation with our actuaries, made the decision to lower our discount rate – the percentage of return we must earn to maintain our funding on pensions – from 4.5% to 4.0%. These pre-2000 levels have required us to increase our reserves by $105 million. This move was about the long-term health of the plan and not because we thought a global pandemic was coming – but it has certainly proven wise and insightful.
We entered this period stronger financially than 2008-2009 and as a result, your retirement assets remain strong and secure.
Special Apportionment in 2020
The Special Apportionment Policy requires the board to consider the Special Apportionment at least once every three years based on funding levels (as of 12/31 of the prior year), board directed reserve policies, and current market conditions. As we shared following the board meeting, given the current market conditions it is not prudent to award a Special Apportionment. However, recognizing that 2019 performance indicated a Special Apportionment could be awarded, the board has agreed to delay the decision to see how the market performs between now and July. The Investment Committee and Board will hold special meetings in early September to make this decision. If awarded, the Special Apportionment would be applied on or near October 1, 2020, based on 12/31/19 pension credit balances.
Traditional IRA Contributions
Each year, eligible taxpayers can contribute to a Traditional IRA as a prior year contribution for tax and IRS contribution limits purposes, through April 15. This year, by extending the tax filing and payment deadline to July 15, the IRA Contribution deadline is extended as well. Similarly, the IRS-required 5498 (which you receive a copy for informational purposes only) will also have a delayed mailing date.
Any contributions made to an established account must be marked for 2019 if you intend to make a prior year contribution between now and July 15, 2020.
If you are interested in opening an IRA with Pension Fund, please contact your Area Director.
Required Minimum Distributions (RMDs)
RMDs are suspended for 2020. So, what does this mean if you are over the age of 72 or turning 72 this year and no longer working?
If you are receiving a monthly distribution from a Tax-deferred Retirement Account (TDRA) or an Individual Retirement Account (IRA), we will continue to send these to you. You must notify us in writing if you wish to suspend these monthly transactions by April 20 (or the 20th of any following month). Otherwise, we will continue to send the monthly payments. We cannot refund those distributions which have already been made.
If you have authorized Qualified Charitable Distributions (QCDs) for 2020 from an IRA, we will pay the QCDs, unless you notify us in writing to suspend your QCDs for 2020.
If you receive the one-time, semi-annual or quarterly RMD, these are suspended for 2020. We will mail you a letter in June, informing you of the amount you would have been required to take; if you still want to receive the November 2020 payment, you must complete and return the appropriate forms. We will continue to use your prior year tax elections, which you’ll have the opportunity to change.
The reason for suspending the RMDs is Congress was concerned about forcing investors to take money from accounts that have been negatively impacted by the market downturn. Of course, as a member of Pension Fund, your account balance has grown during this time and not experienced any loss in market value.
We remain grateful for your continued support during these unique times. Know that we are taking the necessary steps each and every day to keep your retirement assets strong, smart, and secure.
Rev. Dr. Todd A. Adams
President and CEO
P.S. Visit this page to learn more about our new, free Your Money Line service for members, especially if you have non-securities related questions and would like to talk with someone about your finances. Speak to a financial concierge by calling 833.890.4077 or emailing firstname.lastname@example.org.