Brothers and Sisters
I posted last week with some information from a friend, former shipmate, and now financial advisor. He spent some time looking around and came up with a couiple of conclusions and a few questions.This is it for me, I leave tomorrow and Bill doesn’t want to hear from me until Christmas !
He does not have a lot of experience with multiple employer plans. He said that almost all of the rules are carry overs from the Taft-Hartley Act with some modifications. The so called Defined Contribution plan looks like it is directly linked to the current DB plan,for funding purposes. The charts and graphs are boiler plate cut and paste stuff from the IRS. Basically the Feds have forms that ask for yes or no answers. If all the answers are YES then your plan will probably get a good review. If there are some NO answers then there is some explaiing to do. Taft Hartley allows for fairly liberal contribution / distribution rules and these rules are defined within the collective bargaining agreements. Basically he can’ts see why the DC plan would have to allow participation by the lump sum receipents unless they WANT to let them in the plan. If AMO wanted to withhold their participation they could file with the IRS and explain why. They may not even need to file. Depending on the rules of AMO plan, this decision could be made by the board of trustees. They could probably make a case by explaining the circumstances and by showing that withholding the lump summers contributions would speed up the funding of the DB plan THE FASTER the Better says the FED ). After which a true DB plan could be in place with 100% participation. Here is the catch the employer trustees may be demanding that the lump summers participate so that they can maintain their senior people. So if they presented a weak case it would fail, if they want to exempt the lumpers they probably could.
The reality is that nobody cares about new employees. They must be allowed to participate but even after several years they will have minimum dollars of their own, but will have made huge contributions to the DB plan and most will leave the maritime trades anyway. Which creates new problems.
Bill feels that this is worth looking into. He also feels that this is one reason that there is little “official” discussion of the issue. the words “non-descrimination” can get you a long way.
After reading this thread he wants to caution that there was probably nothing illegal done. He gets a kick out of the bashing ! He does feel that if the math he could muster is correct, the pension plan has been poorly advised. Bill reminded me many times that this type of business is a managers dream. DB plan, 401(k), MBP this is a jewel of business. He feels that many mistakes were probably made. I mentiioned the industry warnings in my previous post. He would like to know if the advisor had a role in the decision to allow the plan to be deliberately underfunded for years, did he play a role in the permitting of SIU participation in the lump sum pension. ( this decision could have been made at the trustee level by invoking reciprocity language in Taft Hartley) If this was a board decision it was a horrible one.
If it was an advisor decision he should be a past advisor. If if was a trustee decision, they just decided to raid the plan for sport , and it was a bloody raid ! Plain and simple. But probably not illegal. Highly immorral, with the real information, they had. I don’t think you can shame these guys. By the way, Bill’s opinion is that if the plan experienced less than around 14-15 % gain in 2009 they are still holding on to some toxic junk. Now consider an arrangement where the administrator was taking orders from the union and the advisor was taking orders from everyone.! Now there is a real conspiracy for you. Get a different advisor, get a differnt administrator. They let Rome burn on this deal. Of course they just might not want a loose cannon running around spilling the cannonballs !
The only way to know what went on is to get copies of the trustees meetings minutes. You could ask for them but it would probably take a judge to get them Then there is another lawsuit !. The information may or may not solve the problem but the cause of the problem, would be revealed. This could also solve the mystery of how AMO plans could spend 10 million dollars for swamp land (OK Ocean access) . Remember they had to get IRS permission to divert the money. They could have probably received a permit to divert it into the pension instead. The Union could have sold the land to a real buyer and Everybody Makes Money ! instead they let the DB drown. The only way to find this out would be through a direct confrontation, debate style ! Or is everyboby afraid of this ? Have some courage.
I have to finish packing, so here I go. In case anybody reads this I suggest placing a sailing DB participant member on the board of trustees. They can be easily trained ( we are not all totally stupid) have them serve one year terms and report to the membership.
2. Track the progress of the DB rehabilitation monthly in the union paper. Use the cartoon guy, he can come up with something. This might make people feel better .
3, Stop wastimg money and get new advisors. These guys have already made plenty. Cast them off. It’s a new day, a new era, a new opportuity, Seize It !
4 The candidates tout transparency so be transparent not shallow. Let us know what is really goingg on.
5 Union and Plans , Stop buying land, condos, houses, horses, sports cars, helicopters, fast women, good whiskey, super sized fries, and big milkshakes ! Be economical show the membership that every once in a while you do realize that you work for us. Hav a little skim milk, take a cab, stay at a $100.00 hotel, rent an apartment, eat a hot dog. Try being more like us. Maybe we will buy you the good whiskey once in a while. After the debate !
Good Sailing
I’m holding out hope and my ballot until mid-november .