Introduction 

Section 1 Section 1 - This notice, which federal law requires all multiemployer plans to send annually, includes important information about the funding level of the Pipe Fitters’ Retirement Fund, Local 597, Plan Number 001, EIN 62-6105084 (Plan).  This notice also includes information about the rules governing insolvent plans and benefit payments guaranteed by the Pension Benefit Guaranty Corporation (PBGC), a federal agency.  This notice is for the plan year beginning January 1, 2006 and ending December 31, 2006 (Plan Year). 

Plan’s Funding Level 

Section 2 Section 2 -  The Plan’s “funded current liability percentage” for the Plan Year was 63.09%.  In general, the higher the percentage, the better funded the plan. 

Plan’s Financial Information 

Section 3 Section 3 - The market value of the Plan’s assets as of January 1, 2006, the valuation date, was $927,360,565.  The total amount of benefit payments for the Plan Year was $78,164,070.  The ratio of assets to benefit payments is 11.9 to 1 [plan assets/total benefit payments].  This ratio suggests that the Plan’s assets could provide for approximately 12 years of benefit payments in annual amounts equal to what was paid out in the Plan Year.  However, the ratio does not take into account future changes in total benefit payments or plan assets. 

Rules Governing Insolvent Plans 

Section 4 Section 4 - Federal law has a number of special rules that apply to financially troubled multiemployer plans.  Under so-called “plan reorganization rules,” a plan with adverse financial experience may need to increase required contributions and may, under certain circumstances, reduce benefits that are not eligible for the PBGC’s guarantee (generally, benefits that have been in effect for less than 60 months). 

                     A plan that becomes insolvent must provide prompt notification of the insolvency to participants and beneficiaries, contributing employers, labor unions representing participants, and PBGC.  In addition, participants and beneficiaries also must receive information regarding whether, and how, their benefits will be reduced or affected as a result of the insolvency, including loss of a lump sum option.  This information will be provided each year the plan in insolvent. 

Benefit Payments Guaranteed by the PBGC 

Section 5 Section 5 - The maximum benefit that the PBGC guarantees is set by law.  Only vested benefits are guaranteed.  Specifically, the PBGC guarantees a monthly benefit payment equal to 100 percent of the first $11 of the Plan’s monthly benefit accrual rate, plus 75 percent of the next $33 of the accrual rate, times each year of credited service ($33 x 75% - $24.75).  For a participant with an accrual rate of $44 per month or greater, the maximum guarantee is $11 + $24.75 = $35.75 per month times the participant’s years of credited service. 

                     Example:  John has 10 pension credits valued at $74 per credit for an accrued benefit of 10 credits x $74 per credit = $740 per month.  The PBGC maximum guarantee is based on an accrual rate of $35.75.  As a result, the PBGC maximum guarantee applied to John’s benefit is 10 credits x $35.75 per credit = $357.50 per month. 

Where to Get More Information 

Section 6 Section 6 -  For more information about this notice, you may contact Mr. Peter Driscoll, Plan Administrative Manager, at 312-633-0597 or at Pipe Fitters’ Retirement Fund, Local 597, 45 North Ogden Avenue, Chicago, IL 60607. 

                     For more information about the PBGC and multiemployer guarantees, go to PBGC’s website, www.pbgc.gov, or call PBGC toll-free at 1-800-400-7242 (TTY/TDD users may call the Federal relay service toll free at 1-800-877-8339 and ask to be connected to 1-800-400-7242).