The B&C Pension Fund
The seven collective bargaining agreements between Mondelēz Global LLC and the BCTGM that expired on February 29, 2016 address your pension and retirement benefits, including Mondelēz Global LLC’s participation in and contributions to the Bakery and Confectionery Union and Industry International Pension Fund (the “B&C Pension Fund” or the “Fund”)—an important element of your total compensation package.
The B&C Pension Fund is a multiemployer pension plan managed by trustees. The Fund trustees include representatives of the BCTGM International Union and representatives from some of the companies whose employees are covered under the Fund. Our company and other employers make financial contributions that are used to provide pension benefits for our BCTGM-represented employees.
How the Fund Works
- Mondelēz Global LLC—and other employers with BCTGM-represented employees, such as Bimbo, Kroger, Kellogg’s, ConAgra and Safeway –- make financial contributions to the Fund.
- Contributions are based on the rates set by the trustees and agreed to in the collective bargaining process.
- Contributions are deposited into the Fund and invested by the trustees.
- The Fund’s assets are used to provide benefits to current and future retirees in the Fund.
- When a participating employee retires, the employee receives monthly income from the Fund for life, based on the number of years worked as a represented employee and on the benefit level for which the employee qualified under the terms of the Fund.
Ideally, multiemployer plans like the B&C Pension Fund are well-funded in order to provide benefits for current retirees as well as for employees who have not yet retired.
The Fund Is In “Critical and Declining Status”
Each year, multiemployer pension plans like the B&C Pension Fund are required to provide an Annual Funding Notice that discloses the fund’s current financial health. Plans that are not well-funded are certified to be in “Endangered Status” or “Critical Status” –- and must issue a separate notice of funded status to plan participants and the Department of Labor.
The latest Annual Funding Notice for the B&C Pension Fund reported a funded percentage of 65.1% at the end of 2013. The Fund’s actuary has since reported that the funded percentage has declined to 62.8% at the end of 2014. The Fund is in “Critical and Declining Status.”
In April 2015, the B&C Pension Fund reported that it was in “critical and declining status” and was projected to be insolvent in 17 years (by 2032). In May 2016, just one year later, the Fund’s Notice of Critical and Declining Status indicated that the Fund is projected to run out of money to pay benefits by 2030, just 13 years from now.
Compounding Problems Affecting the B&C Pension Fund
The number of active employees covered under the Fund has declined in recent years, which means the amount of money going into the Fund is also declining. The amount of required contributions currently made by participating employers is significantly less than the amount of money needed to cover benefits for retirees. This is true even though participating employers are already paying more into the Fund than they agreed to under the applicable collective bargaining agreements, because the Fund has imposed a 10% surcharge on participating employers under its rehabilitation plan.
The B&C Pension Fund website, www.bctrustfunds.org, has more information on the Notice of Critical and Declining Funding status as well as the rehabilitation plan.
Other multiemployer pensions have faced similar difficulties –- including the Central States, Southeast and Southwest Areas Pension Fund, commonly known as the “Central States Pension Fund.” The Central States Pension Fund is one of the largest multiemployer plans in the United States and pays out close to $3.50 in benefits for every dollar it receives in contributions. As a result, the Central States Pension Fund projects it will become insolvent within 10 years, meaning it will not have enough money to pay its obligations to retirees. Like the B&C Pension Fund, the Central States Pension Fund has also been certified to be in “Critical and Declining” status. If you are interested in learning more about the issues facing the Central States Pension Fund, you can visit its website at www.mycentralstatespension.org and click on “Central States Pension Fund Rescue Plan” on the home page.
The Central States Pension Fund has already initiated a new process that may result in a reduction in benefits for hundreds of thousands of its current and future retirees. This process is allowed under the Kline-Miller Multiemployer Pension Reform Act of 2014, a law which established a way for multiemployer pension plans to reduce pension benefits temporarily or permanently if a plan is projected to run out of money before paying all of its obligations. If you are interested in learning more about the Kline-Miller Multiemployer Pension Reform Act of 2014, you can visit the U.S. Treasury website at https://www.treasury.gov/services/Pages/Benefit-Suspensions.aspx.
Benefits If a Plan Becomes Insolvent
When a pension plan becomes insolvent, the Pension Benefit Guaranty Corp. (PBGC), a U.S. government agency, provides financial assistance to the plan that enables it to continue to pay some level of benefits. However, the maximum benefit the PBGC will guarantee is limited by law to about $12,900 per year –- typically less than the full pension benefit a participant has earned. In other words, if a plan is unable to pay its obligations, the benefit available to a participating employee may be less than the participant’s full pension entitlement.
An Important Note on the PBGC
With many multiemployer pension funds in critical status, PBGC itself is in jeopardy. As of the end of 2014, PBGC’s multiemployer program’s deficit was more than $40 billion. This budget deficit means the PBGC’s ability to cover even reduced pension benefits may be in doubt.
The security of our employees’ retirement benefits is important to us. The current “Critical and Declining” status of the B&C Pension Fund, the challenging environment for pensions generally, and the future of the Fund, are issues that we look forward to discussing with the BCTGM during the upcoming negotiations.
Health care benefits are another component of our employees’ total compensation. These are also covered by the collective bargaining agreements Mondelēz Global LLC has with the BCTGM, and will be discussed during upcoming negotiations.
|COMPARING RETIREMENT PLANS >|
|Proposed Retirement Plan Overview|
|What Happens to My Pension If…?|
|Comparing Retirement Plans – May 13, 2016 Update|
|B&C Pension Fund Performance|
Contracts between Mondelēz Global LLC and the Bakery, Confectionery, Tobacco Workers and Grain Millers (BCTGM) union that cover about 2,200 employees at five Company bakeries and three distribution sites expired on Feb. 29, 2016.
It remains the Company’s goal to negotiate in good faith to secure contracts with the BCTGM that continue to provide our employees with good wages and benefits, while at the same time allowing the Company to operate as a Best-in-Class organization in the Consumer Packaged Goods markets in which we compete.