Masonry Magazine October 1962 Page. 16
MASONRY Answers Your Questions
On Setting Up a Pension Plan
The following are some of the questions MASONRY received on the series run in the August and September issues entitled: Setting Up a Pension: What You Should Know. Several other inquiries we have on hand will be run in the November issue.
Q. Can Union employees (business agents and other paid Union officials) be covered under a Pension Program?
Yes, if specifically provided for under the Pension Trust Agreement.
Q. Can a Reciprocal Agreement be made between adjacent or adjoining localities?
Yes, if mutually agreed upon by the Trustees and if contributions by the contributing employer are equal.
Q. When should the Pension Plan be submitted to the Bureau of Internal Revenue for approval?
It should be submitted to the Bureau of Internal Revenue for approval prior to the time employers are to make contributions. Otherwise, it is quite probable employers could not take tax credit for their contribution prior to the time the Pension Plan was submitted to the Bureau of Internal Revenue.
Q. Can the Pension Plan (which includes all the details of benefits, vesting, eligibility, etc.) be drawn up before it is decided how the Plan is going to be handled or financed?
Yes, the details and specifications of the Pension Plan should be worked with all haste after the Trust Agreement is in effect. This is important so the provisions of the Pension Plan can be submitted to the Bureau of Internal Revenue for their approval prior to the date contributions start. It is not necessary to decide as to whether the Pension Plan will be handled by a large Insurance Company or by a Bank or even perhaps a combination of both Insurance Company and Bank.
Q. How much money should be in the Trust Fund before actual payments start?
At least a minimum of one full year of employer contributions. Many such Plans require two years' contributions before benefit payments can begin.
Q. I understand from the Article that Insurance Company would help work out the form details of the Pension Program cost, whereas, an independent consultant would normally charge a sizeable fee.
Yes, this is true. Insured Companies have a staff of actuaries or experts on their payroll so they are in a position to give a considerable amount of their time and help in the development of the Pension Plan in hopes that at a later date, the Insurance Company will underwrite all or, on the other hand, a part of the Pension Program. An independent pension consultant works on a basis similar to a doctor or lawyer and consequently, he must charge a fee for the amount of time and effort he gives.
Q. I understand Insurance Companies invest a large percentage of their assets in mortgages, whereas Banks have very small percentages of their assets invested in mortgages. Is this true and if so, what would the average percentage of Insurance Companies in mortgages be compared to Banks?
Insurance Companies have an average of 40% of their total assets in mortgages compared to less than 5% for Banks.
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